Financial prudence catalyst for quality service delivery—official
DRTSS starts Maltis second phase
MSE hints at trading derivatives

Economy difficult for job prospects

Economy difficult for job prospects

The Employers Consultative Association of Malawi (ECAM) says the current economic situation, with increased cost of doing business and cost of living, has made it difficult for employers to engage more staff.

In an interview with Business News on Wednesday, ECAM executive director Beyani Munthali said the continued depreciation of the kwacha and reduced power output for manufacturing companies—which it says is now at 40 percent—is chocking employment opportunities for the country whose citizens are in dire need of income generating opportunities.

The economy has affected unemployment levels, with many people requenting labour offices, such as these captured at Blantyre, in search of work

The International Labour Organisation (ILO) says that lack of economic diversification in sub-Saharan Africa has been a factor in subdued labour productivity growth, especially in comparison to other developing countries.

ILO, which recently released, World Employment and Social Outlook: Trends 2016, observes that unemployment rates for countries in the sub-Saharan Africa—Malawi included—moved up slightly to 7.4 percent in 2015 from 7.3 percent in 2014. Unemployment rates for women were estimated at 8.5 percent in 2015, up from 8.4 percent in 2014 and 6.4 percent for men in 2015 from 6.2 percent in 2014.

“The incidence of vulnerable employment remains pervasive in the region, at almost 70 percent of total employed against a global average of 46.3 percent. More importantly, this share shows no sign of decreasing in the foreseeable future, casting doubts on the region’s ability to reduce informality and improve job quality.

“In almost all sub-Saharan African countries, a higher share of women than men is estimated to be active in the category of contributing family workers in 2015,” reads the report.

The report adds that “the youth unemployment rate stood at 11.1 percent in 2015, up from 10.9 percent in 2014. It is higher for young women (12.5 percent in 2015) than young men (9.8 percent in 2015). Youth employment growth remains below overall employment growth. As a consequence, informal employment tends to be the first job for most youth in sub-Saharan Africa.”

A job seeker interviewed on Wednesday lamented that despite earning a degree in business administration from the University of Malawi last year, he is yet to secure a job.

“I have been working hard to secure a job, but I have been unlucky to the point that even internships are hard to come by,” said the graduate who requested not to be named.

However, Munthali said in Malawi—just like in the rest of the sub-Saharan African countries under study—companies and institutions are failing to add human capital due to high costs of doing business which has been brought about by the fall of the local currency. He said the situation makes it more difficult to pass over additional costs of production to consumers, who are already faced with the rising costs of living.

Munthali suggested that one way of tackling the situation would be to ensure that skills development among the country’s unemployed sector, which largely constitutes the youths, is in line with the employers’ present and future needs.

“We need to build capacity by sourcing materials that is up-to-date and engaging government and industry captains on relevance of skills being imparted in the colleges in the near future,” he said.

Munthali said the association has since, in partnership with Global Acquaintances Membership, developed a policy which will promote as well as influence government employers to take more interns in a bid to build more experienced human resource.

FDH Financial Holdings wins corporate leadership award

FDH Financial Holdings wins corporate leadership award

FDH Financial Holdings Limited, a local diversified investments and financial solutions firm, has scored another first for being awarded for outstanding corporate leadership in Africa 2015 by a UK-based publication, Capital Finance International (CFI.co)

The award was offered to the firm’s chief executive officer Thomson Mpinganjira, who has been praised for attaining prominence in the business world by “tirelessly advocating for increased transparency, good governance and scrupulous honesty”.

Told government that Fisp is unsustainable

FDH Financial Holdings Limited mid last year bought 80 percent stake in the formerly wholly-owned Malawi Government bank, Malawi Savings Bank (MSB).

Reads the write-up in the winter edition of the magazine: “He has set leadership example for senior executives to follow throughout Africa.

“People such as Dr Mpinganjira are providing both the entrepreneurial muscle and intellectual wherewithal that fuel the regional boom.”

Reacting to the award, Mpinganjira yesterday said it is humbling that his effort as part of FDH Financial Holdings is being recognised at a global level.

“It pays to do the right things all the time. The values of transparency, good governance and honesty are so crucial in growth of our economy in general and progress of the human race,” he said.

CFI.co judging panel has commended Mpinganjira on his efforts and agrees that corporate governance is singularly important to boosting development throughout Africa.

Government clarifies on electricity deals with IPPs

Government clarifies on electricity deals with IPPs

Ministry of Natural Resources, Energy and Mining has said discussions are on-going between the ministry and Independent Power Producers (IPPs) following the signing of memorandum of understanding (MoU) between the IPPs and Electricity Supply Corporation of Malawi (Escom) on Term Sheets – a prelude to signing of Power Purchase Agreements (PPAs).

The ministry’s statement contradicts recent reports of a stand-off on the electricity deals with IPPs most of whom have approached government and the Malawi Investment and Trade Centre (MITC) on possible investment in the country’s power sector.

Nkula Hydro Power Plant is falling to power the economy

Following the liberalisation of the electricity supply industry in 2003 coupled with the formulation of the integrated National Energy Policy (2003), and the recent government drive to encourage private sector participation, most IPPs are willing to invest in the power sector.

Department of Energy spokesperson Joseph Kalowekamo said the reported deadlock on the electricity deal is not only misleading, but also could potentially create panic among the citizens and prospective investors in the electricity supply industry.

“To show commitment, a number of them [IPPs] have ended up signing MoUs with the government. In November, 2015, the Ministry published in the local papers and made available to the public a list of the IPPs that have so far signed MoUs with the government,” said Kalowekamo.

Out of the 17 IPPs that had signed the MoUs with Government of Malawi, Kalowekamo said only one IPP signed in 2011 while the rest signed the MoUs in 2015 and are at different stages of project implementation.

“Some of the IPPs have proceeded to conduct pre-feasibility and feasibility studies that would inform investment requirements and subsequent PPAs to be entered into with off-takers, including Escom,” he said.

Generally, according to law, IPPs are expected to negotiate with an off-taker, in this case Escom, on tariffs and once a PPA is signed between Escom and an IPP, the latter is expected to apply to the Malawi Energy Regulatory Authority (Mera for a tariff approval and issuance of a generation licence for them (IPPs) to proceed with the project.

To date, no IPP has signed a PPA yet with Escom as negotiations are ongoing, said Kalowekamo.

Tobacco first round crop assessment out

Tobacco first round crop assessment out

Tobacco Control Commission (TCC) has said the leaf’s first round assessment report will be ready next week as 11 teams of tobacco experts are currently in the fields assessing the situation on the ground.

TCC chief executive officer Albert Changaya said in an interview on Monday the team comprises officers from TCC, growers associations, researchers and buying companies.

Worried with dry spell: Changaya

“Give us until next week to give the nation concrete figures on the situation of tobacco on the ground,” he said.

He, however, said the tobacco regulatory authority is worried with the prolonged dry spell that has affected most districts in the country, saying it might impact on yield and quality.

Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza said on Monday the ministry is also waiting for TCC’s assessment on the situation of tobacco on the ground in the face of the dry spell.

So far, indications on the ground show that tobacco and maize crops have been hugely affected by the prolonged dry spell.

Last year, Malawi produced 192.7 million kilogrammes (kg) of all types of tobacco. n

Yawning gap between rich, poor in Malawi

Yawning gap between rich, poor in Malawi

Monica Moyo, from Kawale Village, Traditional Authority (T/A) Mabulabo in Mzimba District cannot escape to be classified in any bracket definition of a poor person.

Although there are myriad definitions of who the poor are, Moyo fits into every definition judging by her life and that of her household.

Poor people have to do odd jobs like these to earn a living

She lives around Kanyika Mine, which is being developed by an Australian miner, Globe Metals and Mining Company. With six children, she hoped the mine would provide a livelihood, but she was wrong. There are no menial jobs to enable her put food on the table.

Moyo is among poor Malawians living in rural areas of the country who are enshrouded in worst forms of living standards by all generic measures.

“I don’t have all basic needs and my six children and I just live like a wild animal,” remarked the widow in a recent interview.

Often times, Moyo and her children sleep on empty stomachs.

Moyo says poverty is the worst form of violence as each moment she is trapped under hopelessness, wondering whether one day she will live a happy life.

She is placed among poor Malawians who continue to get poorer and poorer while on one hand the rich and are getting richer.

Today, eight million Malawians—about 50 percent of the population—are poor, and experts warn that if the situation is not reversed, the figure could hit 9.5 million, pulling an extra 1.5 million Malawians into the poverty trap.

While the poverty graph seems to be on an upward spiral, economic inequality on one hand continues to worsen significantly in Malawi in recent years.

Kachaje: The country economy is worse off than in Kamuzu Banda’s era

This is contrary to Malawians’ aspiration to have a fair and equitable distribution of income and wealth enshrined in Vision 2020—now gathering more dust at Capitall Hill.

Dangerous divide

Elsewhere, economists, through various regression analyses, found a significant positive correlation between increasing income inequality and high poverty levels and consequently low economic growth rates—as measured by real gross domestic product (GDP).

A recent state of inequality analysis by an international charity and development organisation, Oxfam gives a clear picture of how people from densely-populated areas such as Mtandire adjacent to Area 47 in Lilongwe are struggling to fend for themselves than their counterparts in Area 43, a low density suburb.

“In 2004, the richest 10 percent of Malawians consumed 22 times more than the poorest 10 percent. “By 2011 this had risen to see the richest 10 percent spending 34 times more than the poorest,” reveals the Oxfam study.

Over the period 2004-2011, the consumption of the top 10 percent rose from being about three times higher to being about four times higher than that of the poorest 40 percent, it says.

There is more meaning attached to this enigma.

Malawi’s Gini coefficient also shows the extent to which robust economic growth is benefiting the rich while leaving the poor behind.

Gini Coefficient, which is a commonly used measure of income inequalities, shows how close a given distribution of income is to equality and inequality with the closer it gets to one the more unequal is the distribution the country is.

In the case of Malawi, the Oxfam report is purely pressing an alarm.

In seven years of impressive growth, the report shows, the Gini has leapt up from 0.39, on a par with Cameroon, to 0.45, (moving close to 1) on a par with the Democratic Republic of Congo (DRC).

Talk about disparities in access to land, health care services, justice, education, employment and business opportunities between urban and rural dwellers, men and women, people with and without disabilities is even worse in Malawi.

Land Gini coefficient for example was 0.523, larger than the consumption Gini coefficient of 0.450 in 2011.

Again wealth inequality has worsened in Malawi over time and is worse than inequality in consumption, reveals Oxfam.

“The Gini coefficient for wealth (as measured by household ownership of the following durable assets: radio, television, furniture, sewing machine, fridge, washing machine, bicycle, motorcycle and car) has grown from 0.431 in 2004, to 0.564 in 2011. With the exception of urban areas, wealth inequality has significantly worsened over time in all the three regions.”

Goodall: People are still living in the same conditions as it was in the 1940s

Annoying inequalities

Irked by soaring levels of every form of inequality in Malawi, economic watchers blame the situation on presidents whom Malawians including the poor ‘employ’ to manage the country and enable equal distribution of resources.

“Every Malawian president has ‘successfully’ managed to leave the economy worse off than how he/she found it, leaving the poor, poorer, probably with the exception of Kamuzu Banda,” says one commentator Henry Kachaje who is also Economics Association of Malawi (Ecama) president.

To him, inequality is not an accident, nor is it inevitable but simply originates from policy choices.

“Consequently, some policy choices can worsen inequality while others reduce it.”

He holds a strong view that the main reason Africa’s people are poor is because their leaders have made that choice.

Weighing in on the current inequality status, Lilongwe-based economic governance commentator Mathias Kafunda fears that inequality may heighten risks of conflict or may require more redistributive government spending, adding that high inequality diminishes social mobility—and this is the case for Malawi now.

But Oxfam regional director (southern Africa) Nellie Nyang’wa said government must ensure that it narrows the prevailing ‘dangerous divide’ pointing out that extreme inequality hinder, economic growth and stifles social stability, among others.

Government stance

Fortunately, government seems to be in agreement with the worsening inequality levels on the ground.

The tone by Minister of Finance, Economic Planning and Development Goodall Gondwe is enough to confirm suffering by the poor the situation is dire and needs immediate redress.

Gondwe says inequalities and poverty levels are more pronounced in villages. He appealled to all Malawians to help government reduce the suffering of the poor.

“In the 1940s I went to stay with my grandmother in a round house with no windows… it is sad that 51 years after independence, many of our people are still living in the same conditions as it was in the 1940s,” he said.

If the situation on the ground is not reversed, the minister fears the path to eradicate poverty will be tough for Malawi.

Nelson Mandela once said overcoming poverty is not a task of charity, it is an act of justice that is man-made, but can be overcome and eradicated by the actions of human beings.

However, threats are still numerous as with the recent revision of poverty line by World Bank from $1.25 to $1.90.

This has already thrown more Malawian into the abyss of poverty trap at a time Malawi is also sitting on the world’s lowest gross national income (GNI) per capita or average income at $250.

Government decries transport sector hurdles

Government decries transport sector hurdles

Minister of Transport and Public Works Francis Kasaila has said inefficiencies in the country’s logistics and transport sector is costing the country about 50 percent in transportation costs.

The minister said in today’s competitive world of trading between nations, efficiency of the supply of goods and services plays a key role in a country’s economic growth and development.

Malawi’s railway sector is developing at snail’s pace

Kasaila said this in Blantyre on Friday during the graduation of students of Chattered Institute of Logistics and Transport (Cilt).

He said: “Transport cost significantly contributes to the landing cost of both imports and exports of any country. Crossing border [transport] presents many challenges such as border facilitation services, state of infrastructure along the supply chain, unsynchronised border working hours, all of which contribute to costs of trade.

“To mitigate the situation as a landlocked country, Malawi requires special skills from our young and upcoming professionals.”

A survey by Southern African Development Community (Sadc) in the road freight sector conducted in 2014 revealedthat Malawi’s transportation cost in the region is the highest with about 60 percent of the cost of production taken up by transportation costs.

Kasaila said government is actively pursuing a number of initiatives to improve infrastructure for trade facilitation.

“Government has approved an increase in the fuel levy for the road sector so that we keep our roads in good condition all the time and consequently reduce travel time as well as implementing one border post project under trade and transport facilitation programme. This will lead to reduced time in managing clearing operations at our border posts,” he said.

Kasaila said government has prioritised rehabilitation of rail infrastructure with the opening of Nacala corridor and feasibility studies on Nkaya-Mchinji and Sena corridor are underway.

In his remarks, Cilt president StallardMpata urged government to fully utilise the projects being implemented in the sector for maximum economic benefit.

“Malawi has made major projects in the transport and railway sectors with the expansion of road networks and the railway line in addition to the implementation of the electronic processing of transit goods at the borders through Dedza, Karonga and Mchinji.

“For all intended purposes, our cost of internal trade should be coming down due to infrastructure that Malawi government has put in place,” he said.

But Mpata said Malawi is making minimal progress in utilising the railway sector which he said over the years has developed and could have taken the economy to the next level.

Malawi up on economic freedom index

Malawi up on economic freedom index

A new report published this week by The Wall Street Journal and Washington’s think-tank The Heritage Foundation, has indicated that Malawi has improved on economic freedom—a measure that includes property rights, control of government spending, monetary freedom and trade freedom.

This year, Malawi jumped 15 places on economic freedom to 111 out of 177 economies from last year’s 126.

Insists reforms will soon bear fruit: Gondwe

The country’s economic freedom score this year is 72.4 percent.

In sub-Saharan Africa, Malawi along side Zambia, South Africa, Tanzania and Mozambique registered high improvements in 2015, the 2016 Index of Economic Freedom Report said.

The rating follows recent World Bank Doing Business 2015, which Malawi also improved three steps to 141 this year from last year’s 144.

However, the country slipped three steps to 135 out of 145 economies on the 2015/16 World Economic Forum, Global Competitiveness Index, the most comprehensive assessment of national competitiveness worldwide.

The new rating will be good news to Minister of Finance, Economic Planning and Development Goodall Gondwe who has insisted that government is undertaking reforms that will turn the economy around.

“We are carrying out a number of reforms and I am sure come 2016, Malawians will clap hands for us,” said Gondwe in an earlier interview with Business News.

He said adequate and resilient policy reforms will aid in strengthening macroeconomic growth in the medium and long-term.

According to the International Monetary Fund (IMF), Malawi economy, currently in slow down, is expected to recover in 2016, with growth in gross domestic product (GDP) expected to pick up to 4.5 percent due to recovery in the agricultural sector, construction activity, and the wholesale and retail sectors.

The bank also predicts that credit to the private sector is projected to pick up over the medium term as inflation falls to single digits.

In the 2016 Index of Economic Freedom Report, however, poor countries like Malawi have been hailed mainly for reforms in trade.

The report says that free trade policies that have been embraced, do not just promote economic growth, but encourage freedom—including protection of private property rights and the freedom of average people to buy what they think is best for their families, regardless of attempts by special interest groups to restrict that freedom.

“The 2016 Index of Economic Freedom shows that people who live in countries with low trade barri¬ers are better off than those who live in countries with high trade barriers.

“Reducing those barriers remains a proven recipe for prosperity. Govern¬ments interested in higher economic growth, less hunger, and better environmental quality should work to increase trade freedom,” reads the report. n

Economy failing insurance sector

Economy failing insurance sector

Captains in the insurance industry have said the economic hardships that Malawi is currently facing is negatively impacting on the sector as it is struggling to grow.

In an interview on the sidelines of the opening of the Institute of Insurance in Malawi (IIM), one of the trustees of the institute, who was also guest of honour at the function, Eric Chapola, said as a result, players and stakeholders in the industry should expect a gloomy year ahead.

Chapola (R) and Kadzongwe share notes during the opening of the institute

“The economy itself is going through bad times, as a result, companies are not producing as they should have been in a stable economy, as a result, there are also no new investments coming forth. Cash is tied, therefore, our customers are finding it difficult to revise their insurance upwards.

“We write insurance policies on declaration of assets and our experience is that clients are reluctant to make declarations because they don’t want to pay more premiums. People are now coming to insurance companies to cut their expenses by negotiating for cheaper rates, cheaper premiums and in so doing, our premiums are going down,” said Chapola who is also chief executive officer for Nico General Insurance Company Limited.

Chapola also said the coming of a new player in the industry, CIC Insurance Company from Kenya, has worsened performance in the industry, saying new firms always bring more changes as each firm would want to offer cheaper rates and premiums to attract customers.

As a result, Chapola said to keep their clients, the old insurance companies have to either agree to charge the cheaper rates that new entrants in the industry are charging or agree that the rules are different, which challenges growth.

However, to survive the harsh economic environment, Chapola said there is need for industry players to charge risk appropriate premiums and also take into account interests of their shareholders.

“Players need to realise that a business venture is not a charitable organisation. They need to charge premiums that are risk appropriate and also companies need to be aware that they have shareholders who must receive dividends. At the same time, they should realise that their shareholders have several alternatives—they can choose where and when to invest.

As companies, we must be in a position to offer good services to customers in a win-win situation,” he said.

He, thus, called on government to ensure that there is an enabling environment for businesses to prosper and woo new investors by, among other things, creating an enabling registration for setting up a business and also help in alleviating the problems of power outages that also scare new investors.

On the workshop, Chapola said that the coming in of Equity Re Insurance Brokers (Training Division) in the sector is a welcome development and a necessity for the growth of the sector.

In his remarks, IIM president Rex Kadzongwe said for the industry to grow there is need for more skilled and qualified professionals, hence the need for a training division.

Kadzongwe said the institute has since intensified awareness and civic education programmes to curb fraud and also to increase insurance penetration in the country, which is currently very low.

New MBS lab is game changer, says MCCCI

New MBS lab is game changer, says MCCCI

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said the K12.4 billion Malawi Bureau of Standards (MBS) Laboratory Complex, under construction in Blantyre, is a game changer in the export business.

He said: “Many companies have had their products declared unfit because international buyers connive with laboratories to do that. They know that when products are declared unfit, traders will reduce the price and they buy to make huge profits.

Chilima unveiling the plaque

“This has resulted in many traders deciding not to export because they do not want to go to South Africa, for instance, to pay for certification and have their products declared unfit.”

On his part, Chilima said the laboratory will help the country to save foreign exchange and time required when exporting goods.

“It is well documented that currently, our country is facing several barriers preventing it from benefiting fully from the world trading system. One of the contributing factors is the lack of international accreditation of export certification services in the Malawi Bureau of Standards.

“However, this project will also ease the process of exporting goods from Malawi because there will be no need to send our exports to other countries for certification,” he said.

Leopard Match factory supervisor John Mathandalizwe noted that at the moment, it is a challenge to export because if a market is in South Africa, local companies producing the same goods there price their goods lower.

Chilima laying a foundation stone

“One thinks of shipping costs and money spent on certification services. Essentially, you peg your prices a bit higher than local companies,” he said.

Contributions for the project have come from European Union (EU)3.8 million euros (K2.9 billion), United Nations Development Programme (UNDP) 1.7 million euros (K1.3 billion), Norwegian Agency for Development Cooperation (Norad) 2 million euros (K1.5 billion) while the Malawi Government is responsible for the construction of the buildings.

MRA incorporates more banks in service automation drive

MRA incorporates more banks in service automation drive

Malawi Revenue Authority (MRA) says it has increased the number of banks involved in tax collection from four to 10 in anticipation of service automation.

Previously, MRA has been working with National Bank of Malawi, NBS Bank, Malawi Savings Bank and Standard Bank.

MRA Head Office

MRA deputy corporate affairs manager Steven Kapoloma, in an e-mailed response to a questionnaire last week, said they have included FMB, Ecobank, FDH Bank, Nedbank, Indebank and CDH Investment Bank in its pilot phase in which large taxpayers are able to pay their taxes through the banks.

“These taxpayers are now able to pay their taxes at any branch of the commercial banks and not only at MRA offices as was the case before. After the pilot phase is done, this service will be open to all taxpayers,” he said.

Kapoloma said the addition of six banks gives more choice to taxpayers to ensure swift settling of taxes thereby saving time spent on queues in banking halls within MRA premises.

“Taxpayers can also transfer tax money from their account into MRA account through mobile electronic services available at each of the 10 banks.

“We are also piloting the electronic payment of taxes, an MRA e-payment platform, where taxpayers will pay from their desktop, laptop computers and mobile phones. All these are aimed at reducing costs of compliance and eliminate time lost in the earlier process,” he said.

MRA has been engaging in a number of initiatives to ensure that both small and large taxpayers pay the appropriate tax.

TCC extends registration exercise

TCC extends registration exercise

The Tobacco Control Commission (TCC) has for the second time, extended the 2015/16 tobacco registration exercise to next Friday.

The exercise, which started last August and was expected to end in November 2015, was first extended by a month to November 31 2015 before being extended again to January 29.

One of the tobacco farmers likely to send his leaf to the floors this growing season

Data collected for TCC shows that as of June 11 2015, the commission had registered 29 861 growers.

“Due to the number of growers yet to register and licence for the 2015-2016 marketing season, the commission has allowed for an extension that will run from January 11 2016 to January 29 2016. Those that have not registered or renewed their registrations are asked to complete before this period ends,” reads part of the statement issued on TCC website.

In an earlier interview, TCC technical and operations manager Fred Kamvazina attributed the low turnout of registrants to network challenges that the commission had been experiencing.

“Of course, we had network challenges at the start of the season for close to a month, which also affected the exercise, but we picked up when the problem was checked.

“We feel that we are having a decline in the numbers because some clubs are yet to pay for their registration hence we cannot include them on the registered list. The other reason could be that, perhaps, some farmers are pulling out of the system,” he said.

He, however, said that the development will not have any impact on tobacco production as farmers operate based on quotas.

Group corporate affairs manager Mark Ndipita said there may be many factors for the decline in the registration turnout.

“There may be a lot of explanations as to why growers are registering at such a pace, one of which may be is that farmers are busy finalising last season’s business as you are aware that the tobacco markets closed not long ago,” he said.

Meanwhile, TCC’s newly appointed chief executive officer Albert Changaya has said international tobacco buyers in the 2015/16 season will buy about 177 million kilogrammes of the leaf this year; an eight percent decrease from last year’s 192.6 million kilogrammes.

This year, Malawi earned $337.3 million (K189 billion) from tobacco—an eight percent drop from last year’s $366.3 million (K205 billion)—despite volumes at 192.6 million kilogrammes being 7.9 percent higher than last year’s 189.8 million kilogrammes.

BAM assures end to Nat Switch challenges

BAM assures end to Nat Switch challenges

Bankers Association of Malawi (BAM)has assured that challenges bank customers have been facing when transacting on automated teller machines (ATMs) connected to National Switch (Nat Switch) will be resolved by end February.

Nat Switch connects all commercial banks’ ATMs to enable customers transact at any bank of their choice using an ATM card.

Esau: Problems to be sorted out

However, since its rollout in February 2015, the project has received mixed reactions from customers because some ATMs have been showing that disbursements have been done yet in actual fact the transactions were not successful.

This has resulted in most banks to be inundated with complaints from customers seeking reimbursements.

Speaking in an interview in Lilongwe last week, BAM president Misheck Esau confirmed that commercial banks have been receiving complaints from customers, but said the hitches will be over end February.

He said: “The Nat Switch is a milestone project because previously, ATMs could not communicate with each other. We have about 500 ATMs that are now interconnected and problems were envisaged in the rolling out of a project of this magnitude.

“But now we are coming to the tail end of the problems and by end February all the problems will be sorted out.”

Reserve Bank of Malawi (RBM) spokesperson MbaneNgwira, in a separate interview last week, said they are happy that the challenges will resolved soon.

“If BAM is saying that the problems will be over by February then that is true because they are the main players in the whole set up of the Nat Switch. If we were the main players, I could have added more information but suffice to say this is a good development,” he said.

The World Bank has been funding the project under the five-year Financial Sector Technical Assistance Project (Fstap), but member banks contributed to the project through subscription of equal shares in National Switch Limited.

Cotton farmers start accessing loans

Cotton farmers start accessing loans

Cotton farmers in the country have started accessing loans for the purchase of cotton seed courtesy of the Cotton Ginners African Limited (Cgal).

The cotton industry’s future looked break after 70 percent of the farmers last growing season defaulted K2 billion (about $3million) in loans.

According to Cotton Farmers Association of Malawi (Cofam) president, George Nnesa, about 300 000 farmers have accessed loans to buy cotton seed.

He said: “Cgal has been distributing the loans to cotton farmers including those who had defaulted in the previous season.

“The agreement is that they will repay the loans including the defaulted ones.”

Cotton, which is the country’s fourth largest cash crop after tobacco, sugar and tea, generates an estimated over K5 billion annually.

Experts in the sector have argued that the crop has huge economic potential and could rake in substantial amount of foreign exchange, in excess of $500 million (about K306 billion) per annum, more than what the country gets from tobacco.

The crop is mainly grown by smallholder farmers in Balaka, Chikwawa, Nsanje and some lakeshore districts such as Salima and Mangochi.

EthCo decries raw materials deficit

EthCo decries raw materials deficit

Ethanol Company (Ethco) Limited, a subsidiary of Press Corporation Limited (PCL) based at Dwangwa in Nkhotakota, has said it is utilising only 50 percent of its plant’s capacity because of lack of raw materials for production of ethanol.

The company has since challenged that it will offer competitive prices to sugarcane growers who may choose to sell their canes, which produces raw materials for production of ethanol, to them this year.

EthCooutgrower development manager Brian Namata made the remarks on Friday during a tour that members of Kabadwa Cane Growers Scheme in Nkhotakota made to Phata Cane Cooperative in Chikwawa.

He said the company is currently relying on molasses which they buy from Illovo Sugar (Malawi) Limited plant at Dwangwa in Nkhotakota.

Said Namata: “But these have not been sufficient to enable us produce enough ethanol. Hence, we decided to start producing ethanol direct from canes.

“To realise our dream, we have launched an initiative called Project Rama [raw materials] to mobilise farmers in Chikwawa and Nkhotakota to produce more sugarcane and sell to us and we are assuring them of competitive prices.”

He said through Project Rama, EthCo is targeting 2 000 hectares of cane farms in Nkhotakota and another 2 270 in Chikwawa.

Namata expressed hope that this will meet its minimum demand of 400 000 tonnes of sugarcane for its factories in the two districts.

Phata Cane Growers Cooperative executive chairperson Wiston Yohane said the continued drop in prices of sugar on the international market is one of the major concerns among cane growers in the country.

He said low prices have resulted in local cane growers not to earn enough from their produce.

“But I would like to believe that things will improve with the coming of EthCo on the market. Competition on the market is critical as it helps farmers gain more from their produce,” he said.

Apart from growing cane, Phata Cane Growers are also into aquaculture, maize farming, beekeeping and fruit production.

The objective of the tour was to allow growers to share techniques, experiences and lessons in the sugarcane industry.

EthCo sister company, Chikwawa-based Presscane Limited, embarked on a $70 million (about K50 billion) project to increase ethanol production by engaging farmers to grow and sell the sugarcane to the ethanol distillery company.

The project is targeting 1 500 farmers in the sugarcane-growing area of Chikwawa, covering about 15 group village heads in the district.

Last year, Presscane also launched Ethanol Driven Vehicles Project (EDVP) with the installation of conversion kits in about 50 vehicles to enable motorists choose either using ethanol as a standalone fuel or a blend of ethanol and petrol.

Malawi to benefit from UK’s ?1.3bn fund

Malawi to benefit from UK’s ?1.3bn fund

United Kingdom’s (UK) Strategic Defence and Security Review has announced a ?1.3 billion (about K1.3 trillion) Prosperity Fund over the next five years to promote economic reform and development needed for growth in partner countries such as Malawi.

A statement released last week said the fund’s priorities will include improving the business climate, competitiveness and operation of markets, energy and financial sector reform. It will also increase the ability of partner countries to tackle corruption.

Nkula Hydro Power Plant

“We expect these reforms to create opportunities for international business, including UK companies,” the statement reads in part.

Apart from Malawi, the fund will also contribute to reduction in poverty in recipient countries including Angola, Mauritius, Mozambique, Namibia, South Africa, Tanzania and Zambia.

The Prosperity Fund will form a small, but integral element of the UK’s total Official Development Assistance (ODA) commitment of 0.7 percent of its gross national income (GNI).

The statement further reads: “It will primarily be focused on ODA eligible middle income countries, contributing to poverty reduction and complementing [Department for International Development] DFID’s work in poorer countries.

“In this way, the Fund will contribute towards meeting the new Sustainable Development Goals [SDGs].”

Since 2011, the Prosperity Fund has supported the UKs Prosperity Priority on opening markets, ensuring access to resources and promoting sustainable global growth, mainly in the emerging powers.

Currently, the Southern Africa Prosperity Fund, administered through the British High Commission in Pretoria, South Africa, has started receiving proposals to boost inclusive growth and sustainable economic development through interventions in power, infrastructure, cities, skills and transparency in priority countries in the Southern Africa Development Community (Sadc) region.

In Malawi, business climate is a huge challenge to private sector growth, according to Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Business Climate Survey 2015.

MCCCI president Newton Kambala recently said in an interview the challenges affecting businesses have remained the same over the years.

He said the cost of doing business, electricity, telecommunications, uncertainty in economic and regulatory policies and crime remain major obstacles to doing business in the country.

The proposal forms are available on www.gov.uk.

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