Mining & Trade News

The Governments of Malawi and India have prequalified five Indian consulting firms to conduct consultancy services for construction of 30 Megawatts Solar Power Plant for Blantyre Water Board (BWB).

The project will be financed by the Government of India through a US$215.68-million extended Line of Credit (LOC) by Export – Import (EXIM) Bank of India for the implementation of drinking water supply schemes and other development projects in Malawi.

The listed companies include: Avant-Garde Systems and Controls Limited; Darashaw and Company Limited; NTPC Limited; TATA Consulting Engineers and; WAPCOS Limited.

According to a General Procurement Notice, the listed companies were examined and verified for both completeness of their submissions and adherence of their applications to the prequalification criteria that was prepared by the Malawi Government.

Reads the statement by Malawi Government, EXIM Bank and BWB: “Blantyre Water Board which is one of the implementing agencies for the LOC intends to apply a portion of the funds towards construction of an Independent Power Producer (IPP) for own use.”

“The Importance of constructing an IPP for the Board cannot be overemphasized. Firstly, the project shall reduce operational costs to sustainable levels that will allow the Board to continue supplying affordable services.”

“This shall consequently help in the improvement of BWB’s business profitability which will enable timely system maintenance of faults and subsequent investments in expansion of network to unserved areas and technological improvements.”

The consultancy services will involve preparation of a detailed feasibility study and designs for the project, as well as preparation of Detailed Project Report (DPR).

BWB has proposed December 23, 2021 as deadline for submission of bids by consultants, and January 17, 2022 as the commencement date of consultancy services for the IPP project.

Malawian youths have risen up to shape the future of the country’s agriculture sector by exploring opportunities along the value chain in production and markets.

Youths in central Malawi’s Lilongwe district, have teamed up under a project called Youth in Agribusiness to harness the potential of the sector away from subsistence farming to employment creation, economic growth, export earnings, poverty reduction, food security, and nutrition.

Founder and leader of the group, Blessings Banda, says the aim of organization is to make agriculture attractive and profitable to the youth so that they can embrace it and be able to create wealth.

Population growth and an economic slump have disrupted livelihoods in Malawi, where unemployment, mostly youth unemployment, is on the rise.

” This is an intergenerational initiative that offers practical skills to empower the youth by providing capacity building so that they take agriculture as a business and be able to create wealth”, explains Banda adding that the project also aims at opening production and marketing opportunities for the youths as well as lobbying for better market prices.

“We are a conduit that connects youths to access agri-finance,” he says pointing out that the institution will act as a guarantor to cushion participants who may struggle to provide collateral against agrifinance loans.

Banda says despite making some progress, Malawi still has a long way to go in agribusiness, especially in the provision of agrifinance as well as extension services in terms of agritechnical knowledge, expertise and support.

“Luckily, government and other stakeholders are already making partnerships aimed at creating a sustainable business environment for agriculture,” he explains emphasizing that deliberate policies and programs are underway to create good, profitable and promising markets.

Endorsing the project, founder and CEO of a Lilongwe-based enterprise, Mtengowakumunda company, Sylvester Chabuka, reiterates that agribusiness is very important to the social-economic development of the country.

He urges the youth to change their mindsets and seeing agriculture as a business.

Chabuka says that though 80 percent of the country’s population are engaged in agriculture, most do not take it as a business but rather for subsistence.

“Am glad to see my fellow youth, Blessings, implementing this project. We need more youths to venture into agribusiness and explore the value addition chains”, Chabuka says observing that value addition for farm produce has huge demand and potential in food processing.

Agriculture accounts for around 28 percent of the county’s GDP and contributes over 80 percent of the national export earnings, according to the Malawi Growth and Development Strategy III.

The Malawi Investment Trade Centre (MITC) has challenged local Small and Medium Enterprises (SMEs) to produce quality products that can compete favourably on both local and international markets.

Speaking during the official opening of a three-day mini trade fair in Lilongwe, MITC Board Member, Fumbani Nyasulu, who also represented the Principal Secretary in the Ministry of Trade, said local production of good and high quality products can easily turn the country from a gross importing nation into an exporting one.

“The government agenda is to export more and import less, hence, our call on SMEs not to only focus on the local market but to produce with the international markets in mind.

“We should be competitive enough to replace the imported products in the shops with quality and affordable local products,” said Nyasulu explaining that government has put in place measures that will assist local producers build their capacities in different value chains.

The mini trade fair has been organized to give the local SMEs an opportunity to come together and share experiences with their fellow sector players, said Nyasulu adding that the activity is also one of MITC’s functions of promoting trade and investment.

The fair has been organized in collaboration with African Development Fund (ADF), Small and Medium Enterprises Development Institute (SMEDI) and National Association of Small and Medium Enterprise (NASME). The theme of the fair is “SMEs Driver of Industrialization and Economic Growth.”

In his remarks, SMEDI Chief Executive Officer Rodrick Chataika pledged to continue building the capacities of local SMEs. 

“SMEDI will continue playing its important role of capacitating these SMEs through training programs, educating them in business entrepreneurship, management skills, financial literacy on how they can prepare their financial statements and accounting records and also financial proposals if they want to access funding from partners and also from different banks,” said Chataika, whose organization has entered several agreements intended to link SMEs to local banks for business financial support.

He further explained that SMEDI also links SMEs to potential markets, apart from providing incubation centers where entrepreneurs are trained to add value to raw materials and convert them into marketable products.

Chataika said the incubation centers also target local Artisanal Small Scale Miners (ASMs) to turn their raw gemstones into valuable products by professionally cutting and polishing them into internationally marketable products.

Endrina Maxwell, owner of Dwalle Supplies and General Dealers lamented limited capital as the main challenge obstructing her business to compete with bigger companies.

She however sees the formation of cooperatives as an alternative but said she would in the meantime want to run independently. “I want to grow as an individual,” she said

The Reserve Bank of Malawi’s Monetary Policy Committee (MPC) has projected that the rise in fuel prices on the domestic market will trigger a corresponding increase in the rate of inflation in 2022.

It is anticipated that the fourth quarter of 2021 will see the inflation rate shoot to 8.9percent from 8.2percent as a result of the fuel price adjustment as well as the rise in maize prices, persistent disruptions to global supply chains among other factors.

According to a statement signed by MPC chairperson Dr. Wilson Banda, the inflation rate averaged 8.7 percent in the third quarter of 2021 against a projection of 8.8 percent and lower than the 9.1 percent recorded in 2021.

“The decrease is attributed to moderation of the food inflation rate as non-food inflation rate increased marginally. Specifically, food inflation rate averaged 10.3 percent in the third quarter of 2021 compared to 11.1 percent the second quarter of 2021,” the statement says

“On the other hand, non-food inflation rate averaged 7.2 percent in the third quarter of 2021, from 7.1 percent in the previous quarter,” Banda says in the statement adding that headline inflation rate is now projected to average 9.1 percent in 2021, representing an upward revision of 0.3 percentage points from the third quarter of 2021.

He also explained that Malawi’s economy is rearing from the developments in international oil prices as crude oil prices rose to an average of US$73.0 per barrel in the third quarter of 2021 from US$68.6 per barrel in the second quarter.

Banda noted that the increase was propelled by the growing demand for the commodity following an economic recovery in the northern hemisphere and the global energy crunch.

“Brent crude oil prices are anticipated to remain around the current levels for the remainder of 2021 but are expected to decline to an annual average of US$66 per barrel in anticipation that growth in production from OPEC+, U.S. tight oil, and other non-OPEC countries will outpace consumption,” says the statement Meanwhile, the MPC has maintained the Policy Rate at 12.0 percent while the Lombard rate is at 0.2 percent points above the Policy Rate. The Liquidity Reserve Requirement (LRR) ratio on both local currency and foreign currency deposits remain at 3.75 percent in a bid to minimize policy trade-off and to better manage inflationary pressures as well as to support economic recovery

The announcement by the Bankers Association of Malawi (BAM) to introduce a 16.5 percent Value Added Tax (VAT) on various banking services that its members offer to their customers, attracted an immediate public reaction after it was made on Thursday.

The statement signed by BAM’s Acting Chief Executive Officer, Lyness Nkungula, says the association made the decision following a recent parliamentary amendment to VAT Act.

“Bankers Association of Malawi on behalf of its members…. would like to inform the general public that from 1st November, 2021 some of its banking services will attract Value Added Tax (VAT) at 16.5 percent,” reads the statement in part.

The development sparked a national debate with people protesting the pronouncement saying charging customers on every banking transaction only serves to stifle the economic well-being of Malawians, most of whom earn their livelihoods through precarious informal jobs.

Prevailing comments on the social media indicate that people expect the banks to start charging 16.5 percent VAT on bank transactions such as deposits and withdrawals.

“This means that the government introduced MK100,000.00 free tax band is now useless as it will be eaten away by the banks,” notes one commentator.

Economist, Prof. Ben Kalua explains that the introduction of the tax on banking services will not directly affect low income people because they rarely, if at all, use banking services.

“It is a welcome move since poor people are already financially excluded from using banking services,” says Kalua.

However, the Malawi Revenue Authority (MRA) has cleared the mist saying the BAM statement has misled the public because the tax measure does not in any way affect normal banking transactions such as deposits and withdrawal of money.

Briefing the press, MRA Deputy Commissioner, Henry Ngutwa, explained that parliamentary amendment is intended to ensure that banks must meet their obligation of settling 16.5 percent of what they charge their customers on non-related banking services such as printing bank services, ATM charges and fees for processing credits.

The revenue generating body has also said, following the clarification, it does not expect banks to increase their charges.

But commenting on the merits of the Act to clarify banking services and widen the tax base, Prof. Betchani Tchereni says the tax initiative is part of Malawi’s drive towards creating internal sources of revenue as the country drifts away from external sources of income.

“We really need to broaden our tax base,” he says observing that the country experiences pressure to implement its developmental programmes because its development financing is heavily and hugely dependent on external sources as less than 50 percent of its population pay taxes. “We really need to have our own sources of income so that we can do more infrastructure developments and provide social services of higher quality,” Tchereni says but was also quick to note that the proposed tax was likely to affect the customer base of various banking institutions as low income generating people will probably decide to seek for other money saving means in a bid to run away from the 16.5 percent banking VAT.

Real estate consultants, Knight Frank Malawi, has singled out high inflation as one of the reasons for the stagnation of transactions in Malawi’s property industry.

A research study conducted in the first half of 2021 shows that as the country’s monetary policy focused on maintaining single digit inflation, overall inflation increased from7.7 percent in January to 9.1 percent in June. At the same time, the Malawi kwacha depreciated by 5.92 percent.

The research notes that during the study period, the market was generally passive with the residential sector showing resilience while the demand for prime residential property for rent in the commercial sector remained stable with limited number of sales transactions.

However, the prime residential market is reported to have registered a rental decline of between 15 – 20 percent in both Blantyre and Lilongwe cities as some houses became vacant for a long period due to low demand resulting from a sudden flight of expatriates during the height of the Covid-19 pandemic.

“Unfavourable interest rates for housing finance reduced borrowing hence self-funded home construction remains strong in both high density locations and affluent suburbs of all the cities.” the report says

Knight Frank also highlights that the office market demand remained passive during the first half of the year as a result of the scaling down of small and medium enterprise occupiers and relocation of others to residential areas.

It says this year, office vacancy rates reduced slightly as compared to the same period last year though it became subdued in the period under review with vacancy rates of between 20 to 25 percent.

According to the consultants, the vacancy rate, lower rental payments by tenants and subdued business influenced by the covid-19 pandemic all pose a great threat to rental collection.

They further note that in an effort to mitigate the impact, some property owners reviewed rentals downwards by-5 to-10 percent as others maintained existing charges with very few increasing their rental fees.

Meanwhile, Knight Frank says there is an anticipation that the property market will continue to adapt to the current trend in second half of 2021 with little light to normalize in the short to medium term due to rising demand for space.

The Ministry of Trade has embarked on a drive to revive idle community factories created as cooperatives under the One Village One Product (OVOP) initiative.

Industry Minister, Roy Kachale Banda, has said that government has taken this step because it is aware how much these factories can contribute to the growth of the manufacturing industry in the provision of value addition to the products that the country otherwise exports in raw form.

Kachale made the remarks in Blantyre when he toured Mankhamba Bee Keeping and Kunthembwe Producers and Marketing Limited Cooperatives where he learnt that the two institutions are failing to operate because of lack of electricity and reliable water supply among other challenges, despite being equipped with the necessary facilities for value addition of a number of agriculture products.

” We will invite the Ministry of responsible for energy as well as officials from the Electricity Supply Commission (ESCOM) to a roundtable discussion to expedite the process of supplying electricity to the facilities”, said Kachale.

The minister also disclosed that his ministry is in the process of identifying experts to train cooperatives on best practices in processing competitive and quality products besides orienting them with business management skills, a common challenge among cooperatives.

Mankhamba Bee Keeping Cooperative has a warehouse but need machinery and electricity to start processing and add value to the honey they already produce while Kunthembwe Producers and Marketing Limited Cooperative has not been connected to the electricity grid, despite being furnished with a warehouse and equipment for processing groundnuts into cooking oil and groundnut flour.

Implemented mostly in rural areas to accelerate value addition processes, the OVOP initiative, also formed cooperatives to run the factories and create employment for the country’s rural population.

OVOP has contributed to growing rural economies and attracting people away from migrating to urban centres in search of economic opportunities.

Value addition is one of the key areas of focus for the attainment of the country’s long-term objective of ” an inclusively wealthy nation” under the Malawi 2063 agenda.

Theft and vandalism of rail infrastructure has become a major safety risk along the 706 km track line operated by Nacala Logistics Limited in Malawi.

Speaking on the sidelines of the launch of a Railway Safety Week in Blantyre, Nacala Logistics Country Director, Gustavo Stein, told Mining and Trade Review Publication that theft and vandalism of rail-line equipment poses increased threat to human lives.

He revealed that the ongoing damage to rail infrastructure did not only affect Nacala Logistics as an operator, but also the national economy, the social and economic lives of poor commuters and other land users along the rail-line where 16 accidents have now been registered across the country.

“We are struggling with vandalism on our railway systems where increased theft of pandrol clips and other rail materials has forced us to suspend operations between Limbe and Balaka as a safety measure to protect our passengers,” he said.

Stein explained that the safety week was one way of raising awareness on the dangers of tampering with rail materials.

At the end of the exercise, the company is set to attain a zero accident target through the use of diverse communications solutions to reach out to rural masses along the railway lines on how to prevent railway associated accidents.

In her remarks, the Deputy Transport and Public Works Minister, Nancy Mdooko, who graced the occasion, said the Railway Safety Week is also part of governments’ effort to improve the railway system so that it moves in line with national transport plans.

“This event is important for people living close to railway lines so that they understand that it is 100% possible to prevent railway associated accidents,” she said of the function which is expected to be an annual undertaking.

This year’s commemorations are being hailed under the theme “Zero Compromise, Zero Accidents, Zero Harm” and is running from October 24 to 30, 2021.

The theme was chosen to highlight the importance of adhering to safety principles without compromise.

Nacala Logistics runs freight and passenger services with the freight services operating both internationally and domestically while the passenger service only operates within the country.

The company runs 53 locomotives and 669 cargo wagons, 56 of which are tankers.

Deputy Minister of Agriculture Agnes Nkusankhoma has bemoaned the slow pace in adopting sustainable agricultural technologies by players in the industry.
Nkusamkhoma has, therefore, urged stakeholders in the industry to ensure effective coordination in different projects to scale up utilization of already identified technologies in order to increase quality and quantity of production.
She made the appeal during the Malawi Agriculture Innovation and Technology conference and exhibition which was held in Lilongwe courtesy of the Pan African Learning and Growth Network (PALGNET).
Nkusankhoma said the Ministry has so far conducted numerous studies on technology adoption, which have established that lack of coordination among players in the sector is a major stumbling block.
She said: “There is need, therefore, for more coordination across projects and among different players.
“I strongly believe that partnerships are fundamental to delivering the transformation potential of science and technology. There is need for partnership between government Ministries to ensure that our priorities are synchronized; partnership between government and the private sector will revitalize my Ministry and indeed other public institutions to carry out research.”
“Partnership with development partners will bring the much needed investment in our priority areas. Partnership with non-governmental organizations will ensure that simple technologies reach the most vulnerable people at the grassroots.”
Nkusankhoma also stressed that working in partnership will help in scaling-up innovations, and assist in deepening learning and sharing knowledge.
She said there is a need to build synergies and complementarities to get value for the investments that the players are making into the agricultural sector.
The Deputy Minister hailed the conference saying it has helped to provide a unique platform to nurture, develop and expand the partnership base that will promote use of technologies in the agricultural sector.
Nkusankhoma said; “This conference comes at a time when most African countries, including Malawi are still grappling with the slow adoption of science and technology in agriculture.”
“Over the years, cutting-edge and innovative technologies have been developed throughout the world to improve agricultural performance.”
“The application of science and technology continues to be the essence of what we all know as the Green Revolution in countries like India.”
“We, therefore, do not need to be convinced further that our endeavor to achieve Sustainable Development Goal Number 2 which aims at ending hunger and ensuring access to sufficient, safe and nutritious food by all people all year round requires that we join the rest of countries on this continent in adopting innovative technologies at scale.”
Nkusankhoma said application of scientific knowledge and use of simple technologies will make the nation attain aspirations of the Malawi 2063 on agricultural productivity and commercialization.
She reiterated the wishes of the Malawi Government to ensure that every smallholder farmer is supported by creating an enabling environment and supportive institutions.
Concurring with the Deputy Minister, Norwegian Church Aid and Dan Church Aid (NCA/DCA) Joint Country Director Havard Hovdhaugen said the NCA/DCA Joint Country Program strongly believes that collaboration within the industry is vital in establishing sustainable value chains.
Hovdhaugen said smallholder farmers, the private sector and the consumers, are critical components of the supply chain and that without collaboration the chain is incomplete.
He said: “The private sector plays an important role in strengthening the country’s food systems by providing smallholder farmers with access to inputs and markets.
“NGO sector is expected to play a catalytic role of mobilizing smallholders and introducing locally accessible inputs which will in turn generate demand to stimulate the interest of the private sector.”
“As an organization we want to collaborate with the private sector both as input suppliers and potential off takers so that some of the smallholders be motivated to now begin producing for the supermarkets.”
Hovdhaugen challenged all players in the sector to be innovative and come up with technologies that are simple, affordable, and easy to adopt, and let private sector work together with the NGOs for scalability.
The country director also disclosed that NCA/DCA strongly believes that NGO interventions in the sector can only be sustainable if the private sector is part of chain.
Agriculture sector remains the backbone of Malawi’s economy contributing 42% to the country’s gross domestic product (GDP) and 81% of export earnings.