Mining & Trade News

My Community, My Responsibility (MCMRO), a local civil society group, says that apart from the economic depression being experienced across the world, some of Malawi’s policies contribute to the country’s stagnation as they do not support youth participation by offering conducive business start-up incentives.

The organisation’s director, Brian Khembo, says prohibitive business regulatory requirements frustrates aspiring youths from registering and operating formal businesses in the country.

Khembo told Mining and Trade Review  that MCMR will soon be engaging government to consider revising some business regulatory policies that pose unreasonable challenges to setting up businesses.

He points out that one of the challenges include business certification processes which he says does not support youth economic transformation.

“Young entrepreneurs and youth led organisations in Malawi are finding it difficult to operate in Malawi due to unrealistic lengthy and costly business regulatory processes,” Khembo says noting that the development is retrogressive to fighting the country’s high unemployment levels.

“There are business registration requirements which expect a start-up by an upcoming entrepreneur to possess similar facilities and liquidity with an established entity before getting a business license,” he observes citing challenges encountered by the youth-led businesses that want to enter the financial industry, regulated by the central bank, the Reserve Bank of Malawi. 

Khembo says to tackle some of these challenges, MCMR has launched a project dubbed “youth empowerment and entrepreneurship initiative,” aimed at highlighting youth business obstacles including human rights. 

Meanwhile, as one way of fighting for the economic rights of the youth, MCMRO has proposed for a Solidarity March to show that it stands with young entrepreneurs in Malawi.

Khembo says the march highlight the plight of Kondwani Phiri, CEO of Greenlights Portfolio, who is said to have been dragged to court by the Reserve Bank of Malawi for allegedly operating in the financial sector without a license. 

“We are of the opinion that this is a compliance issue, which the RBM would have just advised,” he opines.

Despite local heavy mineral sands being lauded as superlative due to abundance in mineral content of 13% on average as compared to deposits from other countries, Malawi is yet to reap its benefits as energy and lack of proper transport systems continue to cripple operationalization of Makanjira heavy mineral sands mining project in Mangochi.

The deposit whose exploration started in 2002, was initially pursued by Australian engineering company Millennium Mining before Chinese firm MAWEI Mining took over and conducted feasibility studies from 2009 to November 2017 when it obtained the mining licence.

But PRO for the Ministry of Mining Christopher Banda told Mining & Trade Review that despite obtaining the mining license the company is yet to commence mining operations due to challenges in sourcing adequate power and lack of proper transportation models to ferry the minerals to the seaports for export to the world market.

Banda explained that initially the company planned to start mining in either late 2019 or early 2020 as it hoped the power and transportation woes would be sorted out by that time.

The company requires approximately 3MW to kick-start the project and 10MW for the rest of the mine life, and there is also a need to operationalize lake transport services from Makanjira to Chipoka to connect to the railway to Nacala for exporting.

Banda said: “MAWEI Mining obtained the mining license in 2017 but then in the year, they did not complete their environmental impact assessment report until last year when they were fully granted the mining license, and when inquired why they remained dormant they cited heavy rains, insufficient power and transportation constraints as key setbacks.”

“Heavy mineral sands have the highest potential to boost revenue generated from local extractive sector as these type of minerals are in a class of ore deposit which is an important source of zirconium, titanium, thorium, tungsten, and rare-earth elements, which are also fairing good on the market.”

Banda, however, stressed that the Ministry will continue monitoring all sector players to revoke and repossess all dormant licenses, and give them to serious investors.

Mawei Mining is expected to inject US$38.8-million in the first phase of the mining venture to run for one to 10-years years where, among others, it will be mining 10mt of ore per year producing Ilmenite ; 215,793 tonnes , Magnetite; 63,600 tonnes, Zirconite; 8300 tonnes and Rutile; 1,100 tonnes.

It is projected to rake in an approximate of US$29.2Million in annual revenue with a profit of US$5.4Million.

The feasibility studies Mawei Mining conducted at the cite affirms the availability of over 354 million tonnes ore containing Ilmenite; 9.48mt, magnetite; 1.648mt, Zirconite; 0.358mt, Rutile; 0,04mt and Monazite 0.017mt.

Information collected from survey reports indicates that Malawi’s heavy mineral sands have an average mineral content of 13%, which is higher compared to 10% for Richards Bay, in South Africa, 4,77% for Hillendale, in South Africa, 4,8% for Dongara, in Australia, 10,4% for Tamil Nadu, in India and 3% for Kwale, in Kenya.

Meanwhile, in a bid to increase electricity supplied against the increased demand for power Malawi President Lazarus Chakwera has engaged the Mozambican power supply company EDM to increase by 60 MW the electricity it will be supplying the country under the Malawi-Mozambique interconnection deal.

If approved, the extra 60MW will add on the initially agreed 50MW, providing the local electricity distributor the Electricity Supply Corporation of Malawi (Escom) an additional 110MW into its grid from the Interconnector.

Malawi’s mineral sector contributes less than one percent to the country’s gross domestic product with a number of medium to large scale mining projects failing to take off or realise their full potential due to a myriad of problems including power challenges, lack of adequate transport infrastructure and delays by authorities in approving mineral licenses and environmental impact assessment reports.

The country’s investment and trade promotion and facilitation agency, the Malawi Investment and Trade Centre (MITC), has urged local business community to patronise the upcoming 2022 Commonwealth Business Forum expected to take place in Kigali in Rwanda from June 21 to 23, 2022.

This year’s Commonwealth Business Forum will be held alongside the Commonwealth Heads of Government Meeting (CHOGM) which is scheduled for June 20 to 25, 2022.

MITC Chief Executive Officer Paul Kwengwere said the business forum is expected to attract business captains from various sectors such as finance, agriculture, tourism, and healthcare among others.

Kwengwere said the business forum will provide good platforms for networking and building business partnerships.

He said: “We are always encouraging the business community to take advantage of events such as these because they are the right place to network, make business connections and also learn more of other business opportunities that can help them to grow.”

“We believe this event will help our private sector to discover business opportunities within the commonwealth and also be able to identify ways in which they can connect with the Commonwealth market to further their growth strategies.”

The business forum which will feature networking sessions and presentations will be held under the theme ‘Delivering a common future: Connecting, Innovating, Transforming.

CHOGM is a pivotal agenda-setting and decision-making space for the diverse community of 54 Commonwealth countries.

Commonwealth leaders meet every two years for CHOGM, which is hosted by different member countries on a rotational basis.

Since 1971, a total of 25 meetings have been held, with the most recent being in the UK in 2018

Apart from the Commonwealth Business Forum, MITC is also calling all private sector companies to attend the forth coming Lusaka Business indaba and Expo scheduled for May 27th to 28th in Lusaka, Zambia.

According to Kwengwere, the business indaba is aimed at discussing ways in which businesses can access finance to drive their growth and also explore market opportunities available in Lusaka for businesses to take advantage of.

Kwengwere stressed that there are a lot of business opportunities that Malawi can take advantage of in Zambia especially when it comes to supply of various goods and services.

“It is also pleasing to note that the indaba is focusing on how businesses can access finance and markets which is critical to our private sector players.”

“So as MITC we are encouraging the business community to attend this important meeting because we know it will help them to gain knowledge on available market opportunities in Lusaka but also it offers them an opportunity to interact with financiers who will be attending the event.”

As a Government agency, MITC identifies, develops and packages investment opportunities in Malawi; provides a professional service to all clientele; brands and markets Malawi as an investment destination; retains and expands trade and export activities and links opportunities to the developmental needs of the Malawi community.

MITC also operates as a One-Stop Service Centre for business start-ups in Malawi.

The Malawi Government says it is entering into trade relations with a number of countries in the world’s key trade blocks in order to expand the country’s export market base.

Responding to questions by the Parliamentary Committee on Trade on the status of Malawi’s trade activities, Christina Chitima, the Principal Secretary for the Trade Ministry told the committee that the country has signed various Memorandums of Understanding (MOUs) with South Africa, Sudan, India and China to export locally produced farm items.

Chitima said the arrangement will ensure that extra local farm produce that cannot be consumed is earmarked for the export market to boost the country’s economy. The secretary gave an example of pigeon peas, which she said has attracted a trade deal that will ship about 50 thousand metric tons of the peas to India.

She said: “Our expectation is that once these arrangements are concluded, farmers will have the opportunity to grow into cooperatives that will work with relevant institutions such as the Agricultural Development and Marketing Cooperation (ADMARC).

“Other local companies, like seed companies, have already started taking advantage of these overseas markets,” Chitima said explaining that the country is strategizing on how best to penetrate into various international export markets.

 “In dealing with the supply side constraints, we have put in place an inter-ministerial committee and a task force to facilitate smooth export trade and proper diversification of our economy.

“The Competition and Fair Trade Commission (CFTC) helps the government in dealing with some local trade problems such as unrealistic high price charges like in the case of cooking oil, sugar and others.”

Chairperson for Parliamentary Committee on Trade, Simplex Banda, advised the Ministry to consider involving local Small and Medium Enterprises (SMEs) when signing the MOUs.”

“Apart from promoting local participation when signing the MOUs, we have also discussed the need to have a strong legal framework that facilitates creation of conducive environments for investors in this country,” he said, adding that there is need to build symbiotic relationships between the Trade Ministry and other Ministries like industry for fast industrialization, as well as the Ministry of Agriculture.”

Banda also said there is a need for the Ministry to establish a strong relationship with the Department of Immigration as well as the Malawi Police Service in order to curb problems to do with smuggling of products that the country produces. Meanwhile, the Ministry of Trade has established the Malawi Small and Medium Enterprises (MSMEs) Order, which aims at assisting local businesses in finding markets, financial support and eradicate constraints in business and trade

Salima Sugar Company says it is fast-tracking preparations to resume sugar production from Saturday, May 7, 2022 due to current shortages of the commodity on the Malawi market.

The Company has been in off-season from March this year in order to plan, strategise, and review as well as carry out a maintenance programme on its plant, and was expected to commence production on May 14, 2022.

But theCompany Secretary Dr. Charles Thupi acknowledged to have received reports from their distributors of low stocks of sugar in many depots across Malawi which has prompted the company to fast-track preparations to resume production.

Thupi said; “As of now we have received reports of low volumes of our sugar in most of our distributors’ depots, and as a measure to address this inadequacy we have resolved to fast-track our preparations to resume production so initially we intended to commence production in two weeks’ time, but with the current development, we will start this weekend.”

In terms of distribution chain, Thupi highlighted that their sugar is mainly distributed by retail chain stores such as SANA, Chipiku and Kulima Gold since they are not mandated to facilitate their own distribution process under fair trade policy.

“As a Company we do not have a distribution license because we cannot be manufactures and retailers at the same time, hence we rely on these distributors to ensure that our product is widely accessed across the country. But having seen the gap we will open up to more distributors so that our product is evenly distributed.” he said

He also hinted that the company is looking into prospects of increasing its production capacity in order to meet the increased demand of the product against the current capacity.

Thupi said; “The current challenge we have is a high demand of the product and looking at our machinery, production capacity is still on the lower side, therefore we are liaising with our colleagues in government to expand our plant.”

Meanwhile, Salima Sugar Company crushes about 250 thousand metric tonnes of cane yearly which produces a range of 25 thousand to 30 thousand metric tonnes of sugar.

The company has 4,000 hectares of land and currently, 1,000 hectares of land is under cultivation. The farm and factory are located in the shores of Lake Malawi and flood and pivot irrigation is used for sugarcane crop.

Youths in the country have been challenged to develop bankable and solution based businesses in an effort to spark Malawi’s economic growth in line with vision 2063.

The challenge was made by Wealth Malawi MD Harry Chima during the opening of “The Eagles Nest Entrepreneurs Start up Masterclass aimed at equipping entrepreneurs with marketable skills on how to excel in their endeavours amidst the current economic hardships held at Mount Soche Hotel in Blantyre.

At the meeting, participants were drilled on how to position and package themselves to meet the required standards to secure finances from prospective financial institutions.

Chima observed that entrepreneurs are the driving force behind any economy, as they set up new businesses and industrial units which help with regional development.

He said: “These forums are aimed at bringing together entrepreneurs aspiring to endeavour in various sectors so that we empower them with vital tools required for them to excel in their business as we bring in relevant topics to meet the needs of start-up enterprises.”

“In these workshops we also make sure we bring experts in different fields so that they can share hands on industrial experiences in order for the entrepreneurs to know what to expect from the industry and how to dive through opposing currents in business.”

In his remarks, one of the participants Kelvin Dimba highlighted that the masterclass has helped him to attain more insight on how to advance his operations.

Dimba said; “The workshop has been an eye opener for me as a start-up entrepreneur, because there are many challenges on our way being at an infant stage ranging from financing, teabuilding, decision making and marketing among others, hence the workshop has helped to elaborate on all important areas. And it has also helped us to network with likeminded individuals on how to grow our businesses.”

Approximately 50% of Malawi’s GDP is from income generated from both formal and informal small and medium enterprises (SMEs), and 89% of employed people work in the informal sector.

As the country navigates away from overreliance on tobacco as its main forex earner, the Foundation for Smoke Free World (FSFW) has cautioned stakeholders in the local tobacco production value chain to tread carefully so as not to overlook key components essential for Malawi’s economic growth.

The warning has been made in FSFW’s report, which analyses Malawi’s tobacco production trends and other critical factors related to the leaf’s value chain.

In the report, FSFW observes that global tobacco production has, in recent years, undergone significant changes with tobacco production functions moving from high-income countries to low- and middle income countries.

The effects of such shifts has been very pronounced in sub-Saharan Africa in countries like Malawi, arguably the most tobacco dependent economy in the world.

FSFW notes that as interest to diversify in order to minimize effects of tobacco production, there is need to understand the macroeconomic, policy, and political landscapes in a country because the risks in these spheres can hinder the adoption of even the most technically efficient, economically sound, and farmer-friendly alternatives for diversification.

 “A closer look at the tobacco value chain within Malawi reveals that smallholder tobacco farmers are often the most disadvantaged and vulnerable link in the chain, with tobacco production often coming at their expense, literally and figuratively,” it says pointing out that the day-to-day work and exposures associated with tobacco farming are harmful to the health of those who carry it out as well as to the surrounding environment.

“Such observations underscore the extent to which the existing value chain harms the economic well-being, health, and environment of smallholder tobacco farmers and helps make the case for shifting away from tobacco dependence, particularly as the global demand for tobacco declines,” the report further notes

In Malawi, tobacco pricing, which has recently hit new lows, is unpredictable and has forced government to consider reducing the country’s overreliance on tobacco, as evidenced by its new focus on diversification and sustainable agricultural transformation outlined in its key policy frameworks, including the Malawi Vision 2063 and other initiatives

FSFW suggests the need for sustainable, and investment-friendly crops, livestock, and other sources of livelihoods.

“Ultimately, the success of these livelihoods options will depend on addressing the many structural obstacles currently facing the economy in general and the agricultural sector, including limited access to inputs, barriers to reliable financing and sustainable investments, deficits in infrastructure, creation of markets for alternative high-value crops and gaps in knowledge, policy, and institutional capacity.”

Although tobacco continues to be a major crop and accounts for about 12% to 15% of the country’s gross domestic product (GDP), the number of tobacco farms have decreased from nearly 400 thousand to a little under 178,000 in 2019 and tobacco’s contribution to the total value of crop production has also decreased from 39% in 2004 to 18% in 2019

An environmental expert has described the increased soaring of fertilizer prices as a blessing in disguise for Malawi.

Godfrey Mfiti says farming without chemical fertilisers will provide the country with better, efficient and effective alternatives methods that will end up nourishing the country’s farming land which have been degraded by the fertilisers.

His comments were made following the continued skyrocketing of chemical fertilizer prices in the country. The cost of fertilises in the country have jumped from MK38,000 last year, to around MK45,000 and MK50,000 this year.

According to authorities the price build-up is just knock-on effect for Malawi following the rise in global fertilizer prices due to a combination of strong demand and high input costs. The poor 2020 maize and soybean harvest in South America has also contributed to the global fertiliser price increase as major growers reacted by increasing acreage for farming these commodities, a development which also triggered an increase the demand and use of fertilizers.

On other hand, apart from the depreciation of the Malawi currency, the Kwacha, refinery curtailments due to COVID-19 restrictions and high energy prices limited supply of raw materials used in fertilizer production, especially sulphur and ammonia has also exacerbated price hikes.

International Food Policy Research Institute (IFPRI) has since reported that in Kwacha terms, global fertilizer prices have increased by 98 percent, and to make matters worse, bulk shipping rates have more than doubled in the 12 months ending July 2021, which has further increased the landed cost of fertilizer in Malawi.

But speaking to Mining and Trade Review Publication, Mfiti hinted that Malawi needs to contemplate on investing more on production and use of organic fertilizer with a sole aim of increasing sustainable crop production, enhancing long-term soil fertility for better farmer livelihood, as well as alleviating rural poverty and reduce foreign exchange drain on chemical fertilizer imports.

Mfiti said; “There is an opportunity in the soaring chemical fertilizer prices, we can call it a blessing in disguise as it paves way for local manufactures of organic fertilizer to seize this moment by intensifying their operations on the much demanded fertilizer. There are different kinds of organic fertilizers that can be adopted and there is need for local citizens to be trained on how to make these in order to minimize intense imports of fertilizer.

“And when we think of fertilizers, we are talking about feeding the soil, unfortunately, continued use of chemical fertilizers destroys soil structure. Therefore there is a need to teach our local farmers on the use of organic fertilizers such as composite manure which has proved to be environmental friends as well as effective.”

Mfiti further asked government to review the Affordable Input Programme (AIP) if it is still relevant and viable considering the numerous setbacks registered in implementing the program.

“AIP is no longer viable for government to continue implementing it, because if you look closely it only encompasses on maize alone which is a low value crop since it is only meant for consumption,” he said.

The Malawi Revenue Authority (MRA) has identified the transport sector as a key element that promotes smuggling of goods into and out the country.

A meeting between the tax regulatory body and transporters in Malawi’s southern region held to discuss customs and excise processes, procedures relating to importation and exportation of goods noted the existence of a criminal syndicates in the rail, air, river, maritime and mostly in the road transport sectors.

According to MRA’s Taxpayer Education Manager, McHizzal Kawanga, smuggling remains one of the bottlenecks that deprives government import and export tax revenue that would otherwise have helped it to fulfil its financial obligations.

The meeting was aimed at acquainting transport sector players with relevant legal processes required to be followed when importing or exporting different goods.

“We are aware that some of the players are not familiar with laws involved in their businesses and may be vulnerable to manipulation or cohesion to smuggle goods using unchartered routes or to provide false information to tax authorities.

“We appeal to transporters desist from such acts and ensure that their drivers are well warned against the malpractice,” he said

Commenting on the influx of foreign transporters getting more transportation deals as compared to local transporters, Kawanga said that despite MRA not being the responsible body that facilitates transport contracts, it would be commendable if local players are prioritized since it’s the local players’ value chain that contributes significantly in taxes.

In his remarks, Mike Missi, a representative for Zagaf Transport, commended MRA for engaging them on taxation issues regarding importation and exportation of goods, saying the transport sector is indeed vital in tax evasion through combating smuggling.