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.

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.

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.

After 7 years of launching and implementing the Buy Malawi Strategy, Government and Malawian business operators will March 18 commemorate the initiative by showcasing a wide spectrum of locally produced products at the Gateway Mall in the capital city, Lilongwe.

The Malawi Government through the Ministry of Trade and Industry introduced the strategy as a way to promote production and consumption of locally produced goods and services.

Led by the Minister of Trade and Industry, Mark Katsonga, government is calling on local residents, visitors and travelers to celebrate the day, which has become an annual event, by buying and consuming locally produced goods products and services.

“The Buy Malawi Day is an important foundation of the Buy Malawi Strategy, which boosts the production and consumption of locally produced goods and services,” says Katsonga.

The minister points out that apart from instilling patriotism, the culture and lifestyle of embracing local products ”will substantially stimulate competitiveness of local firms, industrialization and, job creation.”

Katsonga advises local industries to intently seek produce or service feedback from both their individual and corporate customers in order to get relevant input so that they keep improving and building their competitiveness and satisfying the needs of their local and export markets.

As one way of showcasing local identity and oneness, Katsonga urges all private firms and all institutions to set aside a particular day or days of the commemoration week to wear locally made clothes to foster the Buy Malawi Strategy as well as to empower local designers and tailors, who make up a good proportion of local micro, small and medium entrepreneurs.

He calls on commercial banks to take a vigilant role in the promotion of the strategy by facilitating affordable financial services to innovative enterprises that produce goods and services locally.

He further appeals to land authorities across the country to prioritize allocation of pieces of land to enterprises and investors that intend to promote local products for both the local and international markets.

“Public servants should continue wearing clothes designed and manufactured in Malawi every Friday,” the minister says adding wholesalers, retailers and general distributors must ensure adequate stocks and visibility of local merchandise in visible shops.

According to a draft report of the Malawi FinScope 2019 indicates that Micro, Small and Medium Enterprises in the country continues facing challenges including low information technology penetration and low investment in research, science and technology.

Despite the challenges faced in the sector, the report show that the MSMEs in Malawi contribute a significant share of employment.

The overall Malawi MSME sector is estimated to consist of 1,141,784 business owners registering an increase of about 50 percent from 758,758 in 2012.

About 11 percent of the population own MSMEs and employs approximately 1,825,219 people 1,260,118 in 2012.

Standard Bank has forecast that Malawi’s economic recovery will continue in 2022 with growth forecast to reach 4.1% driven by rebounds in manufacturing, mining and quarrying, construction, transportation and electricity, gas and water supply.

In a statement announcing financial results for the year ended December 31, 2021, the Bank, however, says despite the economic growth prospects, the pressure on the exchange rate will likely continue on the back of weak foreign exchange supply.

“Upward pressures on inflation rate will likely remain in the first half largely driven by supply constraints,” states the Bank.

In the year under review, the group says it continued to operate in a challenging operating environment as the demand for foreign currency continued to outweigh supply.

“This resulted in the depreciation of the Malawi kwacha and the expectation is for the Kwacha to depreciate further as we head 2022. Covid-19 also continued to affect business which in turn impacted credit growth and transactability,” reads the statement

The domestic economy is estimated to have grown by 3.9% in 2021 from 0.9% in 2020 following solid performance in the agriculture, mining, quarrying and construction sectors.

 In response to rising oil prices, global supply chain constraints and seasonal fluctuations in domestic food prices, global supply chain headline inflation picked up in the year and averaged 9.3% compared to 8.6% in 2020.

 The Kwacha depreciated against the United States dollar by close to 6% in 2021compared to about 3% in 2020 owing to weak foreign exchange supply.

Standard Bank’s profit after tax of MK24.8 billion was 4% above the prior year, and total revenue grew by 31% year on year driven by growth on both net interest income and non-interest revenue

One of the local insurance firms in the country, General Alliance Insurance Limited says it is committed to work with different stakeholders in conserving environment through afforestation.

The company’s head of corporate affairs, Pamela Mazengela made the remarks during a tree planting exercise in Michiru Forest.

The campaign sponsored by General Alliance Insurance Limited, with 2,000 tree seedlings is promoted by Sustain Green Campaign.

According to Mazengela the 2,000 seedlings are an initial contribution for this year’s tree planting season. Other contributions are expected to be made to various stakeholders across the country.

She said; “We donated trees to sustain a green Malawi as part of our corporate social responsibility and giving back to the environment having realized the impact of carbon emissions from the vehicles we insurer has on the environment.”

“This is just a preamble as we plan to plant trees in Blantyre, Lilongwe Mzuzu and Zomba.”

In her remarks, Idah Mbalume who is a plantation manager at Michiru forest commended General Alliance for the gesture saying that it has complimented their efforts in restoring vegetative cover of the forest which has encountered several setbacks in previous years.

Mbalume said; “It is imperative that corporate entities like General Alliance are coming our way with these tree planting exercises which is very welcoming, as it helps us to save on labour costs since we have limited capacity to recruit more labourers to work on this forest.”

“As Michiru forest we intend to plant at least 20 thousand tree seedlings during this year’s tree planting season, and I would therefore urge other companies to emulate the good gesture portrayed by this insurance firm in giving back to environment.”

The Sustain Green Campaign which runs under hashtag #Plant4TheFuture initiative,  is comprised of 22 young people who found synergy on creating solutions for reforestation and their goal is to plant 1million trees across Malawi in areas highly affected with deforestation as well as creating awareness in primary schools by involving students to plant trees at the campus and in their homes.

The US$5 million Chintheche 5-Sstar hotel project by Countrywide Hotels & Resorts Limited, a subsidiary of Countrywide Group of Companies (CWG) seeks an investor to enter into a 70:30 rate joint venture partnership arrangement.

According to Mike Mlombwa, the CWG Group chairperson, the market feasibility study of the 400 square metres ecofriendly water and resort themed beachfront establishment situated along the northern shores of Lake Malawi shows a 30 percent Internal Rate of Return.

He said having already completed both the technical feasibility documents and technical designs, CWG is now waiting for an environmental impact assessment to be conducted.

 “We expect that activities at the hotel will yield spill over benefits to surrounding communities by providing a readily available market for their fishing and farming activities as well as promoting different value chains to do business and generate sustainable revenues from the hotel.

“The project aims at complimenting government efforts to ensure that tourism brings meaningful economic benefits to the people of the country,” he said.

Once completed, the hotel, which is expected to create over 200 jobs for Malawians, will have accommodation, conference facilities and various water sport activities such as kayaking, snorkeling, cruise boat rides among others.

Mlombwa said CWG is also constructing 3 other hotels in Blantyre with a 40-roomed 3-Star portfolio placed along Chirimba road near Chileka roundabout 5km away from Chileka airport.

CWG is an indigenous Malawian conglomerate which has been operating businesses in the country for over 20 years incepted with the group’s flagship Car hire business.

Sycamore Credit Limited, one of Malawi’s fastest growing microfinance institutions, has earmarked the country’s Micro, Small Medium Enterprises (MSME’s) as a priority sector for its wide ranging credit facilities.

The company’s Managing Director, Audrey Mwala, said the business growth experienced in the past year has necessitated expansion of services to accommodate a diverse range of clients seeking reliable and affordable services.

“In 2021, we introduced a new package targeting micro enterprises that are involved in selling of day to day consumables including vegetables,” she stated explaining that the initiative was one of the company’s biggest strides in ensuring financial inclusion.

Despite being affected by client failure to timely settle loan repayment targets, Mwala, stressed that Sycamore Credit Limited will continue to counter some of the Covid-19 knock-on effects on MSME’s by being more innovative.

“The unstable business environment experienced by our clients due to the pandemic has negatively reflected back to us,” she said pointing out that her company intends to expand its group lending facility to ensure that SME’s needing credits are adequately assisted.

She said Sycamore Credit Limited has since secured a special credit facility through the private sector led Malawi Industrial and Agriculture Corporation (MAIIC), which will facilitate access to financial services for deserving SME’s who have formalized their enterprises.

Mwala appealed to SMEs to formalize their businesses to win support from different microfinance institutions because they lack proper identification.

Sycamore Credit Limited opened its doors for operations in 2018 when it started to provide credit solutions to salaried employees, MSME’s as well as informal businesses.

The Malawi Confederation of Chambers of Commerce and Industries (MCCCI) has advised government to review some of the existing taxes in the forthcoming 2022/2023 national budget in order to stimulate private sector growth.

The recommendations were issued by MCCCI president, James Chimwaza, during a pre-budget consultation meeting called by the Ministry of Finance

MCCCI proposes the removal of some general and specific domestic tax measures such as excise tax, value added tax (VAT) and withholding tax.

He said government should also consider providing incentives that will promote usage of alternative sources of energy amidst the current power deficit due to lack of sustainable sources of energy.

Chimwaza further suggested the review of excise duty on alcoholic beverages to curb beer smugglings saying the current system is counterproductive. He also recommended the abolition on withholding tax on farm produces to bring consistency and fairness on the market.

“When ADMARC is purchasing produce from local farmers they do not deduct withholding tax while when private businesses do so they pay. This puts private business at a disadvantage,” he said

The MCCCI president further proposed the downward review of the 20 percent withholding tax on gross sales to 10 percent for small and medium enterprises (SMEs). He also observed that the export allowance calculated at 25 percent of profits from exports was not attractive enough for exporters

“To make export allowances attractive for exporters, we propose a review of the current provision which is based on taxable profits according to Taxation Act to change to export proceeds,” he noted

In his comment, Minister of Finance Felix Mlusu acknowledged the issues raised saying that government will rectify some of the concerns.

Mlusu reminded participants that his ministry recently launched the Domestic Revenue Mobilisation Strategy, as a tool to ensure transparency around the administration of tax and non-tax policies.

The minister stressed government’s desire to continue fostering inclusiveness of the private sector in national development through the creation of a conducive business environment.

He pointed out that for the country to address its foreign exchange challenges, government has launched the Second National Export Strategy which encourages the private sector to industrialise as well as to generate foreign exchange earnings through exports.

Malawi offers a wide range of tax incentives with the aim of encouraging development, enhancing output, earning and saving foreign exchange and expanding employment opportunities.

These tax incentives are aimed at enabling businesses to grow and expand their operations thereby contributing to the overall social-economic development of the country.