It is disheartening to note what is happening in my own country that a whole Minister is being disrespected in broad light infront of cameras.
I commend the Minster of Trade and Industry is his efforts to combat Sugar hoarding. However, I this task needs more consequence management and its root cause lies with how the industry is structured in Malawi.
It is a shame as a country that the entire Sugar distribution, which is supposed to be in the hands of local Malawian business as was the case before 1994, is now in foreign hands.
There has to be a proper criteria of whom we define as foreign investors and which sectors need protection for Malawian business participation.
I really question how as a country we are issuing Sugar distribution business licences.
The Sugar is produced in Malawi, and by Malawian workers in the field, in its entire value chain, but what is being exposed as those running its distribution in Malawi needs serious reflection at political leadership level.
In Malawi, under SUCOMA, which was Sugar Corporation of Malawi, the entire value chain to the retail market benefitted Malawi.
I vividly remember that one prominent politician than later became President of Malawi was once a Sugar Ballon, for the tonnes he was responsible for distribution. Nothing wrong with this, for he is an indigenous Malawian business person.
I know several indigenous Malawians that were involved in this distribution and at no time was there issues of Sugar hoarding of the current scale in Malawi.
Surely, Sugar distribution is not an area that requires foreign investors from an Asian country.
The issue should be about what the Malawi Government has done is setting operating conditions for Ilovo that it seems Sugar distribution is now a ” foreign investors ” space.
I would, therefore, recommend the current Malawi Government, through the Minstry of Trade and Industry in the following:
1- Engage Illovo openly on the distribution model that seem to be foreign dominated
2- Review with Ilovo how such distribution licences were issued, and how trading licences were provided to by Malawi Government to foreign traders?
3- Work on a new distribution model that limits foreign participation with preference to indigenous Malawi business as was the case under SUCOMA before 1994.
4- Malawi produces almost 300 000 metric tonnes of sugar annually, and 97% of it is exported to the disadvantage of local consumption. Why is Malawi Government allowing this trend?
I would like to enlighten my fellow Malawians that Sugar prices are administered on the international market, the prices can be lucrative on the global market in USA dollar terms per tonne, than on the local Malawi market. However, it is the responsibility of an Government to ensure that the local market is satisfied and protected. In South Africa, where Ilovo also operates, the industry is highly regulated under The South African Sugar Association (SASA).
This is an area that requires attention from Malawi Government on enforcement or strethening regulation. For sure most of the Sugar in these warehouses in Malawi is heading to international markets that do not even benefit Malawi even in forex earnings due to externalization. Having all those caught hoarding Sugar being “foreign investors ” is what as Malawians must force a review.
It’s obvious that the very same Sugar that Malawians are involved in producing in its entire value chain, has its intended purpose to serving the interest of ‘foreign distributors”…in international markets against local consumption.
While I commend Minister Mumba for his efforts, he is addressing symptoms of a dysfunctional Sugar industry in Malawi, that requires proper regulation or enforcement therof.
I recommend Minister Mumba to use the tools of his Ministry and engage Illovo openly; and review the entire Sugar distribution in Malawi. That is where the problem eminent.
Chifipa Mhango is the Chief Economist at Don Consultancy Group
