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GAME CHANGER— Pyxus groundnuts factory

INAUGURATED THE PROCESSING PLANT DURING THE
LAUNCH—Chakwera

By Dumbani Mzale, contributor

Perusing the 64-page Malawi 2063 (Mw2063) document, the word ‘industrialisation’ is pervasive throughout.

In fact, the new vision— which replaced Vision 2020 and is Malawi’s second long-term national development masterplan—has one key underlying objective.

The document seeks to transform Malawi into a wealthy and self-reliant industrialised ‘upper-middle-income country by the year 2063.

Going by the dream, it is envisaged that annual earnings for each Malawian or gross national income (GNI) per capita could rise to between $4,046 (K3.5 million) and $12 535 (about K11 million), which is the range the World Bank places upper-middle-income economies.

But the new vision is even more ambitious. It clearly states that if the country were to be more innovative and productive, both the low and upper-middle-income statuses will be reached even much earlier.

To achieve such a feat, the blueprint demands that the structure of Malawi’s economy should be changed from a predominantly importing to an industrialised exporting economy.

The Mw 2063 document acknowledges that Malawi’s journey to industrialisation has not been all rosy over the past years.

There has been an embarrassing drop in the manufacturing sector over the past 25 years—which amounts to what others term de-industrialisation.

Some mind-boggling reversal has been unfolding on the ground during the period under review.

The service sector, whose contribution to job absorption rates in Malawi is much lower than manufacturing—is the one recording more growth rates than manufacturing, a status quo which the African Development Bank (AfDB) observes is countering efforts to industrialise the nation.

On one hand, the share of employment in the industry has steadily declined while that of the services has increased over time.

Tellingly, it speaks volumes that despite paper efforts to add value to raw products especially those from agriculture and the extractive industry, there has been very little progress in that direction, and that has been costly to the economy.

In the past, the challenge to realise the industrialisation dream was exacerbated by high-interest rates, macroeconomic instabilities, high transportation costs, weak industrial linkages, sharp declines in power supply as well poor policy environment.

Other impediments that have led to industrial stagnation include high production costs due to inefficiencies in energy and transport; poor standards leading to non-competitive products on international markets, lack of appropriate skills and uptake of technology, high costs of doing business and deficient enabling infrastructure, and low access to export markets and non-conducive environment for the growth of small and medium scale enterprises (SMEs).

And statistics paint a melancholic past not worth cherishing. Industrial production growth in Malawi only averaged 4.55 percent from 2008 until 2017, which was below the level of growth necessary to sustain gross domestic product (GDP) growth, according to the review document of the expired Vision 2020.

Industrial production only increased 38.57 percent in August 2017 over the same month in the previous year of 2016.

Ray of hope now beaming:

Now it’s exactly a year and two months since the launch of the Mw 2063 but already, the narrative on the ground appears to be slowly but tangibly manifesting. The Mw 2063 was launched on January 19, 2021, by President Lazarus Chakwera in Lilongwe.

The blueprint places industrialisation as a second pillar and vividly suggests that: “We shall have a vibrant knowledge-based economy with a strong manufacturing industry driven by productive and commercially vibrant agriculture and mining sectors.”

It emphasises that Malawi will pursue an industrial revolution driven by strong human capital and the utilisation of local resources.

It is against such a background that a typical epitome of an industrialisation drive currently unfolding into reality was manifested last week when President Chakwera inaugurated a state-of-the-art groundnuts processing plant at Kanengo in Lilongwe. The plant is poised to create about 2,000 jobs and has the potential to increase income levels for an estimated 30,000 people.

To many, this is a key ingredient in the industrialisation concoction, currently swirling in the Capital Hill kitchen.

The factory, owned by Pyxus Agriculture Limited (Malawi), a subsidiary of New York Stock Exchange-listed Pyxus International, is the largest food processing plant in the region and the second-largest biggest in the continent with a processing capacity of 50,000 metric tonnes of groundnuts in a working day.

Already, the processing plant, situated in the middle of Kanengo Industrial Area and is sandwiched by other tobacco processing plants, has contracted close to 7,000 farmers to supply produce for value addition. This is exactly the ‘gospel’ being preached in the Malawi 2063 ‘bible.’

The plant, according to Chakwera, is a landmark achievement in the whole industrialisation campaign.

“Food processing businesses like this one are music to my ears because they guarantee markets for our farmers and growers, as well as jobs for our youth. It is no small thing that this food processing plant is the largest in the region,” he said.

The first citizen is pretty much aware that such initiatives have myriad trickle-down effects on the domestic economy.

He said, for example, food processing businesses offer other multiply effects as they offer opportunities for packaging, machinery and equipment suppliers, thus creating forward and backward linkages that are critical to growing the economy.

By contracting close to 7,000 farmers, Chawera said Pyxus has modelled the kind of coexistence between SMEs and big companies that his government will champion going forward, as the country moves towards becoming a middle-income economy, enshrinement in Malawi 2063.

Minister of Trade and Industry Mark Katsonga was also positive about the route that the Tonse government has taken towards industrialisation.

He explained that the new processing plant is in tandem with the second National Export Strategy (NES 11), which is designed to double the current exports value. NES 11 was launched by Chakwera in Dec ember 2021.

Katsonga said the initiative would also help the country generate more tax revenue while also generating more foreign exchange among other spillover effects. According to the legislator, it is important for several other private sector players to emulate the Pyxus example by bringing more of such huge investments in Malawi.

To many experts including Gowokani Chijere-Chirwa who teaches economics at the University of Malawi in Zomba, the story of a Pyxus plant in Lilongwe opens ajar a window of industrialisation opportunity which Capital Hill must cherish and nurture, at all cost.

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