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Hurdles to the Buy Malawian Strategy

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The Buy Malawi Strategy launched last month is meeting challenges with claims by some local suppliers that major chain stores still prefer importing most of their products at the expense of Malawian made products.

Some of the major distributors of various goods and products, however, blame it on Malawian producers for lacking capacity to meet demand.

But the ministry of Industry and Trade has said government’s responsibility is only to create an environment that is conducive for both local and foreign trading activities to flourish in Malawi.

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“Government does not do business, but regulates business activities in Malawi and attracting as many investors as possible,” said Public Relations Manager in the Ministry, Wiskes Mkombezi.

He also said the private sector is responsible in ensuring that various industries are efficient, compete effectively with foreign companies and are meeting the demand on the market.

“It is pathetic to note that most potentially profitable Malawian products are missing in most shops including at our duty free shops in our airports,” he said

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Malawi’s imports bill has grown drastically and the trade deficit has widened as foreign reserves have declined to critical levels curtailing procurement of vital imports such as drugs, fuel and raw materials for manufacturing, according to the Ministry.

Vision International Tobacco Limited (VIT), a certified local cigarette manufacturing company, challenges, however, that it has the capacity to satisfy demand on the local market.

“We only started our operations in December last year but we are ready to compete fairly on the market by ensuring that our consumers access affordable and high quality cigarettes at all times. We have the capacity because we are ably supplying some major chain stores like Peoples Supermarkets, Chipiku Stores, Sana Superettes, and major wholesalers, retailers, vendors, hawkers and kiosks across the country,” according to Country Manager, Moses Ngwata.

The company buys Malawian Tobacco from the Auction Floors, processes it and then manufactures Fire Lion, Mammuth and Brothers brands of cigarettes all under one roof.

He said, in an interview, that his company is operating in a small cigarette market which only consumes approximately 10 billion sticks per year.

“Our machines have a production capacity of 15 billion sticks per year. This means after satisfying the local demand, we would also be considering to export our product to neighbouring countries and the rest of Africa, Europe, Asia, Middle East, America, and the Far East,” he added.

He, however, decried that some international chain stores still favour importing foreign brands when they can be ably produced locally without wasting the much needed foreign exchange to foreign manufacturers.

“We applaud government for launching the Buy Malawi Strategy and the private sector must take a cue in fully supporting the initiative,” Ngwata said.

Any initiative that adds value to our locally available raw materials such as tobacco is beneficial to the country, according to Mkombezi.

“Value addition creates employment and makes the product a high value product as compared to a raw product. A cigarette is a high value product compared to raw tobacco. As such the price for cigarettes is higher. This also opens up opportunities for exporting cigarettes and generating foreign exchange for the country. Cigarettes are also one of the highly taxed products which in turn results into increased revenue collection by MRA,” he said.

He appealed to Malawians to hold hands together in making sure the Buy Malawi Strategy is a success by changing their mind sets towards goods and services produced in Malawi as a successfully implemented BMS will yield enormous economic and social gains.

“Other countries are supporting their own products, why can’t we do the same here? There is an opportunity for all Malawians to participate in our own economic transformation by providing the much needed demand for locally produced goods and services. We have the chance to stabilize the Kwacha; we have the chance to create jobs for the youth and we have the chance to make Malawi shine among the community of nations. But only if we buy Malawian,” says Mkombezi.

Game Stores Shop Manager in Lilongwe, Basiamisi Mokwape, dismissed claims that his shop may be one of the chain stores shunning Malawian products saying manufacturers and suppliers of various products do not have the capacity to meet local demand.

“We give them prime space on which to fill their products. The space may remain full for a short period but they never come back to place fresh orders. They do not even come back to monitor if their product is running out so they can replenish with more supplies. We have the capacity to pay them but they do not have the capacity to supply,” Mokwape said.

He said some shelves allocated to Malawian suppliers would remain empty for several months without being refilled “and their owners even shun our phone calls so that we can restock their products”.

“We cannot afford to keep empty shelves. They reflect badly on our image and it is expensive to keep empty shelves. That is why we opt to import most of the products which we can locally source,” he said.

According to Shoprite, the supplier selection is determined by a number of factors including legal registration and proof of MBS and GS1 certifications, the supplier’s distribution capacity, as well as the supplier’s willingness to provide quality goods consistently and to build a long-term mutually beneficial relationship. Regular monitoring and evaluation of local suppliers is undertaken to ensure that consistent quality standards are met.

“The business not only sources a majority of its goods locally, but also supports grassroots suppliers with preferential payment terms, marketing support and guidance to help them grow their businesses. Shoprite has partnered with established local business to pack our own Private Label products locally, instead of importing these products from other countries. This objective of sustainable sourcing is grounded in constant engagement with local businesses to formulate strategies for mutual benefit and ultimately growth,” said Shoprite’s Sarita Van Wyk from the company’s communications office in Cape Town, South Africa.

Some of the notably glaring empty shelves in Game Stores included those of Nali products, Chombe Tea, Mhinge Herbal Teas, Kamba puffs and others. Some of the products are Malawi’s flag carriers on the International Market but are not available even in strategic locations as the duty free shops at either Kamuzu or Chileka international airports.

Nali Limited Managing Director, Monica Khoromana Unyolo, confirmed her company has been failing to adequately supply most outlets in the country because of inadequate raw materials in the country.

“Our major challenge is climate change. Farmers are not able to grow and supply us with adequate volumes of chilies which are our major raw material. The rains have been very erratic in the past few years adversely affecting our industry. That is why you don’t see our products in many shops,” Khoromana Unyolo said.

She called on relevant authorities and government in particular, to intensify irrigation farming to revive production of various crops including chilies which do not even require any fertilizers.

President of the Indigenous Businessmen Association of Malawi (IBAM), Mike Mlombwa, said consumers tend to favour foreign products because of their attractive packaging and their fair prices. Malawian traders’ problems, on the other hand, are also compounded by lack of financing from lending institutions to promote their enterprises.

“Our products like vegetables and fruits are poorly packed and the banks tend to favour foreigners when approving loans. The other sad development is that some booming Malawian owned companies go as far as selling their product recipes to foreign competitors. All these factors militate against good initiatives like the Buy Malawi Strategy,” he lamented.

The Buy Malawi Strategy is aimed at encouraging consumption of locally produced goods and services and to increase participation of local suppliers in national tenders.

The strategy has a mid-term and terminal evaluation. The evaluations would dictate the next course of action to be taken after the strategy’s implementation duration expires in five years.

However, we can confidently say that the actions the strategy is proposing are very important for Malawi. It is a strategy that proposes actions that lead towards job creation, economic growth, foreign exchange rate stability and economic empowerment which, in our view, is sustainable,” said Mkombezi.

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