Friday, April 13, 2012

Are Exports Always Good for a Country?

Malawi produces more sugar than the demand of its population, of course below the extra demand of the region, I guess. Recently Malawi has faced acute sugar shortages in the distribution chain such that Malawians fight,que and buy sugar at higher prices, that keep on changing everyday. Yes few retailers and wholesalers,have taken advantage of this high demand to hike prices to make abnormal profits. Monopolistic behaviour at work. But why this situation when Malawi produces sugar in abundance to meet the demand of its people and quota exports under contract. It is said that most people have resorted into informally exporting sugar to neighbouring countries which is big business to informal cross border vendors. The impact of this is worse at this time because Illovo, the Sugar producing company, is now off season i.e. is not milling sugar as the machines have been shut down or idle (up to mid this month of April). Solutions- Finding solutions to the current sugar shortage is getting funny but serious considering that to the majority a good government is the one that ensures that people have food (food security which includes sugar). Illovo is now importing sugar from Zambia. The government, through the Ministry of Trade and Industry, has taken the responsibility of issuing sugar export licences from Illovo. Ministry of Trade and Industry is closing shops or withdrawing licences of those shops selling sugar at above recommended retail prices. Hopefully we will see more measures coming if the problem persists. What is the best way forward? Before addressing foreign markets companies should address local markets which is to say companies should well compute and estimate demand of their products and produce to meet that demand as this is good for their businesses. Government should also do its part by providing conducive environment for the private sector. Currently Malawi is still having serious forex and fuel shortages because of its poor policies . Yeah, or else traders out there know that demand for sugar is now very high in Malawi, albeit temporarily, you may tap this opportunity. Contact me.

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