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.
Friday, March 2, 2012
Malawi Fuel Woes
The government is now very much uneasy with this persistent fuel problem.
Now you can see that roads are empty (VERY LOW NUMBER OF CARS), markets are empty(VERY FEW SELLERS AND BUYERS), productivity is very low, companies are closing or retrenching employees, peoples faces are hopeless. The ambulances are mainly parked.
Fuel, forex and electricity are indeed very very important to any country.
Strikes are looming. The old thorn in the government flesh i.e the Judiciary strike of 2 months now is gaining momentum instead of ending. The Big Man feels that there is too much unpatriotic conduct in the country, yet he has the majority in Parliament. Now Parliament avoids discussing problems the country is facing. In fact, the parliament particularly the government side claims there is no problem, SAYING now the country is much better than the previous years because of the (monster-like) Zero Deficit Budget (ZDB)
God save mother Malawi
Friday, December 30, 2011
Maize Exports Ban
It has just been done by Ministry of Industry and Trade. Exports of all maize and maize related products are now prohibited. Licences issued to traders are now null and void documents. Why? To ensure food security in the country. What is your view?
Wednesday, December 28, 2011
SADC Markets for Malawi
Direction of Malawi’s Exports in the Region
Key trade partners in the region, in order of scale based on total exports value percentages since 1994, are South Africa, Zimbabwe, Mozambique, Zambia, Tanzania and Botswana. The rest of the SADC countries import very little from Malawi, that is below 1%. Exports to South Africa started declining in 2007 and reached bottom levels in 2010 at 29.9%. Nonetheless over 50% of total Malawi intra-SADC exports were destined for South Africa over the period.
Of the three Malawi bordering neighbours Mozambique, Zambia and Tanzania, it is Mozambique which imported more from Malawi at 13.5% of Malawi’s total exports over the period than Zambia at 8.2%, and Tanzania at 4.9% despite this country having access to the sea like Mozambique and South Africa. Since 2008, Malawi exports to Mozambique and Zambia have been increasing whilst with Tanzania the trend shows that exports are declining.
The trend for Malawi exports to Zimbabwe is that between 2001 and 2005 exports declined because of Zimbabwe’s economic crisis which had followed their political crisis, but since 2006 exports started increasing and have been substantial since then. In 2006 and 2007 Malawi’s main export to Zimbabwe was maize because Zimbabwe had poor grain harvests then while Malawi had excess maize harvests. In 2006 Malawi had signed a bilateral relationship with Zimbabwe that had cleared Malawi exporters’ hurdles to that market. The bilateral agreement which later coupled with the Zimbabwe economy’s slow but steady recovery from the economic crisis propelled increase in Malawi exports to Zimbabwe. Nonetheless, despite Zimbabwe’s economic problems it has maintained the second position as Malawi’s main trading partner in the SADC region.
With the rest of SADC countries it appears that despite most Malawi exports having a revealed comparative advantage, such products do not substantially access markets of these SADC member countries. The major reasons include either small size of their economy or distance which makes land transport costs unbearable. This gives chance for importers in those countries to import from their immediate neighbours who, after all, produce similar exports to Malawi. For Malawi, the SADC Free Trade Area (FTA) has not done much to reduce transport costs in the region.
Key trade partners in the region, in order of scale based on total exports value percentages since 1994, are South Africa, Zimbabwe, Mozambique, Zambia, Tanzania and Botswana. The rest of the SADC countries import very little from Malawi, that is below 1%. Exports to South Africa started declining in 2007 and reached bottom levels in 2010 at 29.9%. Nonetheless over 50% of total Malawi intra-SADC exports were destined for South Africa over the period.
Of the three Malawi bordering neighbours Mozambique, Zambia and Tanzania, it is Mozambique which imported more from Malawi at 13.5% of Malawi’s total exports over the period than Zambia at 8.2%, and Tanzania at 4.9% despite this country having access to the sea like Mozambique and South Africa. Since 2008, Malawi exports to Mozambique and Zambia have been increasing whilst with Tanzania the trend shows that exports are declining.
The trend for Malawi exports to Zimbabwe is that between 2001 and 2005 exports declined because of Zimbabwe’s economic crisis which had followed their political crisis, but since 2006 exports started increasing and have been substantial since then. In 2006 and 2007 Malawi’s main export to Zimbabwe was maize because Zimbabwe had poor grain harvests then while Malawi had excess maize harvests. In 2006 Malawi had signed a bilateral relationship with Zimbabwe that had cleared Malawi exporters’ hurdles to that market. The bilateral agreement which later coupled with the Zimbabwe economy’s slow but steady recovery from the economic crisis propelled increase in Malawi exports to Zimbabwe. Nonetheless, despite Zimbabwe’s economic problems it has maintained the second position as Malawi’s main trading partner in the SADC region.
With the rest of SADC countries it appears that despite most Malawi exports having a revealed comparative advantage, such products do not substantially access markets of these SADC member countries. The major reasons include either small size of their economy or distance which makes land transport costs unbearable. This gives chance for importers in those countries to import from their immediate neighbours who, after all, produce similar exports to Malawi. For Malawi, the SADC Free Trade Area (FTA) has not done much to reduce transport costs in the region.
The SADC FTA Tariff Liberalization Plan
In SADC, trade liberalization was agreed to be asymmetric, because of the different levels of economic development of its membership. SACU has been liberalizing its market faster (front loading) than the other members which were back loading. Differences also in the pace of liberalization were between the countries classified as developing outside the SACU that is, Zimbabwe and Mauritius and LDCs that is, Malawi, Mozambique, Tanzania and Zambia. Zimbabwe and Mauritius were to liberalize faster than the LDCs.
Tariffs liberalization programme is being done progressively in different products:
1. Category A products: mostly capital goods and raw materials with very low or zero tariffs already, comprising about 47 percent of SADC trade, were to be liberalized upon each country’s accession. All SADC FTA members had this category A liberalized to zero soon after the SADC FTA launch.
2. Category B products: a mixed group of products, including intermediate goods, accounting for another 40 percent of the total SADC trade were to be liberalized at different paces for the various country groups over 8 years, i.e. 2001-2008, with South Africa’s liberalization being the fastest and Malawi’s and other LDCs the slowest.
3. Category C products: characterized as ‘sensitive’ products were to start being liberalized 5 years after accession to the SADC FTA and to reach zero % tariffs in 2012. SADC countries listed the following products as sensitive products: sugar, sugar confectionery, beer, textiles and clothing, matches, motor vehicles, footwear, chemicals and plastics.
Sugar, textile and clothing face more restrictive barriers which include quantitative restrictions in the region. There had been a special SADC agreement on textiles and clothing between the SACU countries and Mozambique, Malawi, Tanzania and Zambia (MMTZ) between 2001 and 2005, which covered such product exports from the four countries to their major SACU market to avoid trade shocks. Under the special agreement, Malawi textile companies exported to SACU duty free and with no quota, as long as there had been a two-tariff heading transformation of the article in question. A one-tariff heading transformation attracted quotas for imports into SACU .
Tariffs liberalization programme is being done progressively in different products:
1. Category A products: mostly capital goods and raw materials with very low or zero tariffs already, comprising about 47 percent of SADC trade, were to be liberalized upon each country’s accession. All SADC FTA members had this category A liberalized to zero soon after the SADC FTA launch.
2. Category B products: a mixed group of products, including intermediate goods, accounting for another 40 percent of the total SADC trade were to be liberalized at different paces for the various country groups over 8 years, i.e. 2001-2008, with South Africa’s liberalization being the fastest and Malawi’s and other LDCs the slowest.
3. Category C products: characterized as ‘sensitive’ products were to start being liberalized 5 years after accession to the SADC FTA and to reach zero % tariffs in 2012. SADC countries listed the following products as sensitive products: sugar, sugar confectionery, beer, textiles and clothing, matches, motor vehicles, footwear, chemicals and plastics.
Sugar, textile and clothing face more restrictive barriers which include quantitative restrictions in the region. There had been a special SADC agreement on textiles and clothing between the SACU countries and Mozambique, Malawi, Tanzania and Zambia (MMTZ) between 2001 and 2005, which covered such product exports from the four countries to their major SACU market to avoid trade shocks. Under the special agreement, Malawi textile companies exported to SACU duty free and with no quota, as long as there had been a two-tariff heading transformation of the article in question. A one-tariff heading transformation attracted quotas for imports into SACU .
Malawi Trade Policy (SADC)
Malawi is a member of Southern Africa Development Community (SADC). Malawi joined SADC to have easy access to SADC markets. Is it true now after over 20 years? What is the problem? This blog will provide answers but you also my dear reader.
The SADC Economic Indicators
Eight of the fifteen member countries of SADC are least developed countries (LDCs) , the rest are developing countries with South Africa being the richest economy having 59% share in the collective SADC GDP. Angola's GDP share is 18.3%, Tanzania 4.37% and for the rest their GDP share is less than 3%. Malawi's share is less than 1%.
In 2008 GNI (ppp)per capita in USD puts Seychelles, Botswana,Mauritius,South Africa, Namibia, Swaziland and Angola in that order are ahead of the rest, With their GNI PPP ranging between $19630-$4820 from highest to lowest. Malawi GNI ppp is AT $810. Source World Development Indicators (2010).
SADC countries are in a “spaghetti bowl” situation as far as RTAs are concerned by being members to more than one and overlapping regional trade arrangements. Five countries belong to Southern Africa Customs Union(SACU: South Africa, Botswana, Namibia, Lesotho, and Swaziland. Tanzania also belongs to East African Community (EAC) Customs Union and 9 countries belong to Common Market for Eastern and Southern Africa (COMESA), and these are DRC, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe , which also launched a customs union in 2008.
The SADC Economic Indicators
Eight of the fifteen member countries of SADC are least developed countries (LDCs) , the rest are developing countries with South Africa being the richest economy having 59% share in the collective SADC GDP. Angola's GDP share is 18.3%, Tanzania 4.37% and for the rest their GDP share is less than 3%. Malawi's share is less than 1%.
In 2008 GNI (ppp)per capita in USD puts Seychelles, Botswana,Mauritius,South Africa, Namibia, Swaziland and Angola in that order are ahead of the rest, With their GNI PPP ranging between $19630-$4820 from highest to lowest. Malawi GNI ppp is AT $810. Source World Development Indicators (2010).
SADC countries are in a “spaghetti bowl” situation as far as RTAs are concerned by being members to more than one and overlapping regional trade arrangements. Five countries belong to Southern Africa Customs Union(SACU: South Africa, Botswana, Namibia, Lesotho, and Swaziland. Tanzania also belongs to East African Community (EAC) Customs Union and 9 countries belong to Common Market for Eastern and Southern Africa (COMESA), and these are DRC, Madagascar, Malawi, Mauritius, Seychelles, Swaziland, Zambia and Zimbabwe , which also launched a customs union in 2008.
Tuesday, December 27, 2011
TOBACCO SALES 2011
Tobacco sales this season were the worst. Poor farmers produced more good quality tobacco in return they got peanuts. They could not pay their farm workers. Quarrels were the order of the day. Some poor farmers committed suicide because they could not pay input debts.
The President did not make outburst against buyers as he used to. We simply lost the game. Is it because of anti-smoking lobby. No. a big No. Why?
Our neighbours, Zambia, Zimbabwe and Mozambique were getting better prices. Smugglers who were managing to illegally take their tobacco to the markets were making big profits and wealth. Sad though most of them had their tobacco impounded by the watchful police.
What is their next year? I will report.
The President did not make outburst against buyers as he used to. We simply lost the game. Is it because of anti-smoking lobby. No. a big No. Why?
Our neighbours, Zambia, Zimbabwe and Mozambique were getting better prices. Smugglers who were managing to illegally take their tobacco to the markets were making big profits and wealth. Sad though most of them had their tobacco impounded by the watchful police.
What is their next year? I will report.
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