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  • African PlatformMalawi

     

    Country information

    A small intensely rural, agricultural economy. Agriculture contributes 36% of the GDP and employs more than 80% of the total labour force.
    Country Size: 118,485 square kilometres
    Population: 12 Million
    Currency: Malawi Kwacha (MK)
    Languages: English
    Capital City: Lilongwe
    GDP (US$): 2 billion
    Economy - Overview: A small intensely rural, agricultural economy. Agriculture contributes 36% of the GDP and employs more than 80% of the total labour force.
    Main Economic Sectors: Agriculture, Manufacturing, Fisheries, Tourism.
    Main Exports: Tobacco, Tea, Sugar, Coffee, Rice, Apparel, Pulses.
    Main Imports: Major petroleum products, Vehicles, fertilizers, iron or steel, electrical machinery, equipment, Pharmaceutical products, Dairy products, Mineral fuels.
    Industry (Main Industries): Tobacco, Manufacturing, Tourism.
    Natural Resources: Land, Abundant water, Fish, Livestock, Wildlife and Forests, Human resources with reasonable agricultural skills.
    Agriculture (Main Products): Tobacco, Tea, Sugar, Coffee, Maize, Groundnuts.
    International Organization Member: UN, SADC, COMESA , WTO, OIE (International Animal health Organization)
    Infrastructure: 2 international  airports, good road network even in rural areas, Lake Malawi waterway,  good communication facilities.
    Other: Climate-normally warm, cold in winter (May-August).
    Rainfall-600 to 3000 mm per annum depending on location and altitude.

    Livestock

    Cattle Population: 800,000
    Sheep Population: 103,000
    Goat Population: 1,700,000
    Camel Population: None
    Other Population: 570,000 (donkeys, rabbits, pigs)
    Cattle Off Take Rates: 27%
    Sheep Off Take Rates: 43%
    Goat Off Take Rates: 64%
    Livestock Policy: To sustain modern livestock breeding & production to meet domestic demand for animal products such as meat and dairy products through provision of sustainable animal health and livestock extension services. The Government has also a deliberate policy of broadening livestock ownership to the rural community so that the livestock sector contributes to poverty reduction efforts and food security. The animal health policy emphasises surveillance and prevention of spread of trans-boundary , trade sensitive livestock diseases to safeguard the livestock industry.
    Slaughter Facilities: Number of abattoirs: 3
    Slaughterhouses: 24
    Slaughter slabs/places>200

    Industry profile

    Hides and skins

    Tanning

    Footwear

    SWOT analysis

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     Hides and skins

    Quantity Hides: 210,000
    Quantity Sheep: 45,300
    Quantity Goat: 1,101,377
    Annual Collection Level Hides: 190,000
    Annual Collection Level Sheep: 43,030
    Annual Collection Level Goat: 1,046,300
    Flaying Methods: Hand flaying (using flaying knives ); flaying by pulling, pneumatic de-hiders.
    Preservation Methods: Air (ground) drying, Frame/Suspension drying; Wet salting.
    Grading Systems, available grades and percentage of Each: Grade I: Abattoirs (hides): 60% / Abattoirs (skins): 75% / Smallholder (hides): 30% / Smallholder (skins): 80% / Export sector (raw): 40%

    Grade II: Abattoirs (hides): 10% / Abattoirs (skins): 10% / Smallholder (hides): 10% / Smallholder (skins): 10% / Export sector (raw): 40%

    Grade III: Export sector (raw): 20%

    Grade IV: Smallholder (hides): 10%

    Reject system: Abattoirs (hides): 30% / Abattoirs (skins): 15% / Smallholder (hides): 50% / Smallholder (skins): 10%
    Hides & skins trade channels: Farmer to Butcher/Abattoir to Collector/Buyer to Trader to Exporter.
    Abattoirs also export directly to international & regional markets.
    Market (%): 80% International and 20% Regional & local (only raw hides and skins)
    Regional (Tanzania, Zambia, South Africa, Zimbabwe)
    International (Hong Kong, China, Italy, Greece, Portugal)
    Annual Export Value (US$): 2000: US$210863
    2001: US$340000
    2002: US$321000
    2003: US$315000
    2004: US$858000
    Average market Bovine price: Hides: US$ 5 Hide(raw, cured) / US$ 4 (raw, green)
    Average market Sheep price: Skins: US$ 0.5 piece (raw, cured) / US$ 0.4 (raw, green)
    Average market Goat price: Skins: US$ 0.5 piece (raw, cured) / US$ 0.4 (raw, green)

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     Tanning

    Number of Tanneries: 1 (not operational currently)
    Installed tanning capacity: 300 hides/day
    3000 skins/day
    Tanneries in Operation: None
    Utilized capacity: Not applicable currently, but it used to be 70% utilization capacity.
    Output of the industry: Pickled: None
    Wet blue: None
    All went through to finished leather
    Crust: None
    Finished: 77,000 sqft of finished leather/year
    Number of employees: 60, at the time it was operational
    Market (%): 100% local (local Bata & Phazi Shoe Companies) for finished leather and could not satisfy the local demand by the only two Leather manufacturing companies then, Bata & Phazi Shoe companies and Leather Association of Malawi.
    Estimated Annual Export Value (US$): None. All is domestically consumed. Actual annual value: US$5,026,850.

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     Footwear

    Number of Footwear Factories: 2
    In Operation: 2, however, one now only manufactures plastic kitchen wear and the other one (Bata Shoe Company) currently only manufactures plastic shoes.
    Manufacturing capacity: Phazi Shoe factory: Installed: 10000 pairs/month and utilized: 6000 pairs/month (60%) when it was operational.

    Bata Shoe Company: Installed: 60000 pairs/month and utilized: 35000 pairs/month
    Number of employees: Phazi: 70 employees; Bata: 126 employees
    Market (%): 100% domestic (local) market
    Estimated Annual Export Value (US$): None

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     SWOT Analysis

    Strengths:
    • A fairly sound macro-economic policy
    • Stable and democratic political environment
    • A thriving livestock industry
    • Absence of trade-sensitive livestock diseases
    • Existence of community structures that offer a conducive environment to undertake community-based activities aimed at improving the hides and skins sector and
    • Presence of good communication facilities and presence of a good extension system for delivery of livestock services.
     
    Weaknesses:
    • Inadequate quality material
    • Limited formal knowledge in hides, skins and leather issues
    • Inadequate capacity in the sector
    • De-motivated government extension staff
    • Lack of value addition to the raw material
    • Inadequate/crumbling slaughter house infrastructure
    • Low disposable income of the population (widespread poverty)
    • Weak institutional support
    • Weak and unreliable markets
    • Inadequate conducive policies to support the sector
    • Inadequate  enforcement of regulations in the hide and skins trade.
     
    Opportunities:
    • Abundant raw materials
    • Unexploited industry
    • Very healthy competition in the field (collection of Hides and Skins)
    • High local demand for finished leather for artisan manufacturing of leather articles
    • Fairly good investment environment for the sector
    • Cheap labour force
    • An emerging middle class society that is fashion conscious
    • A highly liberalized economy and renewed interest of the donor community in the livestock sub-sector
    • Some signals of strong political will to support the sector.
     
    Threats:
    • Chaotic markets
    • Too many foreign buyers on the market who compromise on quality
    • Lack of investment in the sector
    • High staff attrition in the livestock sub-sector due to the HIV/AIDS pandemic
    • Unregulated, massive imports of second hand shoes and other leather goods
    • A dwindling livestock population
    • A booming plastic shoe industry
    • Unregulated trade in the leather sector
    • Strict environmental and sanitary demands/regulations on the international market.

    Government policy

    Fiscal Policies: 17.5 % VAT, a very small export levy on Hides and Skins (US$ 20 per 50Kg of hides and US$ 45 per 50 Kg of skins) 30%  corporate taxation since July 2001.
    Monetary Regulations: 100 % repatriation of dividends and profits declared on any investment. However, Investment must be registered with the with the Central Bank of Malawi. Even management agreement fees can be repatriated. Free exchange control mechanism in place (no Government control on exchange rates).
    Trade regulations: Free trade zones (SADC & COMESA) , a small export levy on raw hides and skins (3 %), Trade in Hides and Skins regulated by the Hides and Skins Trade Act(restricts trade in Hides and Skins unless with a valid Buyers and/ or Exporters licence), no restriction on exports or imports of leather and leather products and most other products since it is a liberalized economy. Sometimes, occasional export restrictions are imposed to safeguard infant industries and strategic staple commodities.

    Investment environment

    Requirements For Foreign Investment / Joint ventures: Business proposal / Investment profile required, the size of the investment (minimum : US$ 50,000), Identity of local partners, application for investment certificate to Malawi Investment Promotion Agency (MIPA).
    Tax Incentives: General Incentives:
    •   Additional 15% allowance for investments in designated areas of the country
    •   Allowance up to 20 percent for used buildings and machinery
    •   50% allowance for qualifying training costs
    •   Allowance for manufacturing companies to deduct all operating expenses incurred up to 24 months prior to the start of operations
    •   Zero duty on raw materials used in manufacturing
    •   Indefinite loss carry forward enabling companies to take advantage of allowance
    •   Agreement for the reduction of withholding taxes on remittance and payments
    •   Low wage rates and a stable social and political environment
    •   40% investment allowance on qualifying expenditure for new buildings and machinery

    Export Incentives:

    Incentives for establishing operations in an Export Processing Zone (EPZ) include:
    •   No withholding tax on dividends
    •   No duty or capital requirement and raw materials
    •   No excise taxes on purchases of raw materials and packaging materials made in Malawi
    •   No surtaxes (VAT)
    •   Zero corporate tax rates

    Incentives for manufacturing in bond include:
    •   Export tax allowance of 12% of export revenues for non-traditional exports
    •   Transport fax allowance equal to 25% of international transport costs, excluding traditional exports
    •   No duties of imports of capital equipment used in the manufacture of exports
    •   No surtaxes
    •   No excise taxes or duties on purchases of raw material and packaging materials
    •   Timely refund of all duties (duty drawback) on imports of raw materials and packaging materials used in the production of exports.
     
    Free Trade Zones: SADC, COMESA free trade zones, Export processing trade zone facility available.

    Institutional support

    Institute Name
    Malawi Investment Promotional Agency (MIPA)
    Malawi Chamber of Commerce & Industry (MCCCI)
    Malawi Export Promotion Agency (MEPC)
    Malawi revenue Authority (MRA)
    Food and Agriculture Organization (FAO)
    Reserve Bank of Malawi (RBM)
    Ministry of Agriculture
    Leather Association of Malawi (LAM)
    Ministry of Trade & Private Sector Development

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     Malawi Investment Promotional Agency (MIPA)

    Contact Name: Mr. Kapwereza Banda
    Job Title: General Manager
    Address : Aquarius House, First Floor
    P.O.Box: 302 Zip: 3
    City: Lilongwe
    Country: Malawi
    Phone1: 265-01-770 244 Phone2: 265-01-772 236
    Fax: 265-01-770 680    
    Email: mipall@malawi.net
    Website: http://www.malawi-invest.net
    Activity:
     Other Government body  
    Presentation of the institute: MIPA's promotes, attracts, encourages, and facilitates local and foreign investment in Malawi. MIPA is  responsible for:
    •   Developing  favourable investment image regionally and internationally
    •   Investment promotion missions
    •   Recommending to government changes in statutory and administrative framework relevant to investment climate.
    •   Facilitating the  investment process
    •   Providing courtesy service to investors
    •   Furnishing information on investment in Malawi
    •   Identifying partners for joint venture business opportunities
    •   Working with local and international financial institutions for investors  benefit
    •   Encouraging existing investors to expand or start new investments
    •   Consulting private sector organizations for informed recommendations concerning investment climate.

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     Malawi Chamber of Commerce & Industry (MCCCI)

    Contact Name: Mr. C. Kaferapanjira
    Job Title: Chief Executive
    Institute Name: Malawi Chamber of Commerce & Industry (MCCCI)
    Address : Chamber House
    P.O.Box: 258    
    City: Blantyre
    Country: Malawi
    Phone1: 265-01-671 431 Phone2: 265-01-671 988
    Fax1: 265-01-671 147 Fax2: 265-01-673 211
    Email: mccci@eomw.net
    Website: http://www.mccci.org
    Activity:
     Chamber of Commerce  
    Presentation of the institute: MCCI's  main objectives:
    •   promote trade, commerce and industrial development in a competitive and minimally regulated business environment
    •   assist business community by promoting and advocating for conducive  business environment
    •   encourage competition in the economy
    •   strengthen the efficiency of production and distribution of goods and services
    •   secure possible conditions for freedom of Trade
    •   facilitate expansion of the base for entrepreneurship
    •   advise Government on matters relating to business and socio-economic impact on society
    •   promote interests of the business community
    •   make representations to Government or any competent authority to promote and develop Trade and Commerce.

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     Malawi Export Promotion Agency (MEPC)

    Contact Name: Mr. George H. Midiani
    Job Title: General Manager
    Address : Kanabar House, 2nd Floor , Victoria Avenue
    P.O.Box: 1299    
    City: Blantyre
    Country: Malawi
    Phone: 265-01-620 499    
    Fax: 265-01-635 429    
    Email: mepco@malawi.net
    Website: http://www.malawi.epc.com
    Activity:
     Other Government body  
    Presentation of the institute: MEPCs objective is to achieve and maintain positive annual growth in the volume and value of exports and increase contribution of non-traditional products to that growth. Main functions  are:
    1. promote export of agricultural and manufactured goods
    2. coordinate operations of  statutory bodies and other persons directed towards  export of Malawi products
    3. gather, collate and make available to exporters in Malawi export information and statistics
    4. organise and operate trade fairs inside or outside Malawi, organize and arrange representation by Malawi exhibitors at trade fairs organized by other bodies in Malawi and elsewhere and
    5. implement Government Export policy.

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     Malawi revenue Authority (MRA)

    Contact Name: Mr. Phiri
    Job Title: Commissioner General
    P.O.Box: 247    
    City: Blantyre
    Country: Malawi
    Phone: 265-01-620 048    
    Fax: 265-01-622 588    
    Email: clifhiwa@yahoo.net
    Website: http://www.mra.mw
    Activity:
     Other Government body  
    Presentation of the institute: The Malawi Revenue Authority (MRA) is an Agency of the Government of Malawi responsible for assessment, collection and accounting for tax revenues. MRA  collects  the following types of taxes:
    1. Income tax
    2. Non-Resident tax
    3. Fringe Benefit tax
    4. Import duty
    5. Excise Duty & Surtax and any other taxes

    Major functions include:
    1. Provide improved taxpayer service.
    2. Promote voluntary tax compliance to the highest degree.
    3. Administer and enforce tax laws.
    4. Counteract tax fraud.
    5. Advise Government on matters of tax policy.

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     Food and Agriculture Organization (FAO)

    Address : Evelyn Court, Area 13
    P.O.Box: 30750 Zip: 3
    City: Lilongwe
    Country: Malawi
    Phone: 265-01-773 564    
    Fax: 265-01-773 263    
    Email: fao-mw@fao.org
    Website: http://www.fao.org
    Activity:
     Other Private body  
    Presentation of the institute: All FAO programs in Malawi work with the Malawi Government and non-governmental organizations to develop projects, policies and support implementation of such projects. All programs targets households who are most at risk, such as farmers with little land, malnourished children and HIV/ADIS affected households.
    FAO programs focus on capacity building. Activities are integrated throughout many different projects, depending on the need of a particular area or population. Activities tend to focus on:
    •   Healing the soil
    •   Diversifying Crops
    •   Maximizing use of all water
    •   Diversifying gardens
    •   Seed Availability
    •   Livestock access and care

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     Reserve Bank of Malawi (RBM)

    Address : Convention Drive, City Centre
    P.O.Box: 30063    
    City: Lilongwe
    Country: Malawi
    Phone: 265-01-770 600    
    Fax: 265-01-773 502    
    Website: http://www.rbm.mw
    Activity:
     Other Government body  
    Presentation of the institute: Reserve Bank of Malawi's objectives are:
    1. maintain external reserves  to safeguard the  international value of the local currency
    2. implement measures designed to influence the money supply and the availability of credit, interest rates and exchange rates with the view to promoting economic growth, employment, stability in prices, and sustainable balance of payments position
    3. promote sound financial structure in Malawi, including payment systems, clearing systems and adequate financial services
    4. supervise commercial banks and other financial institutions
    5. collect economic data of the financial and other sectors for research and policy purposes
    6. promote development in the country

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     Ministry of Agriculture

    Contact Name: Mr. R. P. Mwadiwa
    Job Title: Principal Secretary
    P.O.Box: 30134    
    City: Lilongwe
    Country: Malawi
    Phone1: 265-01-789 033 Phone2: 265-01-789 252
    Fax1: 265-01-789 218 Fax2: 265-01-788 738
    Activity:
     Ministries  
    Presentation of the institute: It comprises several technical departments that all work in a coordinated manner to realize the Ministry's vision of a nation with sustainable food security and reduced poverty. Technical departments are:

    1. The Department of Extension Services
    2. The Department of Research Services
    3. The Department of Veterinary Services (Animal Health & Husbandry)
    4. The Department of Crop Production
    5. The Department of Land Resources & Conservation

    It's mission is to increase agricultural productivity, food security & sustainable usage of natural resources in partnership with the private sector by encouraging investment in the sector, diversification and utilization of appropriate technology.

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     Leather Association of Malawi (LAM)

    Contact Name: Mr. Marvin Kamthunzi
    Job Title: Interim Chairman
    Institute Name: Leather Association of Malawi (LAM)
    Address : Chichiri Residential Area
    P.O.Box: 2892    
    City: Blantyre
    Country: Malawi
    Email: marvinkamthunzi@yahoo.com
    Activity:
     Association  
    Presentation of the institute: The Leather Association of Malawi (LAM) major objectives are:
    1. increase the quantities and improve the quality of hides, skins, leather and associated products
    2. stimulate both internal and external markets for Hides and Skins, leather and associated products
    3. create a favourable forum conducive to discussing and resolving problems related to the leather industry
    4. collect and disseminate information related to the leather industry as a whole
    5. assist Government in reviewing legislation and provide policy guidelines and strategies to improve the industry.
    LAM currently is inactive though efforts are underway to revive it.

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     Ministry of Trade & Private Sector Development

    Contact Name: Mr. N. Kumwembe
    Job Title: Principal Secretary
    Institute Name: Ministry of Trade & Private Sector Development
    Address : Gemini House, Robert Mugabe Crescent
    P.O.Box: 30366 Zip: 3
    City: Lilongwe
    Country: Malawi
    Phone1: 265-01-770 614 Phone2: 265-01-770 244
    Fax1: 265-01-770 680 Fax2: 265-01-776 062
    Email: minci@malawi.net
    Activity:
     Ministries  
    Presentation of the institute: The Ministry's mission is to promote, support and facilitate trade and private sector investment in existing and identified potential growth sectors its strategic objectives are:
    1. increase investment in potential and existing growth sectors, and ensure meaningful private sector contribution to economic growth and employment creation in the country
    2. create a conducive environment and for effective development and growth of the private sector in Malawi
    3. facilitate private sector reforms with the view to improving private sector competitiveness and harnessing of local resources.

     

    Trade statistics

    Products

    Year

    Exports (quantity)

    Exports (in USD)

    Imports (quantity)

    Imports (in USD)

    Hides and skins

    2004

    844,510 mt

    858,000

     

     

    Leather and leather producs

    2004

    Insignificant/mainly re-exports

    20,000

    In various quantities

    1.5 million

    Technical cooperation projects

    Commercialization of Hides and Skins by improving collection and quality in small holder farming systems

     
    Duration: 3 years
    Status: Completed
    Description: A project designed to reduce wastage & improve quality of a valuable renewable resource from the small holder farming sector. It also aims at building local capacity in the sector This will act as an industrial catalyst to the local leather industry, improve people's livelihoods, create jobs, save foreign exchange and reduce poverty in the rural areas.

    Surveys and reports

    Malawi Baseline Survey

     
    Corporate Author(s): TANGO International, Inc.In collaboration with the C-SAFE M&E team
    Year of Publication: 2003
    Number of pages: 66
    Language(s): English
    Also availabe at: http://www.sarpn.org.za/documents/d0000524/C-Safe_Malawi_Report.pdf
    Abstract: The main objectives of the C-SAFE Baseline Survey in Malawi were:
    •   To establish baseline values of logframe indicators against which future measurements of goal-related changes (e.g., practices and/or systemic changes) can be made.
    •   To increase understanding of livelihood security factors impacting the lives of rural households
    •   The secondary objectives of the survey were:
    •   To identify groups and geographic areas where food and livelihood security may be low.
    •   To gather and analyze information that will assist project staff in designing or modifyingappropriate interventions or generate information for further refining the project logframe.
    Publisher: TANGO International, Inc.In collaboration with the C-SAFE M&E team
    Type of Document/Material: Downloadable PDF document

    Company profiles

    Company Name Products
    Agricultural engineering and Marine Services Air/Frame dried
    Ilomba Granite Company Air/Frame
    Jona General Supplies Air/Frame dried
    Lilongwe Cold Storage Ltd. Air/Frame dried - Wet salted
    Shire Valley Halaal Abattoir Air/Frame dried - Wet salted

    Environment and social responsibility

    Environment Legislation: Environment Management Act (1996). An Act that has provisions for the protection and management of the environment and the conservation and sustainable utilization of natural resources. Enforcement agencies include:
    The National Council for the Environment
    The Malawi Bureau of Standards
    The University of Malawi
    The Department of Environmental Affairs
    Environmental quality standards for air, water soil, noise, vibrations, radiation , effluent, and solid waste are from time to time prescribed by the Minister on advise from the National Council for the Environment. There is also a Licensing regime for the handling  storage, transportation, destruction or disposal of waste.
    Labour Laws: All companies or any party involved in the hides and skins and leather sector are required to operate within the framework of country's labour laws which are complaint with ILO. Corporate social responsibility is mandatory in the sector eg no child labourers.
    Other: In line with the developmental goals of the Government of poverty reduction, companies or parties in the Hides and Skins sector are required as a social responsibility to contribute to  poverty reduction effort such as providing employment opportunities as much as possible to the local community and investing in the environment.
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