Malawi still exporting raw products into EU

Malawi is still failing to export finished products to Europe.  Ninety nine percent of Malawi’s exports into the European Union (EU) constitute raw agriculture products

The EU is Malawi’s  largest trading partner for exports and second largest for imports–138.5 million Euro representing 12.9% of Malawi’s total imports from the Rest of the World  in 2010.

Primary  products currently dominating Malawi’s exports to the EU are food stuffs like fish, tobacco and animal products.

“Raw materials and tobacco in themselves make up approximately 67 percent  of Malawi’s exports to the EU, followed by food and live animal products which constitute close to 32 percent  of the exports,” says the EU

The exportation of raw and semi-processed products to the international market has over the years dealt Malawi a heavy blow as it has been generating inadequate foreign exchange cash to finance importation of phamarcueticals, fuel and fertilizer.

This has in-turn worsened Malawi’s trade gap, as reflected in the country’s deteriorating Terms of Trade (Tot)

In 2011, Malawi’s trade gap was estimated at  $456 million

Malawi’s participation in EU trade remains extremely limited, ranging from 0.01 percent to 0.02 percent of total EU trade.

Based on the EU (Malawi) trade facts, in 2010 the main portion of Malawi exports to the EU was destined to Germany (36%), the Netherlands (13.5%) and the UK (10.6 %), whereas, the EU’s main exports to Malawi were from the UK (19.8%), Germany (18.9%) and France (12.2%), during the same period.

The EU has offered  preferential market access to developing countries for decades mainly under the Cotonou Agreement in partnership with the African, Caribbean and Pacific (ACP) countries; the Generalised System of Preferences (GSP); and a series of bilateral Free Trade Arrangements.

- Under the EU GSP’s “Everything But Arms” scheme, the world’s 50 Least Developed Countries, including Malawi, continue to enjoy duty and quota free market access for all goods (apart from arms) imported to the EU.

- Trade provisions under the Cotonou (Partnership) Agreement, to which Malawi is also signatory, had to be revisited, making them compliant with the requirements of the Word Trade Organisation (WTO) at global level. 

Economic Partnership Agreements (EPAs) between the EU and ACP regions have therefore been, and continue to be negotiated, with the main aim of achieving this WTO compatibility. 

Malawi continues to negotiate it’s EPA with the EU  under the regional grouping of Eastern and Southern African regional grouping. One of the main objectives of the EPAs is to build upon and further enhance the market access conditions which were previously provided under Cotonou.

Malawi parliament repeals law against media freedom

Late Mutharika: Introduced many repressive laws

Malawi’s Parliament on Wednesday repealed the controversial Section 46 of the Penal Code removing the powers of the Minister of Information to ban or prohibit any publication deemed undesirable.

Section 46 is one of the repressive laws that caused Malawi’s diplomatic isolation and an aid freeze from the country’s key Western donors.

Despite initial resistance from the former ruling party — DPP — who argued that  the Bill tabled did not fulfil the 28 days notice requirement, legislators from both sides of the House repealed it describing it as a threat to free speech and media freedom.

EU ambassador to Malawi writes on Malawi’s immediate challenges

Baum: Regional Integration could help Malawi

by Alexander Baum – EU Ambassador to Malawi

We have seen some radical changes in this country over the past weeks, haven’t we? From control to liberalisation, from arbitrariness to principles and rules, from distrust in private sector to incentives for the private sector, from accusing to inviting partners, from ignoring neighbours to courting them.

The turn around came quick, perhaps too quick to believe that it is already happening.

Turning words into action and visions into change is of course never easy – it takes time, persistence, patience, but more than anything else acceptance, ownership and participation by stakeholders, perhaps even a change in mentality.

There is no question that the course of the world is more than ever determined by economics. The happiness or unhappiness of populations is largely, though not only, determined by how their economic aspirations are fulfilled. The influence of nations is determined by their economic power, their ability to defend their interest by the size of their economy.

Malawi, other African Countries get GAFSP agriculture grants

Malawi will receive $39.6 million to promote irrigated rice and horticulture production as well as crop diversification , Partners in the Global Agriculture and Food Security Program (GAFSP) announced on Friday.

GAFSP, is a fund that supports country-led efforts to fight hunger and poverty.

It announced that six countries will receive grants totaling $177 million. The grants – to Burundi, the Gambia, Kyrgyz Republic, Malawi, Senegal, and Tanzania – will help each country increase food security, raise rural incomes, and reduce poverty. 
 
International food prices remain volatile and high with the 2011 annual index 24 percent higher than its average in 2010. 

Prices of certain foods remain dangerously high in many countries, leaving millions of people at risk of malnutrition and hunger, many of them children.

 In developing countries that face more volatile international markets, it is essential to increase the productivity and resiliency of food production. 

 ”The Global Agriculture and Food Security Program has quickly proven to be one of the most innovative and effective development programs the global community has created,” said Lael Brainard, Under Secretary of the United States Treasury for International Affairs.

 ”GAFSP will raise the incomes of 7.5 million smallholder farmers and their families. These new grants will meet the high global demand for agricultural resources to achieve food security. Continued financial support from the development community is critical to maintaining momentum in the fight to achieve sustainable, lasting solutions to hunger and poverty.” 

 Launched in April 2010, GAFSP represents a global effort to aid vulnerable populations afflicted by hunger and poverty. It takes up where emergency and recovery assistance leaves off, targeting transformative and lasting change in agriculture and food security within poor countries through financial support to existing aid effectiveness processes. 

 In Togo, where the agriculture sector contributes 40 percent to GDP, GAFSP support is helping the country to implement their national agriculture plan and has funded seeds, fertilizer, and training for farmers.

 It has helped farmers to organize better, improved the production of maize and cassava, and increased donor coordination. 

In Rwanda, one of GAFSP’s first beneficiary countries, the funding is being used to reduce erosion and bolster productivity in hillside agriculture with tremendous results: potato yields are seven times higher than before and cereal yields have quadrupled. 

 Australia, which was selected as the new chair of the GAFSP Steering Committee, will work to improve the responsiveness of the fund, encourage quality proposals, and attract more donors. 

“The program has already achieved significant results and we anticipate a substantial increase in national food security. For instance, in Cambodia GAFSP will help farmers to diversify their crops which will increase incomes, allowing families to feed themselves while obtaining goods and services to improve their nutrition and welfare,” AusAID First Assistant Director 
General, James Gilling said. 

“Channeling funding through GAFSP means we can reduce costs and ensure that aid efforts are coordinated, not duplicated.”
         
In Burundi, GAFSP funds totaling $30 million will improve water management and irrigation in the drought-prone regions of Imbo and Mosso, with investments in infrastructure and agricultural intensification through improved technologies, productive assets, and the establishment of farmer field schools.         

In The Gambia, $28 million in GAFSP funds will target three highly food-insecure regions via an integrated area development program that includes land and water management, horticultural gardens, aquaculture farming, and small ruminant and poultry farming. 

In the Kyrgyz Republic, GAFSP has allocated $16.5 million to support a project that focuses on the rehabilitation of irrigation and drainage systems, building the capacity of water user associations, providing agricultural extension services, and a nutritional component. 

In Senegal, $40 million in GAFSP funds will promote livestock and crop production in three high-potential, drought-prone zones, including investments focused on: provision of water management systems, rural roads, vaccination centers, and financing for model ruminant and poultry operations.

Tanzania will receive $22.9 million to support the rehabilitation of 18,500 hectares of irrigation schemes designed and managed by local government authorities, as well as subsidy on rice input packages in the project zones under an input voucher scheme.
 

DPP defends Bingu’s alleged nepotism

Malawi’s former ruling party has defended President Bingu wa Mutharika ‘s  appointment of tribesmen and loyalists  in cabinet and other influential positions 

Mutharika, who died last month from a heart attack, was accused of nepotism during his time in office. This week the former ruling party -Democratic Progressive Party-defended the late President in parliament.

“In the Presidents speech much has been said about tribalism. This is
strange because the Bingu administration merely moved existing civil
servants into particular key strategic services depending upon their
educational and professional background and loyalty,” said leader for DPP in parliament George Chaponda.

He gave examples of the United States where   President John Kennedy  appointed his brother as Attorney General.

“We also hear of terms like filibustering in the USA which are used to
reflect similar dynamics of politics.   Even in the current administration, the appointments have included family members and certain favorites and none can blame her (President Joyce Banda),” said Chaponda.

During Mutharika’s tenure, some positions like secretary to treasury, director of public prosecutions, Inspector General of Police, were given to his tribesmen. 

Malawi registering 50,000 new HIV infections yearly

Malawi is registering 50,000 new HIV infections annually, ministry of health officials have said.

This is despite the country doing so well in reducing AIDS related deaths and the prevalence rate from 12.2 percent to 10.6 percent in the last few years.

“We cannot go on business as usual. Leadership at all levels, from the
Village Chiefs, Teachers, Politicians at all levels, Members of
Parliament and even at Cabinet level we should all lead by undergoing
an HIV test,” said Khumbo Kachali, who is also Health Minister, said.

Kachali is also Vice President.

HIV/AIDS in Malawi has decimated a generation of the adult age group and orphaned millions of children in over two decades.

UNAIDS country Director Patrick Brenny said Malawi had registered
success in managing HIV and Aids in the areas of nutrition and social
cash transfer for the affected, prevention of mother to child
transmition and universal access to ARV.

“However other challenges such as dwindling resources and continued
infections need collective efforts that we do not stop gaining the
momentum against the epidemic,” he said.

GEF urges involvement of communities in environmental strategies

Global Environment Facility CEO Monique Barbut yesterday  said that success in initiatives to improve the global environment depends on consistently involving local communities and particularly indigenous groups in environmental strategies and projects.
 
Speaking at the Congress of the International Society of Ethnobiology, Barbut, CEO and Chairperson of the world’s largest public funder of projects to benefit the global environment, presented the policy initiatives being implemented by the GEF in connection with indigenous groups.
 
“The way we work with indigenous people, not only in the projects we finance, but also in  the governance of our institution, reflects my determination that the global environmental movement recognize the importance of this issue,” said Barbut, who is completing her second term as GEF CEO.

 “We do this not because it was fashionable or trendy, or simply to make ourselves feel good. We do it most of all because it made good sense.”
 
Working with local communities, including indigenous peoples, is not only the most effective approach to environmental projects, it is also the most cost-effective, Barbut said. 

Projects that follow this philosophy benefit greatly from local knowledge and techniques for working with natural resources and the environment of a given region or locality.
 
“Protecting local and ancestral knowledge is thus not only a way for us to fulfill our current mission and protect the environment, but also to preserve options and solutions for the future,” Barbut said.

  “I am convinced that the policy that we have implemented to strengthen the participation of indigenous peoples has permanently enriched the GEF and enhanced its standing.”
 
The GEF has emphasized the importance of indigenous peoples throughout Barbut’s two terms in office, she said, as an integral part of efforts to improve the GEF’s performance, its management, and its visibility. Making decisions more inclusive contributes to a better sense of ownership of the GEF in the beneficiary countries.

 Barbut said that more indigenous groups are now participating in the network of NGOs affiliated with the GEF than ever before. This progress stems not only from a preferred approach to GEF projects but also from specific and resolute policies designed to ensure engagement with indigenous peoples and respect for their rights.
 
Barbut described a 12-year GEF-financed program in Brazil that involves extensive work with local communities and indigenous peoples to develop sustainable forestry practices. 

The initiatives, financed with a $18 million GEF grant and $30 million in cofinancing, has led to the creation of 25 million hectares of protected areas, an area the size of Great Britain.

 The project is helping preserve the biodiversity of the world’s largest rain forest and reducing greenhouse gas emissions. Nearly half of the “Sustainable Development Reserves” involved in the project are being managed by local and indigenous peoples.

Malawi’s average income per capita goes up

The International Monetary Fund (IMF) says Malawi registered real per capital Gross Domestic Product (GDP) of $178 last year which signals improved income levels per each Malawian  in 2011.

Based on these numbers,  it means each Malawian would earn $178 (or K44,500 based on the current ruling exchange rate) if the country’s total wealth as measured by GDP, was to be shared equally in 2011.

But such a real per capita income is an improvement from $174, $168 and $158 which were realised in the year 2010, 2009 and 2008, respectively.

Between 2004 and 2008, Malawi achieved an average per capita GDP of $147 according to the IMF.

“If you look at such a trend it simply means that Malawi is making strides to ensure growing its economy despite several negative economic forces that are pulling growth downwards and this is good for the entire livelihood of citizens,” said a Lilongwe-based macroeconomist working with ministry of finance.

However, despite all this, Malawi still sits at the bottom of a group of low income countries within Sub-Saharan Africa in terms of average real per capita GDP.

“2011 was a challenging year for most countries just like Malawi. Terms of trade shocks where heightened and also prices for tobacco were low. In addition, we saw a stand-off in aid by donors,” said IMF resident representative Ruby Randall.

 

African Union says no to Malawi’s Banda on Bashir

Malawi Army Commander welcomes al-Bashir when he visited Malawi for a trade summit last year

Eight members of the African Union (AU) Ad hoc Committee of Heads of State and Government meeting in Benin have rejected President Joyce Banda’s request that the 54-member grouping should block Sudanese President Omar Hassan al-Bashir from attending the AU summit in Malawi this July.

The Ad-Hoc Committee met on May 14, 2012 in Cotonou, Benin to, among other things, discuss the election of the AU Commission chairperson, deputy chairperson and members of the AU Commission in preparation for the summit in Lilongwe in July.

During the meeting, the eight leaders also discussed President Banda’s letter requesting to block the Sudanese leader who is wanted by the International Criminal Court over allegations that he is responsible for the deaths of up to 300 000 people in Darfur since 2003. He has denied the charges.

“The eight leaders from South Africa, Nigeria, Gabon, Angola, Ethiopia, Chad, Ivory Coast and Benin resolved that Malawi could not stop Al Bashir from attending the summit,” said a senior diplomat in Lilongwe.

According to the diplomat, official communication is yet to be made to Malawi.

The diplomat also disclosed that all leaders were present, including South Africa’s President Jacob Zuma whose government is on record as having said it would arrest al-Bashir if he ever stepped on South African soil.

Ministry of Foreign Affairs and International Cooperation Principal Secretary Patrick Kabambe said he had heard about the decision, but was still waiting for official communication from AU.

“I have just heard about it, but we are yet to be communicated to officially. I have asked our embassy in Ethiopia for them to get the official text for us to comment,” he said in an interview last week.

Minister of Information Moses Kunkuyu said on Tuesday last week said he could not comment on the issue until government receives official communication from the AU.

Banda, who became the first female president in southern Africa on April 7 2012 after taking over in line with constitutional order following the death of president Bingu wa Mutharika, said a fortnight ago that she had asked the AU not to invite al-Bashir to the African heads of State summit to be hosted by Malawi in July.

“I have written them because of the economic implications this may have on Malawi. Let the AU decide on his position. He [al-Bashir] should forgive us this time as we are struggling to fix the economy,” Banda told a news conference in Lilongwe two weeks ago.

The decision by the AU is the first major diplomatic failure by President Banda who has so far scored on international relations by, among other things, mending relationships with neighbouring countries such as Zambia and Mozambique as well as South Africa and Britain—her former colonial ruler.

“While the West are pleased with her brave stance against al-Bashir, this is likely going to hurt Malawi’s diplomatic relations with other African leaders on the continent who support the Sudanese leader,” observed a Western diplomat in Lilongwe.

Al-Bashir visited Malawi last year when Mutharika was in power, a thing that sparked international criticism that Malawi was not living up to its ICC membership obligations to honour an arrest warrant.

Mutharika’s government allowed Bashir to attend the Comesa Heads of State and Government Summit last year, citing “brotherly coexistence.”

The move strained ties with donors, including the United States and European nations, who had already frozen budget support in Malawi due to Mutharika’s suspected human rights violations and growing autocracy.

Last week, the United States House of Representatives voted to cut off economic aid to any country that hosts al-Bashir.

But, according to Reuters News Agency, the US committee vote is not yet law, but could change as foreign aid legislation moves through Congress this year.

ICC, the world’s first permanent war crimes court, has no police force of its own and is reliant upon State cooperation to have suspects arrested.

The Banda administration is now expected to announce what course of action it will take following the AU rejection.

 

Malawi Finance Minister faces calls to resign

Malawi’s finance minister Ken Lipenga is facing calls to resign his position after he admitted that the country’s revenue authority borrowed K15 billion to prop up its domestic revenue target.

The borrowing from commercial banks to finance the Zero Deficit Budget was illegal because it was done without a loan authorisation bill presented in parliament.

“Its true that our investigations show that there is some truth in that MRA borrowed from banks but I can’t make conclusions because investigations are not through yet,” he said.

Lipenga made the admission when key donors urged him to investigate allegations that the Malawi Revenue Authority had borrowed K15 billion from commercial banks to portray that it has surpassed its revenue target for the first half of the 2011/12 financial year.

Asked whether he will resign Lipenga said: “I cannot resign because I was not told about what had happened, and I never took part in that.”

Lipenga is one of the few ministers that new President Joyce Banda has retained in her cabinet. Banda, the first woman president in southern Africa, took over after the death of President Bingu wa Mutharika who died last month after a heart attack.

Mutharika was serving his final term of office which was due to end in 2014.

It has now come to light that in the last financial year MRA under performed in revenue collection by around K40 billion and built up arrears of around K60 billion

Treasury officials say that the underperformance in the last fiscal year may have forced MRA to borrow from the banks because they were under pressure to feed the zero deficit budget, which was becoming unsustainable without donor inflows.

“We all knew that the zero deficit budget was not going to work because MRA was not going to meet its targets, which was made worse by the donor boycott,” a treasury source said.

Banda is now trying to made fences with donors and she has already devalued the kwacha by about 50 percent to appease the International Monetary Fund with whom she is negotiating a new aid facility.

Meanwhile, a legislator who challenged Lipenga’s figures when he presented to parliament in January, has demanded that the minister apologies for dismissing his claims against MRA.