Lack of transparency in how government allocated forex to some traders to flood the country with Zambian cement aimed to reduce the commodity’s price, has elicited a backlash from governance and human rights advocates.
Three weeks ago Ministry of Trade and Industry announced that it had facilitated four traders to access a total of $1 million to bring in cheap cement from Zambia purportedly to stabilise prices on the local market.
Secretary for Trade and Industry Christina Zakeyo mentioned the traders assisted with forex as Mada Buildings, Randera, Agrocomm and Melton, all based in Lilongwe.
Justifying the selection of the four distributors against a field of other traders in the cement importation business, Zakeyo said the four who received $250 000 each, were selected because they were the major distributors of cement in the country.
But governance and human rights advocates have described the selection process as unprocedural, lacking transparency and against the principles of fair competition in handling of public resources.
The Public Procurement and Disposal of Assets Authority (PPDA), the Reserve Bank of Malawi and the Competition and Fair Trading Commission (CFTC) did not respond to our inquiry on the role they might have played to facilitate the process despite promises to to do so.
But sources at PPDA and CFTC, speaking on condition of anonymity, confided in Weekend Nation that contrary to standard practice, the Ministry of Trade led the process, without involving the entities to vet and authorise the exercise.
Critics argue that such opacity not only hampers fair competition but also undermines the rule of law, especially when public funds are involved.
Catholic University of Malawi Dean of the Faculty of Law James Kaphale condemned the secrecy, asserting that “by not disclosing the criteria used to identify and give the four cement traders and distributors $1 million, the government gave an unfair advantage to these traders, violating fair trading principles”.
He added: “The government lacked transparency and accountability, core elements to the rule of law.”
Centre for Human Rights and Rehabilitation executive director Michael Kaiyatsa highlighted the implications of opaque decision-making.
“Fair trading requires that all market players have equal opportunities and that no one is unduly favoured. On this issue, transparency is clearly lacking,” he explained.
Kaiyatsa further urged government institutions such as the Reserve Bank of Malawi, Ministry of Trade and CFTC to be transparent about how they make decisions, especially when public funds are involved.
Governance expert, Willy Kambwandira, who is executive director for the Centre for Social Accountability and Transparency, echoed the concerns also argued that while the government’s intent to stabilise the cement market was commendable, failure to disclose the criteria used to allocate forex and identify beneficiaries erodes public trust and opens the door for speculation about corruption and mismanagement,” he noted.
He also pointed out that reports of hoarding and underutilisation of allocated funds by the favoured traders further underscore the need for stringent oversight and accountability mechanisms to prevent misuse of public resources.
Consumer rights advocate John Kapito also questioned the integrity of the process.
“Why did government not work with the known local cement manufacturers to address these challenges before resorting to dangerous alternatives?” asked Kapito, who is chief executive officer for the Consumers Association of Malawi (Cama).
He feared that the current crisis may have been exploited by greedy businesses and officials, leaving consumers suffering while a few benefit from the situation.
On Tuesday this week, Malawi Government agencies served an infringement notice on Agrocomm Trade Limited.
The notice alleged that Agrocomm Trade Limited was hoarding 7 800 bags of Sinoma Cement from Zambia, enough to load 13 trucks.
This followed a team from Competition and Fair Trading Commission (CFTC) and the Ministry of Trade and Industry which invaded Agrocomm premises in Lilongwe where they found the alleged hoarded cement.
Reads a CFTC notice: “The commission visited your warehouse and observed the following: That you were hoarding 7 800 bags [13 trucks] of cement [Sinoma].
“The above is prohibited under the Competition and Fair Trading Act (CFTA): Section 51 (a) withholding or destroying producer or consumer goods or rendering unserviceable or destroying the means of production and distribution of such goods, whether directly or indirectly, with the aim of bringing about a price increase.”
Agrocomm Trade Limited managing director Munawar Tebhala said he was out of the country and would respond to Weekend Nation’s query when back in the country.
On Sunday, Minister of Trade and Industry Vitumbiko Mumba lamented the apparent failure of interventions to stabilise the market, claiming some companies were hoarding cement bought using the same forex, while others were using the forex for other means.
Earlier, Kapito faulted the arrangement, saying those in authority were failing to understand forces of demand and supply.
While local producers insist that their cement is pegged at K22 500 per 50kg bag on factory price, traders are selling the same at K37 000 and more.
Malawi’s three cement producers—Shayona based in Kasungu, CPL in Mangochi and Portland Cement Malawi in Blantyre—have a production capacity of 822 012 metric tonnes (MT) against an annual market demand of 1 782 000MT.
