Weeks after accusing local cement producers of creating an artificial scarcity and inflating prices purportedly to sabotage government, Minister of Trade and Industry Vitumbiko Mumba has lamented apparent failure of interventions to stabilise the market.
Briefing journalists after a campaign rally he held in Euthini, Mzimba on Sunday, the minister, who is President Lazarus Chakwera’s running mate on Malawi Congress Party ticket in the September 16 General Election, said some of the companies assigned to import cement from Zambia were holding on to the foreign exchange government facilitated for them while others are hoarding the imported cement.
Said Mumba: “Let me admit, this is a serious battle. We have a company which we supported with forex, but it is hiding the cement, it is not selling. We have been there with a team from the Ministry of Trade, but also Competition and Fair Trading Commission.
“We now have a team from the Ministry of Finance and Malawi Revenue Authority reconciling those that were helped with forex to find out how much cement they have brought in, how much was cleared at the border because we are receiving reports that some did not use all the forex to import cement.”
He said the amount of forex released was enough to stabilise the market and that it was surprising that the situation has not improved.
In a bid to tame rising cement prices, Malawi Government facilitated the provision of $1 million, or $250 000 (about K432 million) each to four companies, namely Randera, Melton Hardware, Agrocom and Mada Tiles for the importation of cement from Zambia to help bring down prices on the local market.
The decision followed a rise in cement prices to about K50 000 per 50 kilogramme (kg) bag.
However, the imported cement was only available in Lilongwe and run out within hours while the rest of the country has remained sidelined.
In a written response to a questionnaire, Ministry of Trade and Industry spokesperson Patrick Botha said government will continue to provide foreign exchange to traders until local factories start operating at full capacity.
He said: “Regarding sustainability of the intervention, well, since we are addressing acute shortages that hit the market, we are hopeful that once all the local factories start operating at full capacity, the supply should normalise and the prices should stabilise such that government will not be required to provide the forex.
“We actually had serious discussions with the local manufacturers before the intervention was put in place and they had submitted their forex needs for importation of raw materials. Government is considering their applications.”
Last Thursday, Cement Products Limited (CPL) managing director Akbar Gaffar told The Nation that local manufacturers have not been successful in getting forex despite reaching out to government for support.
“We have not been helped on forex; you should know that we reached out to the Reserve Bank of Malawi, but nothing really. We have to struggle to get forex and still produce and sell at lower prices,” he said.
Gaffar said consistent supply and fair pricing will be achieved if the producers are given forex at the official rate to import raw materials which cannot be sourced locally. He said cement producers need an equivalent of 10 percent of the foreign exchange allocated to traders importing cement to consistently produce 1 000MT daily.
Speaking separately, Consumers Association of Malawi executive director John Kapito faulted the arrangement, saying those in authority were failing to understand forces of demand and supply.
He also queried why the cement was not distributed to the rest of the country.
“Do we have enough forex? Producers locally are struggling and you end up giving forex to a few traders to bring in just a few bags and you think that would solve the situation? For me, this is just some drama, somebody is benefitting,” said Kapito.
In response to observations that the imported cement was only offloaded in Lilongwe, Botha said there were acute shortages and worrisome price hikes observed in the capital city compared to the other cities.
“But we are monitoring the situation in the other cities to see how best the distributors and manufacturers can push more volumes in those areas as well,” he said.
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.
