Small and Medium Enterprises (SMEs) have expressed concern with Illovo Sugar Malawi plc’s decision to start dealing with recycling companies direct, not through scrap metal dealers.
This is coming at a time the Malawi Stock Exchange listed company is touted as one of the businesses that empower local industries by according them business opportunities either through asset disposal or supply chain.
Illovo, whose primary business is sugar manufacturing, attributed the change at its Nchalo factory to irregularities that are being investigated, but the dealers suspect foul-play, saying they were not consulted.
Three enterprises that are contracted with Illovo to buy scrap metal; Sekuru Enterprises, Ruo Trading and Ntenthera told Business News that they learnt of Illovo’s suspension of scrap metal contracts in June this year, but were never engaged.
Ruo Trading managing director Chiletso Vareta said he learnt about the suspension after his track was already loaded and paid for in June recalling that since then, no business has been given as reports indicate the company is now engaging the recycling companies directly.
Vareta said: “Our concern is that if the big manufacturers like Illovo opt to sell scraps directly to recycling firms, then what does it mean to some industries whose existence rely on such companies.”
Ntenthera director Khani Iman said although the industry is small, it offered both direct and indirect labour to hundreds of young people and described the suspension as a blow.
“This has affected us because as an industry that was solely relying on Illovo, the decision means our businesses are technically closed,” Iman said.
In an interview, Illovo managing director Lekani Katandula said unlike at its Dwangwa factory, they noted irregularities at Nchalo –without divulging more, which led to the said decision.
Katandula said: “We detected some irregularities in Nchalo which are under investigation. We did not have similar irregularities in Dwangwa, hence the current difference in approach.”
Reports indicate that the company’s decision came after one of the suspects found with its irrigation tripods said he bought them from the company’s official scrap metal dealers.
But one of the scrap dealers Frank Chilenje of Sekuru Enterprises said they are accompanied by Illovo’s security and senior officials when loading the scraps and that the gate-pass and road permit are produced after proper certification by the company.
However, Chamber for Small and Medium Businesses Association James Chiutsi urged the company to reconsider this decision as it distorts its historic gesture of according SMEs business opportunity which is commendable.
“We appeal to Illovo to reconsider this decision. Instead, they should hastily do the investigations and deal with the issues at hand. It is very punitive to come up with a decision before concluding investigations.
“We appreciate that they are an independent private company, but as a good corporate citizen, we earnestly request their consideration on this matter,” Chiutsi said.
Meanwhile, Ministry of Trade and Industry spokesperson Patrick Botha said they will wait for Illovo to complete its investigations before commenting on the matter.
