K240bn Sudan deal was overambitious—Supplier
Ideal Group, which went into a $240 million (about K240 billion) annual food export deal with Trinity Holdings of South Sudan, has said the deal was overambitious as only goods worth about $1 million (K1 billion) have been exported so far.
Speaking on Wednesday at a meeting with the Parliamentary Committee on Trade, Industry and Tourism, Ideal Group managing director Thandize Loti, whose organisation engaged 720 farmers in contract farming to supply food commodities to South Sudan, said since last September, the country has only supplied goods worth about $1 million (about K1 billion).
He said: “I have to say it here that the $240 million deal was over-ambitious. It involved a lot of things. Even for the maize flour, we do not have enough milling machines.”
Loti said there are serious capacity issues which need to be addressed, adding that lack of financial support for the deal also heavily affected supply of the commodities that South Sudan demanded.
He said the Export Development Fund (EDF) which was engaged to finance the deal, did not have money to support investments, which also heavily affected the potential to meet the demand.
Loti said: “It took time for EDF to access funding to pay the farmers under contract farming and to cover cost of transportation.
“We failed to export maize flour and other commodities to South Sudan on time and as a result, some of the commodities went bad such that they cannot be sold. Maize flour, with six-month expiry period, was getting to South Sudan after several months.”
But he stressed that South Sudan is a great opportunity for Malawi, saying the $240 million deal can benefit over 10 000 farmers but lack of financing to support the deal is affecting the contract.
On his part, the committee chairperson Simplex Chithyola-Banda said failure to meet the contract demands does not reflect well on the country.
However, he said since the market is still available, there is need to strategise and deliver, adding the country should be able to export the commodities that South Sudan is looking for.
Ideal Group of Malawi and Trinity Holdings of Sudan entered into an agreement to supply maize flour, rice, beans, cooking oil and other commodities to South Sudan.
Ideal Group was to engage farmers in the country to produce enough for exports under contract farming.
Government was also engaged to facilitate the trade and it signed a memorandum of understanding mid-last year with the Sudan government.
