Malawi power plant to propel manufacturing base
Malawi is poised to benefit from the reduction of nagging electricity woes following the opening of the Kapichila II hydro power station with the manufacturing industry expected to grow by some 5.5 percent, the 2014 Malawi Economic Report has stated.
The easing of fuel woes and the appreciation and stabilisation of the kwacha between April 2013 and September 2013 also aided the growth, according to the report.
The news comes as relief to the economy and compensate for the plunge of the mining sector which the report estimates is set to contract by 7.8 percent this year following the closure of the main Kayelekera Uranium Mine run by Australian company Paladin Energy Limited.
“In 2014, the manufacturing sector is estimated to grow up by 5.5 percent. This growth is attributable to increased production estimates in several sub-sectors such as processing of tobacco, tea and sugar; beer production; dairy products; flour products; and wood products, among others.
“As well as the growth in the agro-processing, other companies in the manufacturing sector are expected to benefit from higher demand linked to higher disposable incomes and a more constant supply of electricity following the rehabilitation of Kapichila II Power Station,” reads the report.
Apart from the re-opened power station, the manufacturing sector is also poised to benefit from a more stable macroeconomic environment since the turbulence of 2012.
“The manufacturing sector was estimated to have grown by 5.7 percent in 2013 compared to -1.1 percent registered in 2012. Tobacco processing was the biggest driver of growth in the sector, with output expected to have increased by 95.1 percent, largely in line with the growth rate witnessed in the production of tobacco,” further reports the economic report.
The report says the combination of the several supply shocks means that capacity utilisation in the sector had significantly improved during the period under review.
Finance Minister Goodall Gondwe told Parliament during the presentation of the 2014/15 National Budget that the economy grew 6.1 percent in the 2013/14 fiscal year.
“This growth was as a result of good performance in the agriculture and manufacturing sectors. In particular, the 2013 growth in manufacturing was attributed to higher agricultural inputs and a more constant supply of fuel and other raw materials. The sector registered increased capacity utilisation of above 73 percent,” said Gondwe
However, Gondwe said Cashgate exerted significant challenges to the economy particularly on inflation and the exchange rate.
The secret to economic boom, wealth creation and sustainable economic take off is a successful manufacturing industry strategy. There is no other strategy for economic transformation known to man (and woman) but manufacturing!!! The industrial revolution is the epicentre of human transformation. Unfortunately, Malawi and Africa have not understood this simple phenomenon. African leaders have been hoodwinked to think in simplistic terms that food (nsima) or agriculture is the way forward or indeed extractive industries are key, Nope. The West and the “machinery” i.e. the World Bank/ IMF have hood winked Africa to think agriculture as they have financed these white elephant projects in agriculture. Chikangawa forest is a case in point. I urge Africa and Malawi to graduate or to free from the chains of misguided economic advice that is leaving Malawi economy in stagnation.
This power station inaugration is a step in the right direction. However, until Malawi can discover the key to proper manufacturing this initiative will join a whole host of projects that end up in the graveyard of economic dead-ends or ” as roads to nowhere”. I am currently visiting Israel, a tiny country but with powerful manufacturing industries that has lifted the std of living for its people. I was in Germany last month where the economy oozes manufacturing hegemony in Europe. Whenever I visit Singapore manufacturing I always cannot help but curse K. Banda’s misguided vision away from industry to focus on nsima prodction. He who wins the global contest of manufacturing output wins the world domination. UK discovered manufacturing secrets and dominated the world. Until in 1870sh the US overtook UK in manufacturing output and world domination. Using manufacturing the Asian miracle took place. China miracle has overtaken the US as the world largest manufacturing output nation at $2.9 trillion p.a compared to the US $2.3 trillion manufacturing output per year. The UK economy is languishing because we relinquished manufacturing competitiveness leadership. No one is suggesting that Malawi economy can achieve $3 trillion manufacturing output p.a. but we need to get it right. As a nation we must discover the secret to manufacturing and it is not about agri-business, trust me or extractive industries such as mining or small scale ziboliboli manufacturing. It is about world class manufacturing competitiveness. I will share the secret over a glass of wine with responsible govt officials not in these public forums. Otherwise Mozambique or Tanzania will steal our secrets. lol. They are our dear brothers just kidding!