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  • Christine Chumbler
    Jul 26, 2005
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      Malawi leader bans maize exports

      Malawi's president has banned all exports of the food staple maize as well as fertilizer as the country gets to grips with the current food crisis.
      "From today, no maize should be exported to other countries because we have to feed ourselves first," Bingu wa Mutharika said on Monday.

      He said it did not make sense for Malawi - hit by one of its worst food shortages in years - to export maize.

      At least 4.2m Malawians are in urgent need of food aid, according to the UN.

      The president also ordered a ban of fertiliser exports, saying "we need it here for our food production".

      There is a thriving unregulated trade of cheap Malawi maize and fertiliser in Zambia and Tanzania.

      Merchants buy the products cheap in Malawi and export them to neighbouring countries.

      Ironically, Malawian authorities buy the same maize at a higher price, especially in Tanzania.

      "From today our borders are sealed," said Mr Mutharika, urging ordinary citizens to inspect trucks crossing borders and report suspicious exports.

      Solidarity fund

      He also announced a "Feed the Nation" initiative - a countrywide campaign to collect contribution in the form of money and food to feed the needy.

      "I urge everyone to contribute at least 10% of their earnings to the initiative," he said.

      Mr Mutharika, who donated 1m Malawi Kwacha (£5,000) to the initiative, said it was aimed at showing that Malawians can feed themselves before turning to international donors.

      Malawi requires at least two million metric tons of maize to feed its 11 million citizens but, according to the Ministry of Agriculture, due to persistent drought, the country recorded a 24% drop in maize production.

      The government has announced it will use $50m (£28m) to buy 300,000 tons of maize from South Africa.

      *****

      Malawi: Britain Releases 20 Million Pounds in Budget Support

      UN Integrated Regional Information Networks

      July 25, 2005
      Posted to the web July 25, 2005

      Lilongwe

      The British government has released £20 million in budget support to Malawi, saying the country had "turned the corner" and was making "real progress" in fiscal discipline.

      This is the first disbursement of the £60 million set aside by the British government as budgetary support, making Britain the first bilateral donor to provide macroeconomic support since the International Monetary Fund (IMF) froze aid to Malawi in 2000 as a result of overspending and corruption by the previous government.

      "What we see are signs of growing trust from the donors towards the Malawi government. Britain must be recommended for this good gesture - it is now up to government to prove that the money will be used for the intended purpose and according to the budget," said Collins Magalasi, national coordinator of the Malawi Economic Justice Network.

      Roger Wilson, head of the British government's Department for International Development (DFID) in Malawi, said the funds had been released in response to parliament's approval of the national budget last week.

      The opposition, having a majority in parliament, had held up the budget but relented under pressure from donors and civil society.

      British High Commission spokesman Lewis Kulisewa said the funding decision followed a favourable assessment of Malawi's economic and development policies by the Common Approach to Budget (CABS) group. CABS comprises the major donors, who have acted in concert in recent years.

      The IMF is expected to meet in August to discuss Malawi's newly approved budget. "Some donors that are part of the Common Approach to Budget Support are likely to release their budget when the IMF board approves a new programme for Malawi," said Kulisewa.

      Up to 80 percent of Malawi's development budget is provided by donors, and the country faces enormous challenges related to poverty, food insecurity, HIV/AIDS and the capacity to deliver services.

      Aid agencies estimate that at current inflation levels 4.2 million Malawians will be vulnerable to drought-linked food insecurity this year.

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      Malawi's Inflation Rate Soars

      Business in Africa (Rivonia)

      July 22, 2005
      Posted to the web July 22, 2005

      Frank Jomo
      Blantyre

      - The inflation rate in the southern African state of Malawi as released by the National Statistics Office (NSO) has revealed that the country's annual inflation rose to 15.9% in June from 15.5% in May. This is an increase of 0.4%, and has largely been attributed to the soaring in costs of transport and beverages.

      Following the rise in price of fuel the past three months, Malawi registered a rise in transportation costs by a margin 1.2%. Due to the same, beverage manufacturers announced a rise in price of their commodities mostly by K5.00 (approximately R0.25).


      The report from the NSO indicates that this is the second month that annual inflation on a month-on-month basis was not dictated by food items. In fact it says monthly food inflation continued to drop.

      However compared to last year, the drop is not significant as last year annual inflation was at 11.6% the same month ¡n June.

      The non-food items - transport costs and beverages - advanced 1.2% and 1.1% respectively.

      Food items especially maize greatly affects inflation in Malawi as it accounts for 58.1% in the consumer price indices (CPI).

      The NSO says urban inflation was at 17.5 while that of the rural was pegged at 15% in the month of June.

      Annual national inflation rose 0.2% to stand at 15.5% in May from 15.3% in April as food scarcity continued to exert pressure on maize prices.

      While during the same period, urban and rural inflation rates stood at 17% and 14.7% respectively.

      The NSO said month-on-month [May-April] food index fell 3.4% - a drop the office said is lower than the decrease of 4.0% experienced during the same period last year.

      "The lower drop this time around is indicative of the scarcity of maize grain being experienced in most parts of the country," the office said in May.

      Malawi, IMF to meet

      In total it said the beverages and tobacco group index shot 2.8% against 1.2% last year due to adjustments of some local and imported alcoholic drinks in several parts of the country.

      The household operation group advanced 1.1% compared to 1.9% recorded during the same period in 2004, said the NSO.

      The office, however, said the rest of the commodity group indices experienced marginal upward price movements over the same period.

      There is a very likelihood that food inflation will be under control as imported maize starts arriving in the country.

      In addition Malawi is scheduled to meet the International Monetary Front (IMF) on August 5 on a possibility of tapping IMF funds under the Poverty Reduction and Growth Facility (PRGF).

      Malawi had the disbursement of funds from the IMF frozen in 2000 due to poor governance and high level corruption, which were some of the condition she was told to observe in order to tap the funds under the PRGF.

      Out of the US$55 million she signed under the program, the country had managed to draw only US$8 million. Since 2003 Malawi has been on Staff Monitored Program, a non-aid program, rather a road that leads to the actual tapping of aid.

      Overall though, food inflation according to analysts is expected to be 2.3% higher than headline inflation owing to poor weather conditions.

      However Finance Minister Goodall Gondwe was recently quoted as saying if the weather conditions improve for the better and the irrigation program yields positive results, the rate is expected to drop to 0.5% by December this year, which will bring headline inflation down to 3.9.

      During the presentation of the 2005/2006 budget in parliament in June, Gondwe said the core inflation rate that excludes food is estimated at 13.8% compared to the previous 2004, which was at 13.7%.

      Food inflation is projected at 19.2% by December-end this year and authorities expect commodity price rise to average 14.5% in 2005, which will be up from 11.5% in 2004 and 9.6% in 2003.

      This owes to the fact that Malawi has been registering a gradual decrease in food production, and an answer to a decline in inflation lies in sound food security measure that will see the country realising bumper harvests.

      Inflation has been largely under control since 2003, averaging 10% in that year and 11.1% (estimated) in 2004.

      Discount and commercial lending rates also declined from 40%-45% in 2003 to 25% in early 2004 to date.


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      'Financial hiccups' sees Malawi close four embassies

      Blantyre, Malawi



      26 July 2005 07:43

      Malawi is to close four of its 19 embassies and recall 35 diplomats from Canada, France, Kenya and Libya as a cost-cutting measure, the foreign minister said on Monday.

      "Financial hiccups the country is experiencing have forced the closure," said Foreign Minister Davies Katsonga, adding that the "development will not affect government relations with the four countries".

      Katsonga said the poor southern African country, battered with a $600-million domestic debt and $2,9-billion foreign debt, would save two million dollars a
      year from the closures.

      He added that the four countries were chosen because few Malawians lived there and the volume of trade with the countries was small.

      Most of the diplomats deployed during the past 10 years were loyalists and party zealots of retired president Bakili Muluzi, who handed over power to his chosen successor Bingu wa Mutharika last year.

      Malawi, backed by the International Monetary Fund and World Bank, is on a cost-cutting drive to try to revive investor confidence.

      About 60% of Malawi's 11-million people live below the poverty line. - Sapa-AFP

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      Zambian politician on spy charges

      Zambia's opposition leader Michael Sata has been charged with spying, on top of earlier sedition charges for allegedly inciting miners to strike and riot.
      Mr Sata's lawyer accused the police of "playing political games". The charges could lead to a jail term of 20 years.

      He was arrested on Friday, following last week's protests in some of the copper mines which remain crucial to Zambia's economy.

      The strikes cost Zambia more than $20m, reports the AFP news agency.

      His court appearance was delayed because of the new charges.

      Mr Sata was a close aide to former President Frederick Chiluba but left the ruling MMD party after being overlooked as its 2001 presidential candidate, to set up the Patriotic Front.

      In 2002, he was acquitted of stealing two government cars.
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