As cement shortages hits Malawi, time to liberalise imports to suppress prices

Cement is scarce on the local market. The little that is manufactured costs a leg and an arm, in response to the supply and demand rule.

Local manufacturers have mostly blamed the price rise on imported clinker and use of diesel engines to power their production lines because Escom is in comatose.

A 50 kg bag of one brand from a retailer which was K6 600 only a month ago is now anywhere between K9 000 and K10 000 in Blantyre, representing a 60 percent price increase. The same range of prices shooting through the sky obtains for all other cement brands. At one outlet, once in a while there is a long queue of trucks reminiscent of the 2012 fuel queues. People are buying out of desperation. Those still buying are obviously doing so while gritting their teeth.

Cement manufacturers say the situation is unlikely to change until February 2018. Hoping God in his usual generosity will flood Malawi with rain to swell up Lake Malawi, the main source of water for the Shire River. That most manufacturers will downsize is only a matter of time. Some have already closed shop and put their production lines under care and maintenance. The picture is that of gloom and doom for the sector.

Malawi’s manufacturing sector contributes 10.7 percent of the gross domestic product (GDP). The main industries are food processing, construction, cement, consumer goods. With cement manufacturing on halt, there is little construction work taking place.

Show me one construction project that does not use cement and I will give you my index finger to chop off. Forgive my use of swear words. But this is just how bad things are. All this is snowballing into a gargantuan loss of revenue for government. The question is: where is the leadership?

Yet when foreign cement manufacturers want to export cement to Malawi, local cement companies which are failing to cope with the power outages cry wolf. Dangote Cement, which is of much higher quality than most local brands but cheaper has to be smuggled into the country. This is no doubt fuelling corruption. When Transparency International (TI) ranks Malawi poorly on the corruption index we cry foul? Where is the leadership?

Local cement manufacturing firms claim foreign cement imports kill the local industry. But what is the difference when they are already downsizing and retrenching because they are not manufacturing? Wouldn’t government be better off collecting revenue from import and excise duties from the formal trade in cement made in Zambia and other countries and VAT (Value Added Tax) from sales of the same?

When Escom is operating at half-mast as is the case now, apart from loss of revenue for government, development is stultified. Cost overruns for projects become the order of the day. What is the job of the President if not to fix things through implementing proper policies?

With the power outages now running into the fifth month, for the third year running, and getting worse by the day, APM met the twin boards of Escom and Egenco on Wednesday. As usual, his larger than size motorcade blocked traffic in town. But that is another story for another day. His message to the nation after the meeting was that in a year or so, power outages in the country will be history. That had a sense of déjà-vu. Power problems have been with us for as long as APM has been at the helm of this country.

Escom, the ruling party’s cash cow, which is distributing only 160MW against the national demand of 300MW has been run down. If there was political will to change things three years is a century.

Until Egenco starts generating enough power, it is being unresponsive to the market dynamics for government to continue to ban foreign cement imports on the pretext of protecting the local cement industry.

Urgently liberalise cement imports to suppress price increases and reduce budget overruns for projects. Minister of Industry, Trade and Tourism, Henry Mussa, the ball is in your court. You have a crisis in your hands.

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