Mining & Trade News

The Public Private Partnership Commission (PPPC) says commencement of the construction of the Mpatamanga Hydropower Plant, which was scheduled for this year, has been shifted to next year.

The project, which will see the injection of a total of 350MW into the national power grid will be constructed at Mpatamanga Gorge, along the Shire River.

It is being developed through a Public Private Partnership Model in which EGENCO will hold 30% shareholding on behalf of the Government of Malawi.

The other shareholders will be the World Bank’s International Finance Corporation to retain 30% and a strategic partner to hold 40% of the investment.

PPPC CEO Patrick Kabambe disclosed to Mining and Trade Review that the project will not start this year due to on-going negotiations with two international energy firms SN Power Invest of The Netherlands and Electricite De France SA of France which have so far submitted their final technical and financial proposals for assessment.

Kabambe said the two investors have merged to work as a consortium for the project anticipated to be finalized by 2025.

Kabambe said; “We are still under negotiations, the investors submitted their final offer on September 17,2021 and we have just finished evaluation of the proposal, the next step is to embark on negotiations on final details.”

“We understand that citizens’ key instrument is the analysis of whether these companies will be affordable enough to meet current power needs, of which it is noted that this project is worth investing considering the funds being spent in maintaining gensets.”

He also cited that once commissioned, Mpatamanga will double Malawi’s power generation capacity hence paving way for more investment opportunities in the country as major industrial operations have been failing to commence in Malawi due to power deficiency.

Kabambe said: “We have seen many industrial projects in various sectors including mining failing to rollout with some pulling out to other countries due to energy scantiness, but once this project is commissioned, we are optimistic such distresses will halt.”

“And with the coming in of the interconnector with the Southern Africa Power Pool, we stand solid chances of exporting excess power to other countries, equating to new revenue channels for Malawi.”

The project will also assist in meeting future power demand during both peak and off-peak periods, improve the performance of the existing power system due to inclusion of a storage reservoir to support peaking operation as well as significantly reduce the sediment inflow into the Kapichira reservoir, increasing power generation at the plant and prolonging the lifetime of the reservoir.

The total investment on the project is estimated to be approximately US$850-million and a comprehensive World Bank-financed feasibility study for the project was completed in 2018.

During the study, a UK-based global engineering, management, and development consultancy firm Mott MacDonald, Malawi-based C12 Consultants, and France-based biodiversity and ecosystem consultancy Biotope were engaged to carry out the environmental and social impact assessment (ESIA) for the project.

Malawi vice president, Dr. Saulosi Chilima, has called on world business magnates and leisure seekers to come to Malawi and experience the country’s rich and diverse culture, trade and tourism investment opportunities

Speaking during the Malawi National Day at the Dubai Expo 2020, Chilima explained that Malawi is a land full of untapped opportunities in agriculture, tourism, mining and manufacturing.

“I wish to invite investors here in Dubai to explore investment opportunities in areas like eco-tourism, hotel, camps and lodges, water and lake sports, wilderness safari, energy generation, minerals beneficiation and agro processing,” he stressed.

Chilima, who is also Malawi’s minister of economic planning and development and public sector reforms assured prospective investors that apart the numerous investment and trade opportunities, Malawi has a hard-working and trainable workforce, a peaceful and welcoming environment and a strong judicial system.

In a speech tailored to reiterate the world trade fair’s theme ““Connecting Minds, Creating the Future”, as well as its sub-themes of sustainability, mobility and opportunity, Chilima called on participants to come and explore Malawi’s mineral resource opportunities which include agro-minerals for fertilizer production, energy and industrial minerals such as bauxite, iron, gypsum, coal, and uranium.

The vice president, however, pointed out that so far Malawi has only been able to export tobacco, dried peas, soya beans, sesame seeds, tea and coffee to the UAE.

But he challenged that apart from exporting the mentioned products, Malawi can also supply the UAE with frozen goat meat, fresh fruits and vegetables as well as value added products such as sugar and edible oils, whose raw materials are abundant in Malawi.

Transport access for goods to UAE from landlocked Malawi is through Indian Ocean sea ports in Tanzania and Mozambique but for perishables and other sensitive goods, an Emirates Airlines freighter plane with necessary facilities makes routine landings in Malawi.

Malawi is signatory to a number of multilateral and bilateral trade agreements such as the COMESA, SADC, AfCFTA, EU and UK GSP and AGOA, which provide preferential access to world markets.

The 2020 fair has been held this year because of the Covid-19 pandemic. It is expected to run till March 2022.

Meanwhile, the gathering is regulated by strict precautions, including mask and vaccination requirements, and limitations to the number of people in the fair and in exhibition pavilions.

The United Nations is also part of the fair highlighting the sustainable-development goals (SDGs).

NBM Development Bank, which is a subsidiary of Malawi’s financial powerhouse National Bank of Malawi (NBM), says it has earmarked funds to lend to enterprises embarking on production of clean and renewable energy.

NBM Development Bank Projects Officer Tothola Gonthi told Mining and Trade Review that under the financing product, the Bank offers long and medium term loans, equity and quasi equity capital, Credit Risk Guarantees and leasing facilities to qualifying Small and Medium Enterprises (SMEs) in line with its strategic objectives and business model.

Gonthi said: “Basically we are financing projects that are trying to deliver clean and renewable energy, including charcoal briquettes in a quest to eliminate use of environmentally hazardous stoves.”

“The development bank has been financing these projects for the past two years, but we commenced full scale financing last year, 2020.”

He said the Bank has not set a limit in terms of amount of funds to be loaned out since it intends to finance as many players as possible as there is a huge market for renewable energy in Malawi catalyzed by the country’s power deficiency.

Gonthi said the Bank will finance enterprises that demonstrate impact in terms of promoting environmental and social-economic sustainability including clean energy projects for low income population such as development of clean stoves for cooking, water purifiers and solar lightning projects.

So far, the Bank has disbursed over K427 million to various players in renewable energy sector including solar system supply retailers.

Gonthi explained: “Basically for one to qualify for our financing opportunity, the enterprises are supposed to be solely dealing in clean and renewable energy, and they have to submit a comprehensive business proposal as it is vital to determine and weigh the prospects of business in proportion to the funds being sought-after,”

“We finance start-ups as well as those that are intending to expand, for example Pan Green Africa which is venturing into charcoal briquettes production, we financed them from start up to the extent they are in production.”

With the minimum amount of capital financing pegged at MK 15 million and Maximum of MK 150 million, the Bank has so far financed over six enterprises which are currently on production phases.

Malawi’s energy sector is one of the most severely constrained in sub-Saharan Africa as less than 10% of the population of 18 million is connected to the national electrical grid. For 80% of the people living in rural areas, access to electricity is less than 1%.

The total installed capacity for power generation in the interconnected grid of Malawi operated by Electricity Supply Corporation of Malawi (ESCOM) is approximately 362 MW, of which 351 MW is hydropower and 11 MW is power produced from reciprocal engines.

Estimates indicate that shortage of capacity frequently exceeds 60 MW, or over 17% of peak demand in Malawi. With no reserve margin and a stressed system, the reliability and quality of electricity supply is poor.

Malawi depends on domestic generation, as there are currently no significant interconnections to neighboring countries.

The National Construction Industry Council (NCIC) has warned foreign construction companies against sidestepping laws that regulate the industry in Malawi.

According to a press statement issued by the Council, some foreign companies working or intending to provide construction services in the country deliberately avoid to comply with the regulations that compel them to provide services through joint ventures or subcontracting agreements with local firms.

Clarifying on the statement, NCIC Acting Chief Executive Officer, Engineer Gerald Khonje stressed the need for foreign firms to follow both the Subcontracting and Joint Ventures by Foreign and Malawian Construction Firms Order of 2014 as well as The Practice of Construction Consultancy Services by Foreign Consulting Firms Regulations of 2004.

“In line with the Presidential Directive on Micro, Small and Medium Enterprises Order (MSMEs) and the Joint Ventures and Subcontracting Regulations in Construction, NCIC wishes to advise all foreign firms operating or intending to operate in the construction industry in Malawi to ensure compliance to both the Order and Regulations.

“Any foreign firm that is found to be operating contrary to the provisions of the Order or the Regulations stated herein risks disciplinary sanctions which may result in the revocation of its license,” said Khonje stressing the importance of complying with the Order or Regulations before commencement of any construction works or activities.

The National Construction Industry (NCI) Act mandates NCIC to promote and develop the construction industry in the country by giving priority to the general public in a bid to ensure that both foreign and Malawian firms benefit from the industry

Khonje explained that the two documents require local contractors involved in joint ventures to shoulder a minimum of 30 percent of the works by volume and value while local consultants must undertake a minimum of 51 percent of the services agreement.

NCIC further warned Malawian firms against entering into fraudulent agreements aimed at circumventing the provisions of the Order or Regulations, saying such conduct amount to offenses that attract disciplinary actions, which may result in the suspension or revocation of their licenses.

Khonje appealed to firms that have not yet complied with the two documents to do so immediately to avoid delays and disruption of their various works or activities.

NCIC has launched a five-year fraud and corruption prevention policy to create a corrupt-free working environment within the Council as well as the entire construction industry.

The policy focuses on fraud and corruption prevention as much as it also looks at internal systems control.

In the fraud and corruption prevention area, the policy emphasizes on development and implementation of effective fraud and corruption detection and correction systems. While in internal systems control, the policy spearheads adherence and enforcement of other policies including registration procedures, financial policies and procedures, codes of conduct, staff terms and conditions of service, evaluation and monitoring and; enforcement procedures.

In an attempt to regulate and reduce inefficiencies in the energy sector, the Malawi Government has revealed plans to develop a Renewable Energy Act. The Act will also go a long way in creating a fertile ground for the participation of Independence Power Producers (IPPs) in the sector.

The current IPP Framework need some improvements to set an enabling environment for various actors in the sector, President Lazarus Chakwera told the gathering in Salima when he inaugurated the 60MW JCM Power plant, the first IPPs solar project to be connected to the national grid.

Chakwera added that the Act will also address red tape and other weak governance systems to guarantee private investment security in the sector.

“For serious developers like JCM Power, who have sourced financing support from the Dutch Development Bank and InfraCo Africa Limited, as well as a liquidity guarantee from the African Trade Insurance Agency, Malawi cannot afford to have governance systems that take eight years for a project like this to move from conception to completion,” he said.

Dismayed by the red tape in government, Chakwera noted that the decision to unbundle the concentration of energy functions in the Electricity Supply Corporation of Malawi (ESCOM) and create separate institutions in order to make the power market more efficient, left behind loose administrative processes that were not responsive to investors.

“More needs to be done to make the administrative processes within these new entities less susceptible to political interference and human error. In short, more needs to be done to make the administrative processes within these entities faster,” he said.

Following the unbundling of ESCOM, Energy Generation Company (EGENCO) took over the responsibility of generating power, ESCOM retained the responsibility for power distribution while Power Market Limited assumed the responsibility of purchasing power,

Chakwera further called on the Ministry of Energy to be professional in handling prospective investors in the energy market so that the country can meet the target of 1000MW in the next four years.

He further advised investors who secured Power Purchase Agreements but had not started implementing their projects to pull up their socks or face consequences. “Malawians have no patience for pretenders. We want serious people like JCM has shown themselves to be,” he said.

The President commended JMC Power for promoting a green future, which fits with the country’s desire for clean energy sources.

He said despite Malawi not being one of carbon emitters, there is a need to embark on more clean energy sources understanding that the country is not spared from negative impacts of climate change as a result of the emissions of nations in the global north.

Recently, Chakwera attended the Climate Conference in Scotland where he witnessed the launch of the Global Energy Alliance for People and Planet, whose aim is to promote universal access to clean and affordable energy.

According to Chakwera, the JCM solar power plant is a potent symbol of the country’s commitment to that agenda, a commitment to building a new Malawi of access to clean and affordable energy.

Recently, UN Secretary General Dr António Guterres warned the Glasgow Climate Conference that “addiction to fossil fuels is pushing humanity to the brink”.

The warning comes as the world reawakens to the realization that uncontrolled use of fossil fuels emits human and environmental damaging carbons that causes global warming.

Southern Africa including Malawi has been more vulnerable to experiences of global warming’s extreme weather events such as heat waves, droughts and heavy flood-causing rainfall.

A recent study in Malawi on the effects of Cyclone Idai in 2017 titled “An Aftermath of a Disaster” by British based climate justice media research firm, Whales that Fly and Malawi’s Hyphen Media Institute shows that global warming not only destroyed the livelihoods of affected Malawians  but also ruined the country’s most relied upon social and economic sectors such as agriculture, fisheries, forestry, energy and went on to overstretch the education and health systems leading to deaths, injuries and displacements of thousands of people.

Africa Centre for Strategic Studies observes that the incidence of natural disasters in Sub-Saharan Africa has increased at a faster pace than the rest of the world. Compared to the 1970s, the frequency of droughts has nearly tripled, storms have quadrupled, and floods increased tenfold.

 “Either we stop it, or it stops us,” challenged Guterres.

While African countries are only responsible for about 4 percent of all carbon emissions, the Paris Climate Conference held six years ago agreed to reduce 45 percent of emissions by 2030 if global warming is to go just 1.5 °C above pre-industrial levels.

Hyphen Media Institute Board Chairperson, Eldson Chagara, says for the world to achieve the 1.5 °C mark there is need to move away from fossil fuel such as oil and gas to renewables like solar and wind energies.

“Switching to renewable energies opens the country to many other economic opportunities such as expanding its manufacturing base by creating value addition options for minerals for making solar or wind panels as well as manufacturing batteries for the solar panels, wind turbines, smartphones, and laptops,” he says.

“These resources if properly planned for and utilized with sustainable community and environmental centred principles could transform the country’s social and economic landscape,” says Chagara.

Malawian geological and mineral expert, Grain Malunga, has responded saying the country can grow its economy by taking advantage of the Glasgow Climate Conference agreement to reduce carbon emissions.

He says Malawi must start strategizing on how to sustainably produce and add value to locally available mineral resources that can be used to produce renewable energy technologies.

The COP26 climate conference is urging nations to transit from fossil fuels to renewable energies.

Malunga notes that Malawi is endowed with silica sand, iron ore, rare earths, uranium and graphite deposits that can be used in the manufacturing of solar panels. He says the country also has significant deposits of cobalt, lithium and rare earth minerals which can be used to produce renewable energy technologies.

“We must position ourselves to be able to participate in the manufacturing of some renewable energy technologies as well as the exportation of raw materials for the technologies,” says Malunga adding that government should also start thinking of training Malawian technicians and engineers who can harness energy from the country’s uranium and bauxite deposits.

Edgar Bayani, Chairperson and Chief Executive Officer at Community Energy Malawi reiterates saying that Malawi is resourcefully well positioned to make significant contributions to the production of renewable energies

“Malawi has rich renewable generation potential in hydropower, solar, wind and biomass, which, if well utilized, could produce a wide range of cheap and reliable power systems, ” he says

Meanwhile, SADC chairperson and president of Malawi, Lazarous Chakwera calls on developed countries, as prime polluters of the earth, to commit to financing climate change mitigating and adaptation measures by poor countries.

“This is what the people in Mozambique, Zimbabwe, and Malawi are asking after burying the relatives they lost during Cyclone Idai,” Chakwera said when addressing fellow leaders.

The Governments of Malawi and India have prequalified five Indian consulting firms to conduct consultancy services for construction of 30 Megawatts Solar Power Plant for Blantyre Water Board (BWB).

The project will be financed by the Government of India through a US$215.68-million extended Line of Credit (LOC) by Export – Import (EXIM) Bank of India for the implementation of drinking water supply schemes and other development projects in Malawi.

The listed companies include: Avant-Garde Systems and Controls Limited; Darashaw and Company Limited; NTPC Limited; TATA Consulting Engineers and; WAPCOS Limited.

According to a General Procurement Notice, the listed companies were examined and verified for both completeness of their submissions and adherence of their applications to the prequalification criteria that was prepared by the Malawi Government.

Reads the statement by Malawi Government, EXIM Bank and BWB: “Blantyre Water Board which is one of the implementing agencies for the LOC intends to apply a portion of the funds towards construction of an Independent Power Producer (IPP) for own use.”

“The Importance of constructing an IPP for the Board cannot be overemphasized. Firstly, the project shall reduce operational costs to sustainable levels that will allow the Board to continue supplying affordable services.”

“This shall consequently help in the improvement of BWB’s business profitability which will enable timely system maintenance of faults and subsequent investments in expansion of network to unserved areas and technological improvements.”

The consultancy services will involve preparation of a detailed feasibility study and designs for the project, as well as preparation of Detailed Project Report (DPR).

BWB has proposed December 23, 2021 as deadline for submission of bids by consultants, and January 17, 2022 as the commencement date of consultancy services for the IPP project.

Malawian youths have risen up to shape the future of the country’s agriculture sector by exploring opportunities along the value chain in production and markets.

Youths in central Malawi’s Lilongwe district, have teamed up under a project called Youth in Agribusiness to harness the potential of the sector away from subsistence farming to employment creation, economic growth, export earnings, poverty reduction, food security, and nutrition.

Founder and leader of the group, Blessings Banda, says the aim of organization is to make agriculture attractive and profitable to the youth so that they can embrace it and be able to create wealth.

Population growth and an economic slump have disrupted livelihoods in Malawi, where unemployment, mostly youth unemployment, is on the rise.

” This is an intergenerational initiative that offers practical skills to empower the youth by providing capacity building so that they take agriculture as a business and be able to create wealth”, explains Banda adding that the project also aims at opening production and marketing opportunities for the youths as well as lobbying for better market prices.

“We are a conduit that connects youths to access agri-finance,” he says pointing out that the institution will act as a guarantor to cushion participants who may struggle to provide collateral against agrifinance loans.

Banda says despite making some progress, Malawi still has a long way to go in agribusiness, especially in the provision of agrifinance as well as extension services in terms of agritechnical knowledge, expertise and support.

“Luckily, government and other stakeholders are already making partnerships aimed at creating a sustainable business environment for agriculture,” he explains emphasizing that deliberate policies and programs are underway to create good, profitable and promising markets.

Endorsing the project, founder and CEO of a Lilongwe-based enterprise, Mtengowakumunda company, Sylvester Chabuka, reiterates that agribusiness is very important to the social-economic development of the country.

He urges the youth to change their mindsets and seeing agriculture as a business.

Chabuka says that though 80 percent of the country’s population are engaged in agriculture, most do not take it as a business but rather for subsistence.

“Am glad to see my fellow youth, Blessings, implementing this project. We need more youths to venture into agribusiness and explore the value addition chains”, Chabuka says observing that value addition for farm produce has huge demand and potential in food processing.

Agriculture accounts for around 28 percent of the county’s GDP and contributes over 80 percent of the national export earnings, according to the Malawi Growth and Development Strategy III.

The Malawi Investment Trade Centre (MITC) has challenged local Small and Medium Enterprises (SMEs) to produce quality products that can compete favourably on both local and international markets.

Speaking during the official opening of a three-day mini trade fair in Lilongwe, MITC Board Member, Fumbani Nyasulu, who also represented the Principal Secretary in the Ministry of Trade, said local production of good and high quality products can easily turn the country from a gross importing nation into an exporting one.

“The government agenda is to export more and import less, hence, our call on SMEs not to only focus on the local market but to produce with the international markets in mind.

“We should be competitive enough to replace the imported products in the shops with quality and affordable local products,” said Nyasulu explaining that government has put in place measures that will assist local producers build their capacities in different value chains.

The mini trade fair has been organized to give the local SMEs an opportunity to come together and share experiences with their fellow sector players, said Nyasulu adding that the activity is also one of MITC’s functions of promoting trade and investment.

The fair has been organized in collaboration with African Development Fund (ADF), Small and Medium Enterprises Development Institute (SMEDI) and National Association of Small and Medium Enterprise (NASME). The theme of the fair is “SMEs Driver of Industrialization and Economic Growth.”

In his remarks, SMEDI Chief Executive Officer Rodrick Chataika pledged to continue building the capacities of local SMEs. 

“SMEDI will continue playing its important role of capacitating these SMEs through training programs, educating them in business entrepreneurship, management skills, financial literacy on how they can prepare their financial statements and accounting records and also financial proposals if they want to access funding from partners and also from different banks,” said Chataika, whose organization has entered several agreements intended to link SMEs to local banks for business financial support.

He further explained that SMEDI also links SMEs to potential markets, apart from providing incubation centers where entrepreneurs are trained to add value to raw materials and convert them into marketable products.

Chataika said the incubation centers also target local Artisanal Small Scale Miners (ASMs) to turn their raw gemstones into valuable products by professionally cutting and polishing them into internationally marketable products.

Endrina Maxwell, owner of Dwalle Supplies and General Dealers lamented limited capital as the main challenge obstructing her business to compete with bigger companies.

She however sees the formation of cooperatives as an alternative but said she would in the meantime want to run independently. “I want to grow as an individual,” she said