Tobacco earnings beat USD350 million target

TAONGA SABOLA

It doesn’t get sweeter than this. With about
25 million kilogrammes yet to pass through the auction floors, the
country’s number one foreign exchange earner tobacco has already
fetched $353 million (about K49.42 billion) surpassing the $350 million
(about K49 billion) set by the authorities, the Tobacco Control
Commission (TCC) said on Thursday.

This year’s revenue is 80 percent higher than the K27 billion, the
green gold generated at the close of the tobacco selling season last
year.

TCC general manager Godfrey Chapola told The Nation that improved
prices on the auction floors have been the major driver of the
skyrocketing earnings.

The country has seen probably the best tobacco prices in years,
partly attributed to increased competition on the market coupled with
rising demand for the commodity emanating from a slow down in
production in some of the major tobacco producing nations.

Chapola said as at Thursday, a total of 145 million kgs of the crop
had been sold. Primary crop estimates had indicated that the country
would produce a total of 150.8 million kgs.

As at Thursday average prices for burley hovered between $2.50 and $2.60.

"Final and June estimates peg total tobacco production this year at
169.7 million kg. Previous estimates (March) had indicated a total
output of 150.8 million kg. We think the increase is due to tobacco
that is ordinarily smuggled across the borders but this year that
tobacco has been sold locally because of favourable prices.

"There are unsubstantiated rumours that some tobacco may have been
smuggled into Malawi from neighbouring countries. This, however,
remains a rumour," said Chapola.

In its April 2008 Economic Newsletter, National Bank of Malawi (NBM)
had predicted this year’s tobacco earnings to hit $452.7 million with
sales averaging $3 dollars per kilogramme. But the price of the green
gold lost some salt in following weeks to settle at around $2.50 as
buyers came back to their senses from a first day ‘mistake’ which saw a
kilogramme of tobacco selling above $9 dollars.

Economic commentators say they expect the increased gross tobacco
revenue to strengthen the local currency in the short to medium term.

In its March 2000 economic bulletin financial securities firm
Continental Discount House (CDH) advised monetary authorities to take
advantage of massive smoking dollar inflows to collect anomalies in the
country’s exchange rate regime.

"With the tobacco marketing season in progress it is expected that
the kwacha will exhibit its tendency of being firm against major
trading currencies reflecting the increased holding of foreign currency
reserves in the country," said CDH.

Govt to disband Air Malawi

MOSES MICHAEL-PHIRI

Government has come out of its shell on Air
Malawi and says it plans to disband the airline and establish a new
entity in which Capital Hill will have 51 percent stakes.

In his wrap up statement to Parliament on Tuesday Finance Minister
Goodall Gondwe said Air Malawi has failed the country and a new airline
will be a solution to retain a flag carrier.

Gondwe said since 2004, government has spent considerable sums of money to ascertain the viability of the company.

He said the board of Air Malawi as well as management have tried
their best with various experiments to bring normality into the company
despite short spells of cash flow improvements that have been
advertised as profits.

"But in the end these too have failed and the financial situation is
now threatening the safety of its passengers. In the circumstances, it
seems proper for the government to make a long term decision, on the
matter that will satisfy both demands.

"We feel that a new airline could be re-established in which the
government will retain a 51 percent shareholding and a strategic
investor would be allowed to own 49 percent of the shares. The
Government would thus have a majority on the board of the airline that
would strictly be run on a commercial basis. In pursuing this deal, we
are looking at what other countries have done such as Nigeria, Kenya,
Zambia, Ghana etc," said Gondwe.

He added that for almost 30 years, Air Malawi has failed this
country to deliver services that are reliable and has from time to time
failed even to procure basic operational materials such as fuel without
government’s support.

"Indeed again and again it finds it difficult to even maintain its
membership of IATA and continues to damage the good name of Malawi by
ignoring its advertised time-tables. The comments it attracts
internationally have been unflattering. It is because of these problems
that the UDF Government decided to privatise Air Malawi and searched
for an investor to purchase it. It was however not successful as
prospective buyers found the airline unviable," said Gondwe.

He said now the question of how Air Malawi should be handled has been a difficult one.

"On one hand it has been argued, that the air line should be
maintained under any circumstances as it is our flag bearer around the
continent. That we should not sell the public asset to foreigners and
that we should therefore save and improve it at any cost.

"This is an understandable view and one which is shared by many. It
is an emotional view, but understandable. On the other hand it can be
argued equally legitimately that we must have an airline that provides
the public with an efficient and reliable service throughout the
country and one that is not a burden on the public finances so that it
does not compete with our ability to assure the public the basic needs
of life," he added.

Gondwe’s revelation puts to rest a heated debate that has ensued in
recent past as to whether government should sell the flag carrier or
not.

The debate followed reports that government was negotiating with South African-based ComAir to buy off Air Malawi.

Commentators recently advised government against trading the
company, arguing that it is of great significance to the country as it
Malawi’s sole flag carrier.

Since then, a number of groupings have expressed interest to buy the
airline, among them the company’s managers and two local consortia.

Currently Air Malawi has three aircrafts but operates two aircrafts
the Boeing 707-300 known as the Kwacha and a 32-seater ATR42.

With the Kwacha grounded when a truck hit a pressurised area two
months ago, the airline has been chartering aircrafts from South
Africa’s Inter Air to operate on its flights.

Opposition blocks budget discussion

Opposition MPs yesterday blocked progress of
the Committee of Supply which scrutinises budget allocations by
faulting Finance Minister Goodall Gondwe for failing to bring into the
House revised expenditures for the last financial year.

Gondwe tried in vain to convince the uncompromising MPs that he
would bring the supplementary appropriation later and showed signs of
frustration alongside Justice Minister Henry Phoya—who described this
year’s budget as "going through acrimony and tribulations".

On Tuesday, Parliament voted to go into the Committee of Supply. But
trouble started earlier yesterday when MCP’s stand-in finance
spokesperson Situsi Nkhoma wanted Gondwe to table the supplementary
bill to regularise any over-expenditure that might have been incurred.

"Apart from that, despite the mediation efforts by the clergy, only
the opposition has signed the memorandum of understanding. We want
government to assure us that it will not fool us as it did last year
when they prorogued Parliament. What is their position on Section 65?"
Situsi Nkhoma queried amid loud cheers from the opposition backbenchers.

Leader of UDF in the House George nga Mtafu said: "Where is Section
65 now and what will happen to our security when the Army marches in on
Friday as someone ordered?"

First Deputy Speaker Esther Mcheka-Nkhoma asked leader of the House
Henry Chimunthu Banda to comment on the matter, but he said he could
not find a Standing Order allowing him to debate the issues under the
Committee of Supply.

"Apart from that, the statements were made six days ago, why did
they have to wait until now? Why should security become an issue only
now?" Hit back Chimunthu Banda.

But Mtafu was at his feet: "His Excellency the State President in
Chiradzulu warned that we should pass, not our budget, not a Malawi
budget but his budget by Friday. Technically, even a very, very
unintelligent person will understand that there is no way the budget
can be passed by Friday".

MCP chief whip Betsoni Majoni said the opposition have waited for
days to give chance to government to apologise to which Industry and
Trade Minister Henry Mussa challenged that the President never spoke of
asking the military to march into Parliament.

Mcheka-Nkhoma curtailed debate and moved into Committee of Supply
where Lilongwe Mapuyu South Joseph Njobvuyalema questioned why the
State Residences vote should be discussed when it has not been audited
since 2003.

Gondwe said the State Residences were audited and they were just waiting for the Auditor-General’s signature.

Nkhotakota Central MP Clement Stambuli said the budget documents needed to be changed to reflect that they were only estimates.

Gondwe said since 1964, the supplementary appropriation bill is
presented soon before the actual appropriation bill of that year.

"It also allows us to easily justify any increase in the next year’s
allocations as we explain the over-expenditure in the past year. This
is the convention and practice for years," he said.

But Blantyre South West MP Gerald Mponda said there was no legal basis for Gondwe’s proposal.

Gondwe argued that Section 177 of the Constitution allows him to
bring the supplementary appropriations bill any time in the year but
former Justice Minister Bazuka Mhango said the section gives a specific
timeframe—that it should be before the start of the year.

Mcheka-Nkhoma asked for direction only to be challenged by
government whip Davies Katsonga who asked her to make her decision
based on the precedence set in the House.

As Chimunthu Banda pleaded for peace to be heard, opposition benches
kept interrupting him, forcing the leader of the House to snap: "It has
been very unusual and the issues that were being raised were irrelevant
to the Committee of Supply. We know what is happening, we are not
children."

After a one-and-a-half hours debate, the House adjourned two hours early with nothing discussed except the technicalities.

Opposition should learn to be sincere

By The Daily Times

There is something extremely wrong with our National Assembly that
beats common sense. Only on Tuesday leader of the opposition and elder
statesman John Tembo told the House that he did not want the wrangles
between his side and the government benches to derail the budget. He
said the misunderstandings were a thing of the past and wished
government well in its implementation of the financial blueprint.



Most Malawians breathed a sigh of relief when they heard that. Some of
them could not believe what they had heard since Tembo has been the
choirmaster in the song that wants Section 65 first and budget later.
These skeptics were proved right less than 24 hours later and those who
were gullible enough as to trust the leader of the opposition’s
cleverly delivered sentiments ended up completely in the wrong.



Alas! Come Wednesday, the opposition in the House did not go into the
committee of supply to finalise the budget as most well-wishing
Malawians had hoped for after Tembo wound up the debate on the budget
with a sweet promising and flattering speech on Tuesday. The opposition
were shamelessly back to their old antics demanding Section 65 and
mounting other hurdles in the way like asking government to explain
over-expenditure from last year before the House could plunge into the
committee of supply.



One thing came out clearly from this unpredictable behaviour of the
opposition, either Tembo is a fluent liar, which we would hate to
believe, or he does not command much respect among his ranks.



Yes the opposition is supposed to demand an explanation on
over-expenditure in the votes that it passed last year to keep the
government in check but not while sacrificing the budget. In fact, this
process is supposed to start immediately after the budget is passed and
not wait to be used as a means to reject the next budget.



Simply put, what the opposition has done is hypocrisy. All along the
government side has been portrayed as the devil’s advocate especially
when they refused to sign the memorandum of understanding (MOU),
crafted by the clergy to end the impasse in Parliament. From their most
recent actions it is apparent that the opposition is not sincere and
that could be the reason why the government is cautious not to take
them on their word.



But as we have said before, Malawi is our country as most of us have
nowhere else to live and, therefore, those in leadership, most of whom
have flats abroad and go to hospital in South Africa, should not play
with innocent lives. Our children learn in Malawi schools, not in
London and the majority poor need the subsidised fertiliser to push up
yields, more so with the increase in global food prices. Please pass
the budget.

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