Cigarette plant preparations complete

Post was last updated: October 21, 2015

Malawi Leaf Company and Egypt’s Eastern Company have completed preparations for the setting up of a joint venture cigarette factory in Malawi.

The project now awaits formal approval from Egypt’s President Abdel Fattah el-Sisi since Eastern Company is owned by the government of Egypt.

Malawi Leaf Company chairperson, Evans Matabwa, who was in Cairo, Egypt last week to discuss progress on the joint venture agreement signed in Malawi a few months ago, said in an interview yesterday that Malawi’s President Peter Mutharika already gave his nod to the project whose site has already been identified at Area 25 in Lilongwe.

“I am also aware that he [President Mutharika] sent a letter to the Egyptian president in support of this project. Therefore, as soon as the go ahead from the Egyptian side is granted, we will engage into immediate implementation,” said Matabwa.

He said the project offers enormous mutual benefits for both Malawi and Egypt in various aspects.

While in Egypt, Matabwa said he met Eastern Company’s chairman Nabir Abdel Aziz and his team where they discussed progress on the agreement to co-operate on the leaf processing and cigarette manufacturing investment project.

“The discussions were fruitful,” said Matabwa.

He said during a visit to Malawi by a team of sixteen Egyptian technical experts from Eastern Company in June this year, they did a preliminary survey of the investment and submitted a satisfactory report to the board of Eastern Company and that this was later followed by a series of meetings leading to the signing of the Memorandum o f Understanding in Lilongwe.

“We are now at a stage where the two sides, Eastern Company SAE, a subsidiary of Chemical Industries Holdings of Egypt and Malawi Leaf Company, a member of AHL Group, have almost finalised the preparatory discussions,” said Matabwa.

“The whole matter on implementation now awaits the formal approval of His Excellency Abdel Fattah el- Sisi, President of the Arab Republic of Egypt,” he said.

“It must be mentioned here that Eastern Company is a government entity and it is understandable that an investment of this magnitude outside Egypt requires the final authority of the leadership,” said Matabwa.

According to Matabwa, the project–once implemented, will change the dynamics of tobacco trading in Malawi where some high scale value addition to the country’s tobacco will have to be embraced.

“It remains economically unacceptable that after over a century of tobacco growing is this country, we are still exporting raw leaf,” said Matabwa.

“It is time to enhance the value of this crop. The coming in of the factories will therefore make our tobacco more competitive both locally and internationally, and hence improving the farmers’ take home revenue, as opposed to the case now,” he added.

A lot of people will also be employed and government revenue will increase once the project takes off, according to Matabwa.

For Egypt, the location of the cigarette manufacturing operations being at the source of raw material will bring a lot of efficiencies in the business.

“Apart from long term sustainability of raw material supply, the presence of this venture in the southern part of Africa will strategically broaden the market network and hence boost investment returns in the long term,” he said.

Cigarettes are expected to start rolling out of the factory’s production lines by the end of 2016 and the factory is expected to produce cigarettes of superior quality to be exported within the region and other international markets in the Arab world, Europe and Asia.

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