Malawi’s Economic Growth Halted: Illovo Sugar Export Impasse

Key Business Points

• The Ministry of Trade and Industry has blocked Illovo Sugar’s export of sugar to prioritize domestic supply, highlighting the government’s efforts to ensure food security and stability in the market.
• The ministry will monitor sugar movement through technology and security escorts to combat informal cross-border trade and diversion of the commodity.
• The decision is expected to impact Illovo Sugar’s foreign exchange generation, but the company must prioritize domestic supply to regain investor confidence and regain competitiveness.

The Malawi government has taken a stern stance on the sugar industry, blocking Illovo Sugar (Malawi) plc from exporting sugar to prioritize domestic supply. The move comes as an acute shortage of the commodity emerged in some parts of the country, despite the main sugar producer, Illovo, opening its crushing season. Illovo’s delay in starting its 2025 crushing season due to adverse weather conditions has affected domestic supply, leading to a shortage in some areas.

Minister of Trade and Industry Vitumbiko Mumba disclosed that the ministry has not approved Illovo’s application for an export permit, citing the need to ensure sufficient supply on the domestic market. The decision is seen as a key intervention to address the shortage and stabilize the market. Illovo needs to export to earn foreign exchange for some of its production requirements, including the importation of spare parts for maintenance, but the ministry’s decision takes precedence.

To address the issue of informal cross-border trade, the ministry is finalizing arrangements to ensure that trucks carrying sugar are escorted by security personnel. Salima Sugar, another major producer, will be tracking its trucks using technology to monitor the movement of sugar. Concerted efforts are being made to combat diversion of sugar by local traders to neighboring countries, which has created a shortage in some areas.

Illovo Sugar’s acting managing director Kondwani Msimuko and Salima Sugar company executive chairman Wester Kosamu confirmed that their production started late due to weather challenges. They promised to stabilize supply starting on Thursday, with Salima Sugar’s production expected to supplement Illovo’s efforts. The Delayed start of the crushing season has affected Illovo’s sugar exports, which significantly dwindled in the first-half due to increasing demand on the domestic market.

Sugar remains one of Malawi’s three main export crops, alongside tobacco and tea. The government’s decision to prioritize domestic supply is expected to have a positive impact on the industry, ensuring that the country’s citizens have access to the commodity. As the government continues to intervene in the sugar industry, local entrepreneurs and businesses must adapt to the new market dynamics and explore opportunities in the sector. With the right strategies and investments, Malawi’s sugar industry can continue to thrive and contribute to the country’s economic growth.

Source Link

What are your thoughts on this business development? Share your insights and remember to follow us on Facebook and Twitter for the latest Malawi business news and opportunities. Visit us daily for comprehensive coverage of Malawi’s business landscape.