Dairibord sees business vibrancy in reforms
Dairibord Holdings Limited (DHL) with operations in Malawi under its subsidiary, Dairibord Malawi (Private) Limited (DML), is banking its hopes on economic reforms for its business vibrancy and viability.
In May this year, the Joyce Banda-led administration effected a number of monetary and fiscal reforms, developments that have pleased donors and restored their confidence.
Some of the reforms include the nearly 50 percent devaluation of the kwacha and liberalisation of the exchange rate, abolishing some foreign exchange controls, including the thorny 40 percent retention of exports.
Government also removed subsidies on electricity and fuel and subsequently adopted the automatic pricing mechanism (APM) of petroleum products, a situation that has seen fuel rising since June in line with global oil price and exchange rate movements.
The monetary reforms have resulted in foreign currency being available in commercial banks, relieving businesses that had suffered for close to three years because of acute shortages of hard cash.
DHL chairperson Leonard Tsumba said business in Malawi was being affected by foreign currency shortages and ‘restrictive retention policies’.
“The new policies pronounced by the Malawi Government are expected to restore donor confidence, economic stability and business viability,†Tsumba was quoted by Zimbabwe’s Financial Gazette.
As is the case with most companies that rely on foreign exchange, he bemoaned the exchange rate losses arising from the devaluation.
But Tsumba said raw milk intake in the six months to June 30 2012 rose by five percent to 12.8 million litres, with Zimbabwe increasing by nine percent and Malawi recording a seven percent slump. In May this year, DHL announced it will inject more than $1 million (K320 million, at the current exchange rate) into DML to ramp up production and increase profitability.
DHL chief executive officer, Anthony Mandiwanza, said the money will be directed towards the acquisition of new processing plants and equipment.
DHL has 68.4 percent stake in the firm after it acquired an additional 8.4 percent equity last year funded through dividend declaration, according to a Financial Gazette report.
Other shareholders in the Malawi operation include the Malawi Stock Exchange (MSE)—listed National Investment Trust Limited (Nitl), with 28.8 percent and Dairibord Share Ownership Trust which owns the remaining 8.8 percent.
Mandiwanza said the Malawi operation was facing challenges similar to those Zimbabwe went through in the past decade.
During the Zimbabwe crisis, he said, Malawi contributed 80 percent business to Zimbabwe and will continue to invest and support Malawi, not only for sustenance but also for growth.
Business in Malawi was being affected by a plethora of challenges that included expensive capital, unavailability of long-term finance and fuel shortages.
DHL subsidiaries include Dairibord Zimbabwe Limited, Lyons, NFB Logistics and Dairibord Malawi.
