- Investors to enjoy tax breaks, 100% capital allowance on new plant
Government has unveiled 17 projects in the manufacturing sector worth $121 million (K62 billion) that could attract potential investors to transform the country into an export destination, according to the Malawi Investment Projects 2014 launched in Lilongwe last week.
However, the value of the projects does not include those in the construction and operation of a greenfield integrated cement plant at Bwanje in Ntcheu and the recycling plant for paper, plastic and organic matter because the costs are yet to be quantified.
Government believes the development of industries is an integral part of a nation’s economic growth and development since it is critical to transform from importing and consuming to producing and exporting, a policy thrust that has been talked about since 2005.
Figures show that the manufacturing sector contributes about 11 percent to the country’s gross domestic product (GDP), but experts argue there is potential for the sector to contribute more.
“An increase in industrial activities contributes to job creation, which in turn expands the market base of the economy. Considering that Malawi’s population is rural based, at 85 percent, and dependent on agriculture, special attention is given to rural industrialisation and agro-processing.
“Various opportunities exist in production of farm implements and inputs, textiles and garments manufacturing, bicycle assembly, furniture manufacturing and building materials manufacturing,” reads the preamble in part.
The promotion of the projects comes against the backdrop of a report by the Economist Intelligence Unit (EIU), which indicated that the country’s industry, which contributes one fifth of economic activities, is expected to shrink by about 1.7 percent this year, triggering exports of goods and services to fall by 1.8 percent.
Government hopes to develop and expand the industrial sector, emphasising on value addition and employment creation.
The Malawi Investment Projects 2014 indicates that investors in the manufacturing sector enjoy tax breaks, including loss carry forward for six years and 100 percent capital allowance and investment on new and unused plant and machinery and industrial buildings, 40 percent on used plant and machinery and industrial building.
The investment compendium shows that three biggest projects in the sector include cement production worth $57.5 million (K29 billion), sugar manufacturing at $28.8 million (K15 billion) and cotton spinning valued at $17 million (K9 billion).
On cement production, the project promoter is Shayona Cement Company, which intends to expand existing cement plant in Kasungu with the latest 1 200 TPD rotary clinkerisation and cement manufacturing unit.
The purpose, according to the investment compendium, is to be producing 1 200 TPD rotary clinker manufacturing and rotary cement for the domestic supply equal to the country’s requirements so that Malawi can stop importing clinker and cement and export 20 percent surplus to neighbouring countries.
Regarding sugar manufacturing project, the compendium shows that the project promoter, Mtalimanja Holdings Limited (MHL) in Nkhotakota, plans to increase sugar plantation and milling capacity so that it is commercially self-sustaining and profitable.
MHL plans to develop about 8 000 hectares of land in Nkhotakota and set up an integrated sugar project, which will comprise a 3 000 TCD sugar mill to produce 300 tonnes of sugar per day, cogeneration power plant and ethanol distillery, which will be developed in phases.
“The project objective is to increase sugar production for exports, animal feed, ethanol production and also energy generation. To empower the smallholder farmers by giving them shareholding both in the mill and sugar cane production.”
The other big project, Cotton Spinners Company Limited, located along the Blantyre—Lilongwe Road near Zalewa, intends to spin cotton lint into yarn for export, and the project is expected to be implemented within 12 months.
It is also expected to be dyeing yarns, towel weaving, knitting jerseys and making sewing threads for the export market.
Ideally, the project intends to add value to cotton exports by transforming lint into yarn and develop an integrated textile industry for Malawi.
Other projects include the revatilisation of Macoha’s factory at Bangwe, honey production and processing, manufacturing of cassava and starch and liquid glucose, production of edible groundnut oil and production of bio-sand filters for water systems. n