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Green Belt Initiative turns into holdings company

Government is in the final stages of turning the Green Belt Initiative (GBI) into a holdings company through a trust to increase agricultural production, enterprise development and exports.

Apart from the GBI coordinator, currently Henre Njoloma, the holdings company will also have first shareholders and first directors with a fully fledged trust in a last ditch attempt to consolidate irrigation farming in the country.

To get a new lease of life: Members of Parliament (MPs) touring the Salima Sugar Project, a GBI investment, currently under construction.
To get a new lease of life: Members of Parliament (MPs) touring the Salima Sugar Project, a GBI investment, currently under construction.

The first assignment for the GBI Holdings Company is expected to be the roll-out of the Salima Sugar Plantation expected to boost sugar production and the subsequent reduction of prices for the most sought-after commodity.

The decision to turn GBI into a company—which follows President Peter Mutharika’s approval in the context of the ongoing Public Service Reforms chaired by Vice-President Saulos Chilima—has won plaudits from two agriculture scholars.

According to a concept note we have seen, as a holdings limited company, GBI will possess a blend of private and public sector orientations to give it impetus to attract Public Private Partnerships (PPP) and joint ventures.

The document envisages a comprehensive GBI that will cover crop, livestock and fisheries farming; land administration; agro-processing and marketing; irrigation infrastructure development; and promotion of rural growth centres, among others.

Reads the document: “With this wide scope, some of the broad benefits will include rural transformation, support decentralisation through expanding revenue base for district councils and control rural-urban migration.”

The turning of GBI into a company comes at a time when the drive to promote investment and trade has been made easy courtesy of the One-Stop Investment Centre under the Malawi Investment and Trade Centre (Mitc) where all responsible stakeholders required for business establishment are found in one place as part of the reforms.

But the initiative will need heavy investment.

An average cost of irrigating one hectare is approximately $10 000 (about K4.5 million). Thus, with 11 000 hectares (ha) targeted for irrigation, that translates to the investment of nearly K50 billion.

And there appears to be a strong business case for such an investment.

Maize grown during winter on 10 000 ha can attract an average yield of five metric tons per ha.

This gives 50 000 metric tons, which, at an average price of about K90 000 ($200) per ton, is worth roughly K4.5 billion ($10 million) per year.

Apart from local consumption, government expects to generate foreign exchange once the new faced GBI becomes operational as Malawi will tap from existing markets in India, China and Nigeria.

Legumes are particularly attractive.

Information from the International Crops Research Institute for the Semi-Arid-Tropics (Icrisat) indicates that chick peas, for example, are easy to grow under irrigation and have a good market in India while groundnuts have a higher return on investment than tobacco and maize, apart from the fact that they have a market in the region as well as China.

Expected yield for chick peas is 1.5 tons per ha; thus, for 10 000 ha, it would be 15 000 tons.

However, these calculations are only based on the 11 000 ha to be supported by the K50 billion from the European Union (EU), meaning that there are more viable opportunities to turn the country into a food basket once GBI utilises all the irrigable land estimated to be 400 000 ha.

Through this roll-out of GBI, hundreds of Malawians are also expected to benefit from employment apart from the overall goal of making Malawi food secure through this unprecedented irrigation programme.

It is also envisaged that commercialising GBI will help fight malnutrition among infants because increased legume production supported with nutrition extension services will contribute to reducing malnutrition.

The GBI efforts anchor broad public service reforms, the National Export Strategy and in a way contribute to preparing Malawi to meaningfully benefit from the just-signed Tripartite Free Trade Area (TFTA).

These enablers are essential for government to realise the aspiration of doubling exports by 2019 as set in the Democratic Progressive Party (DPP) May 20 2014 Tripartite Elections manifesto.

In the meantime, government is negotiating with the EU to use 100 million euro (K50 billion) of its 560 million euro support to Malawi to kick start GBI as a holdings company carrying the nation’s hope of ensuring crop, especially maize, production year round.

Minister of Finance, Economic Planning and Development Goodall Gondwe disclosed this intention last week when he delivered his budget winding statement in Parliament.

Said the minister: “For a long time, the Green Belt Initiative programme has not vigorously developed due to lack of resources. If these negotiations succeed, we are likely to come to Parliament at the Mid-Term Budget Review to ask for an approval to proceed as discussed above.”

Commenting on the development, an agricultural engineer Dr Grivin Chipula welcomed the proposal, saying the current GBI status is distressing

Chipula, deputy head of the Department of Agricultural Engineering at the Lilongwe University of Agriculture and Natural Resources (Luanar), said it was a shame that more than five years since the project was initiated, there is nothing on the ground.

Evance Chaima, an irrigation lecturer at Luanar, also described government’s move as a good initiative worth supporting.

Said Chaima: “Turning it into holdings limited company is a good move considering that the GBI will now be more or less like commercialising irrigation and at the same time promoting export because we are looking at value crops, so taking it out of OPC would be great.”

 

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