Jobs at Crown Fashions Limited, one of Malawi’s garments manufacturing firms, are at stake as the 47-year-old company is temporarily shutting down its operations.
The closure, expected to come into effect this Friday, will see at least 520 direct and indirect employees lose their jobs.
Crown Fashions Limited group chief executive officer Vijay Kumar in an interview yesterday linked the development to the current economic environment, but hoped to reopen after the economy improves.
He said: “We are not completely going out of business as we have already ordered fabrics which are coming into the country. We are, however, facing challenges to operate to our expectations owing to among others, forex shortages.”
In a letter addressed to its employees dated June 10 2022 which The Nation has seen, Kumar advised them that the firm has been forced to cease its manufacturing operations on account of severe economic hurdles and shortage of forex.
Reads the letter in part: “The major components of raw materials used in our operations are imported from overseas, but due to the prevailing economic crisis in Malawi, our suppliers are demanding advance payments before any shipments are made.
“We are, therefore, unable to remit the payments to our suppliers as Malawi is facing forex shortages. This delays the receipts of raw materials and creates imbalance in production planning and finally results in high production cost.”
Kumar also linked the closure to the devaluation of the kwacha which he said created huge pressure on the market, rising fuel prices which has increased the firm’s logistic charges, inadequate power supply and high manufacturing licence fees.
Ministry of Industry and Trade spokesperson Mayeso Msokera, while admitting that the development is a cause for concern, said yesterday that an arrangement has been made to visit the management of the company and understand in depth the issues raised.
He said: “We are cognisant of the fact that relevant authorities are putting in place relevant policies to restore macroeconomic stability of the economy and we hope to see things normalise soon.”
Economists Association of Malawi executive director Frank Chikuta said in an interview yesterday that as the economy is sailing through turbulent waters, it is becoming tough for businesses to operate.
He said: “The closure of such established companies is disappointing and bad for employment and economic growth.
“With the reforms government has started implementing, starting with the realignment of the exchange rate, the prospects for other players are good. However, the adjustment period will be painful and tough because the reforms were delayed.”
The manufacturing sector contributes significantly to economic development through increased government revenue from tax, increasing standards of living and infrastructural growth.