Japan Tobacco International (JTI) has shelved off its investment plans to establish a cigarette manufacturing plant in Malawi.
Instead, the firm which boasts of 25 cigarette factories around the world and sources its leaf from 50 countries across the globe, says it has used resources earmarked for the forgone factory in Malawi to buy cigarette firms in Sudan and Egypt and also established own firm in Belgium.
“For the time being, we have stopped all the processes and if there is an interest [from the Malawi government] then I will have to take it up to the headquarters and see how we can progress,” said JTI Leaf Malawi Limited managing director Fries Vanneste in Lilongwe on Monday.
He was speaking on the sidelines of a familisation tour at JTI premises by new Minister of Agriculture and Food Security Allan Chiyembekeza.
Business News understands that JTI, formerly Africa Leaf, wrote and submitted a proposal to Malawi Government in October 2010 expressing interest to invest in cigarette manufacturing in Malawi but according to a source at JTI, it took time before government responded to their proposal.
Feeling frustrated with the delay by government to JTI proposal, the source said in 2012, JTI rescinded its investment decision plans and intensified the exploration of potential investment in other equally potential investment destinations.
Vanneste declined to share Malawi government excuses that necessitate the delay to favorably respond to JTI proposal.
“I am sorry, I do not know the reasons for the excuses, I just know [that] we did not get the response and then we wrote to government that we are no longer interested into the opportunity to go into cigarette production,” said Vanneste.
He also said the firm is not planning to invest in cigarette manufacturing any time soon also due to Malawi’s small market size of cigarette.
An internet search yesterday revealed that in March 2013, Japan Tobacco announced that it has completed the acquisition of Nakhla, one of the world’s leading manufacturers of waterpipe tobacco with headquarters and two factories in Cairo and Shebin El Kom, in Egypt.
On his part, Chiyembekeza said it is governments wish to add value to locally produced tobacco if Malawi is to realise real value from the crop-which wires in an average of 60 percent of all export earnings.
Currently, Malawi has one company, Nyasa Tobacco Manufacturing Company, which is the first company to produce local made brand of cigarette, in line with Malawi government’s vision for Malawi to add value to local tobacco by its own cigarette company.
But the sole cigarette manufacturer is producing minimal cigarette quantities and recently said it had embarked on an expansion drive and earmarked a $15 million reinvestment in its machinery.
In January 2010, Croatian-based giant cigarette firms Hrvatsk Duhani or Croatian Tobacco Company, and TDR also expressed interest to invest in the country but said would do so “only after a comprehensive market survey has been conducted to establish demand for cigarettes.”
Despite Tobacco being Malawi’s main export commodity, the country continues to export semi-processed tobacco to the international market which has over the past years led to worsening trade balance as total imports value have been surmounting exports value.