K243bn Malawi trade deal on rocks

Setbacks have rocked a K243 billion trade deal between Malawi and South Sudan with the first batch of exported food commodities falling below the expected standards as some local companies stay away.

This development is feared to contribute to the country’s failure to meet the exports demand, Nation on Sunday understands.

Last June, the two countries signed a five-year deal, worth $295 million (about K243 billion) per annum in which Malawi is expected to export maize flour, rice, sugar and beans.

A year later, there are hindrances in the implementation of the exports. A total of 1 200 metric tonnes (mt) of maize flour and rice were shipped into South Sudan against the 180 000mt demand.

The maize f l o u r, however, was not within the standards which South Sudan expected.

In a written response, Thandize Loti, chief executive officer (CEO) for Ideal Group of Companies, which coordinates the exports, confirmed.

He said: “We successfully delivered 1 200mt of rice and maize flour which the importer received and distributed to consumers who have also advised us on their preferences and taste of our products.

“We supplied cream of maize flour yet they preferred pure white flour, very fine like our tradition ufa oyera.”

According to Loti, the first export batch earned local traders $1.2 million  (about K132 million) which is just a fraction of the $295 million the country could be earning every year from the deal.

The CEO was, however, quick to point out that they had learned their lessons and would do their better in the upcoming exports.

He said: “To show appreciation of our products, the importer visited this month with new orders which will be delivered starting July 2022 and we are very ready to deliver efficiently and effectively considering reasons learnt.”

South Sudan National Bureau of Standards chief executive officer Mary Nyitur Moartat, who was one of the officials who visited Malawi in February, asked the country to prioritise standardisation of the products before exportation.

“We need quality goods coming to our country from Malawi,” she said.

Trade expert Frederick Changaya doubted the country’s capacity to meet the South Sudan’s imports demands with poor coordination that characterise deals of such magnitude.

He explained: “The deal is so huge. I don’t think as a country we have that capacity. So, there was need for coordination and sharing notes among players.

“If they are saying they wanted pure white flour and then we were supplying cream, already there was a misunderstanding. We needed to sit down as a sector and strategise.”

Changaya, Applecore Grain & Milling managing director, said his company opted against being part of the deal because of poor terms.

Among them, he said, those coordinating the deal asked that they should just supply raw materials to Applecore, which will only be responsible for production.

Changaya said striping his company of freedom to source own raw materials was as good as not being part of the deal.

Said Changaya: “That deal was going to thrive if companies were given proper support. I have no problem with one person coordinating and getting a commission.

“What went wrong is coordination and somebody may be wanted to get a lion’s share so most suppliers pulled out.”