Malawi’s weaving factory details export constraints

Malawi’s manufacturing companies face a number of hurdles to break into the export market. Bangwe Weaving Factory, which has started exporting its products, has indicated it is also facing a number of constraints to fully satisfy the export trade.

The factory, run by the Malawi Council for the Handicapped (Macoha) in Blantyre, is selling its products in USA, Netherlands and South Africa and prospects are high to expand its export destinations.

All along the weaving factory, opened in 1976, has been producing an array of diversified crafted items rated world class, but were only being sold on the local market, despite their appealing outlook to effectively compete on the global market.

The factory’s centre manager, Henderson Nyondo, said last week they face a number of challenges to break full throttle into the export market, citing high transportation [air freight] cost, a lack of skilled workforce and working capital, among others.

These hurdles fail them to satisfy the orders they receive daily; hence, having outstanding orders.

“We get a lot of enquiries for our products. In the countries we are selling, it seems people are satisfied with the quality of the products and they always ask for more but we cannot produce the quantity to satisfy them,” said Nyondo, in his office replete with a number of products made at the factory hanging on the walls.

“If we had the required machinery, adequate workforce and the enough capital to increase our production capacity, we could have been talking of a different story. For instance, we only have four embroiderers and one makes about three bags a day,” he recounted.

The factory has to raise its own finances for its operations, paying utility bills, maintaining the premises, procuring of equipment and raw materials. Government only comes in to provide subventions for salaries.

Trade experts have always talked of Malawi’s companies lacking the capacity to satisfy the export trade despite producing quality products that appeal to the global trade. Capacity issues come into play.

The factory, according to production manager Danneck Andrew Katesa, has four units namely; weaving, block screen art, tie and dye and tailoring.

It produces goods, mostly hand woven products, such as wall hangings, tablemats, bags, rugs and bed covers.

The products are marketable to the extent that the factory meets all operational costs and also contribute funds for the running of other entities from income generated.

The factory has the potential to grow its export revenue to $45 000 (K14.4 million) annually, said Nyondo.

“The expansion in foreign markets is intended to increase the employment of people with disabilities from 103 to 200 by the factory alone,” he said.

The factory has established an agent in US, Holly Dunlap, who is facilitating their export trade and has given them sewing machines and one dyeing pot.

She has also bought assorted drill fabrics, dye and other chemicals needed for the orders whenever stocks are not available in Malawi.

The partnership will help the factory produce uninterrupted; hence, requesting the Export Processing Zone (EPZ) facility.

Courtesy of the factory’s association with Dunlap, it has made initial sales since February this year as follows; K400 000 worth of products to South Africa, K600 000 worth of dresses to US market, K400 000 worth of bags to Netherlands and they received orders in September of K1.6 million to US.

“The potential for export market seems to grow and it is the factory’s deliberate move to grow this market for the 2012/13 budget period; hence, the earlier attempts to apply for EPZ [Export Processing Zone].

“It is expected that the demand to US market will grow to K3 million per month, but we have the capacity to produce up to K4 million worth of tie and dye products in a month,” said Nyondo.

An EPZ is any area approved by the Minister of Industry and Trade for the purpose of manufacturing of export product with the objective of promoting economic growth by attracting of foreign investments. The zones offer incentives such as import duty exemptions.

In Malawi, an EPZ scheme is governed by the EPZ Act of Parliament number 11 of 1995 and regulated by the EPZ regulation under Section 21 of the same Act.

The factory has also applied for Industrial Rebate at Malawi Revenue Authority (MRA) while waiting to qualify for the EPZ application upon satisfying the requirements.