It has been 10 years since government privatised David Whitehead and Sons, the only State -owned textile and clothing company. Now operating as Mapeto, how is the company doing? EPHRAIM NYONDO writes.
David Whitehead and Sons (DWS) was a company that symbolised the country’s textile and clothing industry. Established as a subsidiary of Lonrho Malawi Limited in 1967 to serve the domestic market and to take advantage of export opportunities, the State-owned company, in its days of the sun, employed thousands, in the process contributing largely to the welfare of Malawians.
However, with the liberalisation of the economy beginning in the 1980s, the pull-out of Lonrho and the shifting of textiles production from Europe to East and South East Asia, presented challenges to the company. It started in the 1990s, in fact, trapped in the baits of financial woes.
Not only did this lead the company—which was the largest textile producer in east and southern Africa—to trim staff, resulting in shrinking profits and cash flows. The company’s production slumped from 33 million metres of fabric, plus moderate quantities of yarn and twine for the domestic market in the early 1990s, to a small-scale producer of 1.6 million by the late 1990s.
At one time, government started pumping in K20 million (US$61 538 at current exchange rate) a month into the company to subsidise its operation costs. But the move triggered a wave of criticism from economists, donors and business captains.
The way out for the company, experts argued, was to privatise it. This happened in April 2003, a move that saw almost 1 500 people being retrenched.
“Life has been tough since. Although some of us received our benefits, living without a job is challenging,” says Lufeyo Ngwira, one of the retrenched workers.
Mapeto Wholesalers, owned by Faizal Latif, who rose to the challenge and took over DWS, has had a rough but promising ride, says Martin Mpata general manager of Mapeto DWS.
“Currently, we have almost 900 workers and when our ginnery in Salima becomes fully operational, we will create 800 more jobs,” he says.
With the Salima cotton ginnery opened last week, the company, adds Mpata, will increase its production from the current 80 000 metres of cloth per day to 150 000, and gradually grow to 200 000 per day.
However, despite the glimmers of hope, the company faces deeper challenges to revive the glorious days of the country’s textile industry.
For instance, while planting the K400 million cotton ginning plant in Salima, the company put on hold 300 looms meant for weaving due to excise tax structure.
“The removal of this tax from direct traders who import to sell is putting us on the same footing with them. It, therefore, does not encourage us to re-invest, thereby employing more people as the operational costs incurred cannot match those of a trader. In the process, our prices will be higher than the imported fabrics, making our investment a white elephant,” he says.
Mpata even spoke on the challenges at the heart of the country’s manufacturing sector.
“The manufacturing industry in the country is far from developing unless the authorities put their weight into things such as unfair excise removals, smuggling and price under-declaration.
Mpata argues that government must also offer incentives to the manufacturing industry that will grow and export the goods to relieve the country of forex problems.
“There are a lot of smuggled goods in the country that threaten the local manufacturing industry. Some of the products that are imported into the country are substandard and do not match with those produced locally. You may recall, just as an example, we had Nzeru Radio who were progressing very steadily on radio and battery manufacturing, but when the country opened all its floodgates, the company had no choice but to close,” says Mpata, adding that the few remaining companies in the manufacturing sector need to be nurtured to survive.
“As for our industry (textiles), we are not asking for protectionism, but fair trade where all parameters leading to fair completion are practised. We are ready to invest more than what we do now,” he says.