Government fails to provide forex to MAREP Suppliers

Malawi Government, through the Reserve Bank of Malawi (RBM), has failed to provide forex to local commercial banks who are supposed to finance 40 local companies contracted to supply materials under phase nine of the Malawi Rural Electrification Program (MAREP).

The suppliers, as is required by the law, had their collaterals such as real estate and other highly valuable property presented at commercial banks around October 2022 in anticipation for execution of their contracts.

Energy Ministry PS Alfonso Chikuni

Government also deposited 30 percent advance payments at the banks, as payment against the suppliers collaterals after these suppliers provided the Bank Guarantees.

But forex shortage has persisted in the country affecting these local suppliers, mostly indigenous Malawians who have not been supported by RBM, leading to delayed supply of the required materials.

Government is reportedly channeling the available little forex to procurement of fertilizers, medical supplies and fuel, making MAREP not a priority.

Speaking on condition of anonymity, one of the suppliers said they are reliably informed that the Principal Secretary for Ministry of Energy, Alfonso Chikuni, is considering just cancelling the contracts by 25th January, 2023 and setting up a new procurement committee in order to start afresh the bidding process.

That move, according to the supplier, appears to be sabotaging the current government’s agenda as it will delay implementation process of MAREP 9.

The angry supplier said such a decision would be wrong and will cost government a lot.

He further indicated no supplier would accept such unreasonable decision by the PS for Energy as the problem in delayed supply is not emanating from them (Suppliers) but rather RBM’s failure to provide forex.

“We are ready to sue the government. Why would they cancel the contracts as if the problem of forex is emanating from us?. Did they want us to source forex on the black market? They know that is illegal.

“Some funds have already been remitted to foreign manufacturers but they cannot send us all the goods before paying 100% of proforma invoice amount. If contracts are cancelled, we indigenous local Malawian suppliers risk losing the money we already paid to foreign manufacturers as they have no refund policy.

“The decision by PS Alfonso Chikuni would also lead to property loss through the provided bank bonds among the indigenous Malawian suppliers.

“In fact, one local commercial bank which was supposed to send €15 million to an international manufacturer on behalf of local suppliers, only managed to raise less than €150,000. It is sad government and RBM are failing to provide forex,” the supplier complained.

Apparently, Nyasa Times has seen a letter from Chikuni, dated 12 September, 2022, which he addressed to one of the suppliers, acknowledging the forex challenges in relation to the supply and delivery of MAREP materials.

The letter reads, in part: “The ministry has engaged the Reserve Bank of Malawi who have been made aware of the strategic importance of MAREP to assist in provision of forex.

“It is the aim of the ministry to seek assurance from RBM to work with commercial banks to ensure that forex is allocated to the programme.

“The RBM has assured the ministry that despite MAREP not being on the top list for this consideration, the bank will endeavour to assist on this matter”.

Efforts to speak to Chikuni and RBM proved futile.

Another letter from a commercial bank addressed to one of the suppliers attests the challenge of forex for their delay in remitting funds for the suppliers.

The letter reads, in part: “We would like to advise you that we are working to facilitate your MAREP forex invoice payment, however there has been a delay due to the scarcity of forex in the country.

“We are striving to source forex for your payment and have engaged the Reserve Bank of Malawi (RBM) to assist in its provision.

“We shall assist you as soon as possible and we appreciate the urgency with which the payment needs to be made”.

Another anonymous supplier added that, in view of this apparent government failure to provide forex, it is unfair for Chikuni and the Ministry of Energy to cancel their contracts.

“So, even if they engage new suppliers, where will they immediately get the forex? I suspect government wants to suffocate local suppliers. Government wants to engage foreign nationals, instead.

“Why is government fighting local suppliers and indigenous Malawians for that matter through the PS of the Ministry of Energy? They signed the contracts on the basis of employing fellow Malawians.

“These are indigenous Small and Medium Enterprises that President Lazarus Chakwera directed they get empowered by partaking in government contracts than concentrating on foreign nationals only.

“Why fighting us as if we have no capacity? We have money in our commercial bank accounts waiting for forex release,” the supplier complained.

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