Illovo Sugar Malawi Plc upbeat on increased sugar production

Illovo Sugar Malawi (ISM) Plc says it is set to boost sugar production and ease market prices following shareholder approval to secure a US$45 million loan from its majority shareholder, Sucoma Holdings Limited (SHL).

Board chairperson Jimmy Lipunga made the announcement in Blantyre on Tuesday during an extraordinary general meeting (EGM) of the company’s shareholders. He said the financing would help the company navigate persistent foreign exchange shortages that have hindered its operations for years.

“Given these challenges, the Group is unlikely to generate or source adequate foreign currency to service its obligations in the short to medium term,” Lipunga said. “The shareholder loan will ease pressure on internally generated and locally sourced foreign currency, preserving our financial flexibility and allowing us to focus on long-term strategic investments and value creation initiatives.”

The board recommended that the facility be used to settle intercompany payables, currently standing at US$72 million, owed to related parties and subsidiaries of Associated British Foods (ABF) Plc, including Illovo Sugar Johannesburg and Illovo Group Marketing Services. The debt, Lipunga explained, stems from essential machinery and services procured on Illovo Malawi’s behalf, with balances piling up over the last four years due to limited foreign currency inflows.

He stressed that the loan will provide immediate relief.
“Sucoma Holdings has effectively paid US$45 million on behalf of Illovo Sugar Malawi. This will ease our pressure, enable us to scale up sugar production, and ultimately stabilize commodity prices. Importantly, there is no set repayment deadline under the agreement,” he added.

Meanwhile, Frank Harawa, Secretary General of the Minority Shareholders of Listed Companies (MISALICO), welcomed the resolution, describing it as a progressive move for both the company and consumers.

“We voted for the loan because it is critical to increasing production and reducing sugar prices, making the commodity more affordable to Malawians,” Harawa said. However, he urged Illovo to strengthen security measures to curb external smuggling of sugar, which undermines local supply and pricing.

Illovo Sugar Malawi Plc, the country’s oldest sugar producer, has faced mounting operational challenges due to forex shortages, but the company remains optimistic that this shareholder-backed loan will turn the tide in its production and pricing outlook.