Malawi economic recovery bearing fruit: IPS making its contribution

Truth must be told whether one likes it or not. And those telling this truth must do so boldly and without fear or favour. The indisputable fact is that the Economic Recovery Programme is bearing fruit.

The country has adequate stocks of fuel; forex is available; companies are operating at full capacity. Now add to this list the fact that the kwacha is firming while headline inflation is on the downward spiral.

A huge contributing factor to this development is proceeds from tobacco sales. Malawi expects to rake in a handsome US$300 million from its greed gold this year. This is something that has eluded the country for the past three years. Thanks to the visionary leadership of Her Excellency the President Dr Joyce Banda who has worked round the clock to turn around the tobacco story, farmers will once again start reaping the full benefits of their sweat from tobacco.

Soon after taking over government in April last year, Her Excellency started talking to stakeholders in the tobacco sector with a view to making growing tobacco a fruitful endeavour.

Hail Malawi President Joyce Banda for brave reforms
Hail Malawi President Joyce Banda for brave reforms

The answer was the introduction of the Integrated Production System in Tobacco (IPS). IPS earmarks about 80 percent of tobacco sales to be transacted through contract farming and 20 percent through the auction system.

Although government has embarked on agricultural diversification agenda, it recognizes that tobacco remains the main export earner and anchor of Malawi’s economy in the foreseeable future. Government therefore approved the IPS in the tobacco subsector to, among other things, encourage tobacco buying companies to support tobacco growers especially smallholder farmers by engaging them into contracts to produce good quality tobacco which would eventually attract premium prices on the market.

So what are the specific objectives of the IPS? IPS aims to:

  • Increase a predictable and timely income to the farming community from the IPS portion of the crop;
  • Provide corporate social responsibility and development of infrastructure in a proper and transparent manner in the areas of operation, thus improving livelihood for rural communities; and
  • Facilitate crop size management and create a platform for further efforts to address compliance issues such as child labour and environmental degradation

Lest we forget, last year, the country only managed to sell 79 million kg of tobacco through the floors and realised US$177 million. This is because tobacco had lost its shine as the green gold of Malawi after three successive years of poor prices at the auction floors.

As of May 1, 2013, some 41,604,701Kgs of tobacco had been sold at a value of US$72,393,326.03. The total projected volume for the 2012/2013 marketing season is about 156 million Kg, representing a 97 per cent projected increase in tobacco production volume.

The increased volume is expected to realize above US$300 million. There can be no better reason for celebrating than for this because these resources will anchor the economy in terms of improving availability of foreign exchange and further bringing the stability that the kwacha needs.

The good thing is that as a policy intervention, the IPS in tobacco has come to stay.

Better proceeds from sales of tobacco as a result of the IPS are expected to increase farmers’ incomes as well as improve environmental conservation through buyer company compliance to corporate social responsibility.

Of course, tobacco production is generally challenged by the Framework Convention on Tobacco Control (FCTC) implementation guidelines which, among other things, lobbies for restriction or stopping governments and private sector support for tobacco production and marketing.

However, economic growth and wealth creation cannot be more than seeing farmers earning more money from their farming efforts. And that is what poverty reduction is all about. Hail, President Dr Joyce Banda for the ERP which is putting more money in people’s pockets and bringing smiles on their faces.

  • Steven Nhlane is Presidential Press Secretary 

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