Mulli’s bid rejected, Nyiombo gets deal: Malawi fertilizer subsidy for IRLAD

Malawi government has announced successful bidders in the fertiliser subsidy programme which has seen business conglomerates, the Mulli Brothers Holdings Limited , which was believed to had close links with the late president Bingu wa Mutharika , not being given the contract.

The published list of Irrigation, Rural Livelihoods   and Agricultural Development (IRAD) fertiliser project shows only two companies will carry out the exercise. They are Malawi’s leading suppliers of fertiliser, Nyiombo Investments  and  Export Trading.

Leston Mulli, head of Mulli Brothers confirmed he has not been given the contracts despite “offering competitive prices”.

Mulli: Ommitted

“Our bidding prices were lower than those who have been awarded the contracts,” he told Nyasa Times.

And Indigenous Business Association of Malawi (Ibam) president Mike Mlombwa  said Malawian businesses have lost out in the bid as government has offered to foreigners.

“Government should promote the indigenous businesses than foreigners,” said Mlombwa.

But Ministry of Agriculture and Food Security said the bids have been given to those that will make the programme a success, pointing out that Nyiombo was named the leading and successful player in terms of preparedness for the 2012/13 Farm Input Subsidy Programme (FISP) programme.

The main component of the government fertiliser subsidy suppliers  is yet to be  announced.

Critics have previously blamed late delivery and non-deliverance of fertilizer by suppliers, normally then ruling DPP cohorts, as one of the major obstacles to the smooth implementation of FISP since its inception in 2006. Many stakeholders have felt this has led to failure to meet harvest targets.

“As suppliers, Nyiombo Investments managed to supply fertilizer within the prescribed period for the 2011/2012 farming season. This, we attribute to our adequate capacity and that we do not buy from middle suppliers but import directly from manufacturers,”  Nyiombo finance manager Honest Tembo told Nyasa Times in an interview.

According to Finance Minister Dr. Ken Lipenga, the major allocation within the Ministry of Agriculture budget in the 2012/13 National Budget he presented recently is for the Farm Inputs Subsidy Program (FISP) which has been allocated a total of K40.6 billion.

“These funds are for the purchase of 150,000 metric tonnes of fertilizers comprising 75,000 metric tonnes of Urea and 75,000 metric tonnes of NPK fertilizers which will be distributed to 1.5 million farm families at a price of K500 per bag,” said Lipenga when he presented the financial plan.

Expert report

According to the “written evidence” by Andrew Dorward and Ephraim Chirwa entitled “The Development Situation in Malawi” and submitted to the UK Parliament in early June, 2012, the fertiliser programme  in Malawi has the potential to play a major role in both managing short term economic adjustments and welfare needs and stimulating the structural change needed to break out of the ‘low maize productivity trap’ that afflicts millions of poor people and the wider economy.

They observe that there are significant opportunities for further improvements in programme design and implementation regarding timing of input delivery, targeting of beneficiaries, fertilizer specifications, involvement of the private sector in retail sales of subsidized fertilizer, associated audit systems, extension support, and ‘graduation’ (the progressive scaling down of the subsidy without undermining sustainable livelihoods and growth processes).

Dorward is Professor of Development Economics, School of Oriental and African Studies, University of London. He has long term personal and professional links with Malawi. He started his professional career in agricultural development with a posting to Malawi 35 years ago.

Chirwa is Professor of Economics, Chancellor College, and University of Malawi. His research extends across different sectors of the Malawi economy, but in recent years has focused particularly on study of the welfare and economic impacts of health, education, agriculture and social protection policies in rural areas.

Andrew and Chirwa have together led DFID funded evaluations of the Malawi Farm Input Subsidy Programme since 2006, with biennial household surveys and annual analysis of implementation.

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