Annex 1 – Implementation and Resourcing Plan 11

2013 - 2018

volume 2annexes 1-5

Developed by the Ministry of Industry and Trade

PO Box 30366

Lilongwe 3

Malawi

Volume 2 - ContentsVolume 2 - Contents 2

Volume 2 - ACronyms 8

Annex 1 – Implementation and Resourcing Plan 11Annex 1 - Contents 12

ChApter 1 – Core ImplementAtIon meChAnIsm 13

Overview ................................................................................................................... 13

Background .............................................................................................................. 13

Rationale for Operationalising the SWAp via a Transition of Existing NES Mechanisms 15

Implementation Mechanism Structure and Process ............................................. 15

Importance of a Dedicated Secretariat .................................................................. 20

Secretariat Staffing Arrangements – Short and Long Term ................................... 21

Links with other Initiatives ...................................................................................... 22

Potential Sources of Funding .................................................................................. 24

Proposed Roadmap ................................................................................................. 25

Sub-Annex 1: Terms of Reference for the SWAp Secretariat ................................ 27

ChApter 2 – resourCIng of prIorIty Clusters 31

ChApter 3 – Cross-CuttIng, InstItutIons And skIlls & knowledge resourCIng 37

Policy coherence, comprehensiveness and coordination for productive base to be built ...................................................................................... 38

Favourable economic institutions .......................................................................... 38

Competencies, skills & knowledge ......................................................................... 40

Addressing farmer processor disconnect .............................................................. 41

Smallholder farmer and MSME access to affordable finance ............................... 44

Reliable and cost-effective energy ......................................................................... 46

2

Volume 2 - ContentsStandards, accreditation and product quality requirements ................................. 47

Cost-effective transport ......................................................................................... 48

Annex 2 – Oil Seed Products Strategy 53Annex 2 - Contents 54

ChApter 1 - IntroduCtIon 55

Why prioritise this cluster ...................................................................................... 56

Summary of cluster potential ................................................................................. 57

Cluster as a complement to tobacco for smallholders .......................................... 58

Summary of approach to develop cluster ............................................................... 59

Critical factors for success .................................................................................... 60

ChApter 2 – Cluster profIle 61

Summary .................................................................................................................. 61

Products ................................................................................................................... 62

Markets .................................................................................................................... 63

Inputs and Import Substitution ............................................................................... 65

ChApter 3 – strengths, weAknesses, opportunItIes

And threAts 67

Sunflower ................................................................................................................. 67

Groundnuts ............................................................................................................... 68

Soya Beans ............................................................................................................... 68

Cotton ....................................................................................................................... 69

ChApter 4 – the oIl seed produCts strAtegy 70

The strategy framework .......................................................................................... 70

The strategy to develop the cluster......................................................................... 71

Guiding timeline for cluster development ............................................................... 73

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Volume 2 - Contents

Product: Groundnuts ................................................................................................ 74

Product: Soya Beans ................................................................................................ 75

Product: Cotton seeds .............................................................................................. 75

Product: Meals and cake ......................................................................................... 75

Product: Cooking Oil ................................................................................................ 76

Product: Soaps ......................................................................................................... 76

ChApter 6 – ImplementAtIon And resourCIng 77

Implementation Mechanism .................................................................................... 77

Resourcing ............................................................................................................... 79

ChApter 7 – mAtrIx of prIorItIsed ACtIons 81

Annex 3 – Sugar Cane Products Strategy 95Annex 3 - Contents 96

ChApter 1 - IntroduCtIon 97

Why prioritise this cluster ...................................................................................... 98

Summary of cluster potential ................................................................................. 99

Sugar cane as the primary large-scale commercial crop and an alternative

smallholder crop ................................................................................................... 100

Summary of approach to develop cluster ............................................................. 101

Critical factors for success .................................................................................. 102

Chapter 2 – Cluster Profile ................................................................................... 103

Summary ................................................................................................................ 103

Products ................................................................................................................. 104

Markets ................................................................................................................. 104

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Volume 2 - Contents

Inputs and Import Substitution ............................................................................. 107


And threAts 109

Strengths and Opportunities ................................................................................. 109

Weaknesses, Threats and Risks ............................................................................ 110

ChApter 4 – the sugAr CAne produCts strAtegy 112

The strategy framework ........................................................................................ 112

The strategy to develop the cluster....................................................................... 114

Guiding timeline for cluster development ............................................................. 116

ChApter 5 – trAde polICy In tArget mArkets 117

Product: Sugar ....................................................................................................... 117

Product: Ethanol ..................................................................................................... 118

Product: Confectionary (Chewing gum, caramel, syrups etc.) ............................. 118

Product: Rums/Spirits ............................................................................................ 119


Implementation Mechanism .................................................................................. 120

Resourcing ............................................................................................................. 121

Annex 4 – Manufactures Strategy 139Annex 4 - Contents 140

ChApter 1 – IntroduCtIon 141

Why prioritise this cluster .................................................................................... 142

Summary of cluster potential ............................................................................... 144

Manufactures for economic empowerment and MSMEs, and strong link

to agriculture ......................................................................................................... 145

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Volume 2 - Contents

Summary of approach to develop cluster ............................................................. 145

Critical factors for success .................................................................................. 146

ChApter 2 – Cluster profIle 147

Summary ................................................................................................................ 147

Products ................................................................................................................. 148

Markets ................................................................................................................. 148

Value Addition, Inputs and Import Substitution .................................................... 152


And threAts 154

Strengths and Opportunities ................................................................................. 154

Weaknesses and Threats ....................................................................................... 155

ChApter 4 – the mAnufACtures strAtegy 157

The strategy framework ........................................................................................ 157

The strategy to develop the cluster....................................................................... 159

Guiding timeline for cluster development ............................................................. 161

ChApter 5 – trAde polICy for tArget mArkets 162

Product: Beer .......................................................................................................... 162

Product: Articles of Plastic .................................................................................... 162

Product: Assembly ................................................................................................. 163

Product: Dairy ........................................................................................................ 163

Product: Sweet Biscuits ......................................................................................... 164


Implementation Mechanism .................................................................................. 165

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Volume 2 - Contents

Resourcing ............................................................................................................. 166


Annex 5 – Action Matrix for NES Priority Area 2: 179

Annex 5 - Contents 180

Conducive Environment for Production Base and Exports .................................. 179

1. ....Access to Competencies, Skills and Knowledge .......................................... 182

2. ....Access to Supportive Economic Institutions ................................................ 182

3. ....Access to Markets .......................................................................................... 182

4. ....Access to Information .................................................................................... 191

5. ....Access to Inputs ............................................................................................. 193

6. ....Access to Finance and Secure Tenure of Property ....................................... 197

7. ....Access to Business Development Services .................................................. 203

8. ....Ease of Meeting Tax and Regulatory Obligations.......................................... 207

9. ....Macroeconomic Prudence and Stability ....................................................... 209

10. ..Fair Competition ............................................................................................. 210

7

ACE Agriculture Commodities Exchange

AfDB African Development Bank

ASWAp Agriculture Sector Wide Approach

ASWAp-SP Agriculture Sector Wide Approach-Support Project

BESTAP Business Environment Strengthening and Technical Assistance Project

CABS Common Approach to Budget Support

CFTC Competition and Fair Trading Commission

COMESA Community of Eastern and Southern Africa

DARTS Department of Agricultural Research and Technical Services

DEMAT Development of Malawian Enterprises Trust

DFID United Kingdom Department for International Development

DPSM Department of Public Sector Management

DTIS Diagnostic Trade Integrated Study

EAC East African Community

EDF Export Development Fund

EIF Enhanced Integrated Framework

ESWAP Education Sector Wide Approach

EU European Union

FIMA Financial Inclusion in Malawi Project

FSTAP Financial Sector Technical Assistance Project

FSPU Financial Sector Policy Unit

GDP Gross Domestic Product

GPE Global Partnership for Education

HIPC Highly Indebted Poor Countries

IAEA International Atomic Energy Agency

ICT Information Communication Technology

ILO International Labour Organisation

IMF International Monetary Fund

JICA Japanese International Cooperation Agency

JSS Joint Sector Strategy

MAMN Malawi Micro-Finance Network

MARDEF Malawi Rural Development Fund

MBS Malawi Bureau of Standards

MCCCI Malawi Confederation of Chambers of Commerce and Industry

MEPD Ministry of Economic Planning and Development

MEDI Malawi Entrepreneur Development Institute

MFIs Micro-Finance Institutions

MGDS Malawi Growth and Development Strategy

MGDS II Malawi Growth and Development Strategy II

MITA Malawi Industrial Training Association

MITC Malawi Investment and Trade Centre

Volume 2 - Acronyms

8

MIWD Ministry of Irrigation and Water Development

MoAFS Ministry of Agriculture and Food Security

MoEST Ministry of Education, Science and Technology

MoF Ministry of Finance

MoFA Ministry of Foreign Affairs

MoIT Ministry of Industry and Trade

MoJ Ministry of Justice and Constitutional Affairs

MoL Ministry of Labour

MoLH Ministry of Land and Housing

MoTPW Ministry of Transport and Public Works

MoYS Ministry of Youth and Sport

MRA Malawi Revenue Authority

MSE Malawi Stock Exchange

MSME Malawi Small and Medium Enterprises

NCSP National Competencies and Skills Plan

NES Malawi National Export Strategy

NSO National Statistics Office

OPC Office of the President and Cabinet

PSD Private Sector Development

PSD DG Private Sector Development Donor Group

PSIP Public Sector Investment Programme

R&D Research and Development

RBM Reserve Bank of Malawi

RGD Registrar General Directorate

SADC Southern Africa Development Community

SEDOM Small Enterprise Development Organisation of Malawi

SMEDI Small and Medium Enterprise Development Institute

SQAM Standards, Quality, Accreditation, Measurement

STED Skills for Trade and Economic Diversification

SWAp Sector Wide Approach

SWG Sector Working Group

TEVET Technical, Entrepreneurial and Vocational Education and Training

TEVETA Technical, Entrepreneurial and Vocational Education and Training Authority

TIPSD SWAp Trade, Industry and Private Sector Development Sector Wide Approach

TOR Terms of Reference

TWG Technical Working Group

UNDP United Nations Development Programme

USAID United States Agency for International Development

WB World Bank

WTO World Trade Organisation

YEDF Youth Entrepreneur Development Fund

Volume 2 - Acronyms

9

10

Annex 1 – Implementation and Resourcing Plan

11

Annex 1 - ContentsChApter 1 – Core ImplementAtIon meChAnIsm 13

Overview ................................................................................................................... 13Background .............................................................................................................. 13Rationale for Operationalising the SWAp via a Transition of Existing NES Mechanisms .................................................................................................... 15Implementation Mechanism Structure and Process ............................................. 15Importance of a Dedicated Secretariat .................................................................. 20Secretariat Staffing Arrangements – Short and Long Term ................................... 21Links with other Initiatives ...................................................................................... 22Potential Sources of Funding .................................................................................. 24Proposed Roadmap ................................................................................................. 25Sub-Annex 1: Terms of Reference for the SWAp Secretariat ................................ 27

ChApter 2 – resourCIng of prIorIty Clusters 31ChApter 3 – Cross-CuttIng, InstItutIons And skIlls & knowledge resourCIng 37

Policy coherence, comprehensiveness and coordination for productive base to be built ...................................................................................... 38Favourable economic institutions .......................................................................... 38Competencies, skills & knowledge ......................................................................... 40Addressing farmer processor disconnect .............................................................. 41Smallholder farmer and MSME access to affordable finance ............................... 44Reliable and cost-effective energy ......................................................................... 46Standards, accreditation and product quality requirements ................................. 47Cost-effective transport ......................................................................................... 48

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ANNEXESone to 5voLuME 212

Annex 1

OverviewThis chapter seeks to demonstrate that there is significant complementarity between the Ministry of Industry and Trade’s dual objectives of 1) operationalising a Sector Wide Approach (SWAp) for Trade, Industry and Private Sector Development to act as an implementation framework for existing and future sector initiatives; and 2) implementing the National Export Strategy (NES). For this rea-son, taking a united approach to these two objectives may be advantageous. In particular, the key proposals laid out in this chapter are as follows:

I. The Technical Working Groups under the SWAp framework should be modified to mirror the existing sub-groups under the NES development framework. In this way, the SWAp can leverage the momentum gained by the NES process.

II. The NES and all other strategies within the Trade, Industry and PSD sector should be implemented via mechanisms within the SWAp framework. The SWAp should build on the NES and other key sector strategies to develop a Joint Sector Strategy.

III. To ensure successful implementation of the Joint Sector Strategy and the smooth func-tioning of the SWAp, a dedicated SWAp Secretariat should be established. This would include, in the longer term, two positions being created for two staff who will dedicate 100 per cent of their time to the SWAp.

IV. Potential sources of funds for this initiative should be carefully examined.

V. Issues and outcomes of the SWAp process requiring high-level political attention will feed into the Cabinet through the Minister of Industry and Trade. It will be the responsibility of the Minister to present reports from the SWAp to the Cabinet Committee on Budget and Finance on a quarterly basis.

BackgroundThe National Export Strategy

The purpose of the National Export Strategy is to serve as a critical component of the Malawi Growth and Development Strategy II. Its objective is to provide a road map on how Malawi’s produc-tive base can be built in a manner that allows its level of exports to match the upward pressures on

Chapter 1 – Core Implementation Mechanism

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its imports which are necessary to allow for Malawi’s development objectives to be attained. It aims to do this through the develop-ment of the private sector in a manner that is balanced with the economic empowerment of the rural and urban poor, youths and women.

The National Export Strategy is currently coming to the end of an intensive development period which has involved consultations with a wide group of stakeholders and establishment of a number of sub-committees which have been active in developing action plans on a number of cross-cutting issues pertinent to the de-velopment of Malawi’s private sector and its ability to export. The strategy should be finalised for launch in September 2012, after which its implementation period will begin.

The Sector Wide Approach

The Ministry of Industry and Trade (the Ministry or MoIT) has been leading the process of developing a Sector Wide Approach (SWAp) for Trade, Industry and Private Sector Development (PSD) since government launched the concept in 2008.

The objectives of the SWAp are as follows:

• To develop a Joint Sector Strategy (JSS), developed by government, in consultation with sector-relevant stake-holders, with a prioritised accountable, budgeted and monitorable sector Programme of Works aligned to government priorities and systems, allowing harmon-ised support by donors.

• To function as an efficient framework to enhance effec-tive implementation of the JSS as a way to achieve the goal of the MGDS II to “develop and promote a con-ducive environment that will enhance inclusive private sector growth and competitiveness”.

• To function as a forum for negotiation, policy dialogue, and agreement of plans among stakeholders at sec-tor level.

Key to the success of the SWAp, in achieving coordination and avoiding duplication of efforts, is that it should function as a true umbrella framework for the development, implementation and monitoring of all sector initiatives. It should not be viewed as a stand-alone initiative but as a support mech-anism for all of the MoIT’s existing and planned initiatives.

Progress was made in 2010/2011 in establishing the Trade, Industry and PSD SWAp. An independent Technical Review of the sector was conducted

which aimed at assessing key issues facing the sector. Consul-tative meetings were conducted with stakeholders and devel-opment partners, most notably a workshop held in September 2011, where the Technical Review was presented. Following this meeting, there was a move to establish a Sector Working Group (SWG) and five Technical Working Groups (TWGs) which would re-port to the SWG. The proposed structure is outlined in Figure 1 below. A list of potential members for many of these groups was also established. More recently, a Capacity Building Workshop was held in March 2012 with the purpose of educating stake-holders on the operations of SWGs and TWGs in other sectors.

Nevertheless, four years after the idea was originally conceived, there are still a number of issues which remain to be tackled before the SWAp will be fully operational. These are as follows:

• There is a need to make some structural adjustments to the framework to accommodate sector initiatives (such as the NES, EIF and the MSME Strategy amongst oth-ers) as fully as possible if the SWAp is to function as a true umbrella framework for all sector initiatives.

• There is a need for full-time staff dedicated to the initia-tive. Despite good efforts, the process has been ham-pered by a lack of staff dedicated to the initiative as the Department of Planning, the department tasked with operationalising the initiative, is currently understaffed.

• There is a need to mobilise financial resources available to the Ministry for this initiative.

• There is a need to gain and maintain early momentum on the initiative in order to ensure stakeholder support and participation.

• There is a need for senior champions for the SWAp from the MoIT, the private sector and Development Partners.

Secretary: MoIT

Sector Working Group Chair: PS MoIT

Vice Chair: Lead Development Partner Secretary: Director of Planning

Labour & Technology TWG Chair: Ministry of Labour

Vice Chair: Donor Secretary: Ministry of Labour

Access to Finance TWG Chair: Ministry of Finance

Vice Chair: Donor Secretary: Ministry of Finance

Industry and SME TWG Chair: Department of Industry

Vice Chair: Donor Secretary: Department of Industry

Trade TWG Chair: Department of Trade

Vice Chair: Donor Secretary: Department of Trade

Business Environment TWG Chair: Department of PSD

Vice Chair: Donor Secretary: Department of PSD

Figure A1.1: Originally proposed structure of Trade, Industry and PSD SWG and TWGs

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Annex 1

Rationale for Operationalis-ing the SWAp via a Transition of Existing NES Mechanisms The success of the National Export Strategy is dependent on the establishment of an effective implementation mechanism. This is the structure through which stakeholders can ensure that the prioritised actions of the strategy are adequately committed to by implementing agencies and are therefore adequately resourced, both financially and in terms of the time and focus of manage-ment.

Meanwhile, the SWAp provides a framework for implementation of a Trade, Industry and PSD Joint Sector Strategy. The Joint Sector Strategy presents a complete roadmap of the actions that are required to build Malawi’s productive base. This complete road-map should also ensure that smallholder farmers, MSMEs, large businesses, youth and women are able to participate and contrib-ute. It is crucial that the SWAp should achieve active participation and contributions from a wide group of relevant stakeholders to develop a Joint Sector Strategy which has sector-wide support.

The NES - as a comprehensive roadmap for the development of Malawi’s productive base which has achieved a high level of sup-port and momentum from stakeholders across the sector - can form a major building block of the Joint Sector Strategy. At the same time, areas from the revised DTIS (which forms the basis of the EIF process), which have not already been captured in the NES, will also be incorporated into the Joint Sector Strategy through the Technical Working Groups under the SWAp in addition to other issues which stakeholders feel have not been sufficiently addressed in the NES or the DTIS. In particular, this would include elements of the MSME Policy and Strategy; the PSD Policy and Strategy; the Cooperatives Development Policy; the Trade and Industrial Policy; the Microfinance Policy, relating to domestic is-sues. Finally, it will also include priority areas outlined in the recent Communiqué from the National Dialogue Conference and the re-lated operational plan which is due to be developed.

In summary, a single implementation mechanism for the JSS, the NES and other sector initiatives is essential to:

• improve policy and programme alignment and coordi-nation;

• aggregate resources which would otherwise be split between the initiatives in order to realise synergies between initiatives. For example, in the absence of a merged mechanism, funds would need to be allocated to hire a consultant to develop a Joint Sector Strategy from scratch. If the NES and other key strategies are used as building blocks, the need for a consultant to complete this task may be avoided or greatly minimised and any available funds can be used for other related

measures which otherwise would not be funded;

• avoid duplication of efforts between implementation of the NES and other strategies on one hand, and imple-mentation of a Joint Sector Strategy on the other;

• avoid overloading and confusing stakeholders with very similar parallel processes; and

• ensure sustainability of the initiatives.

Implementation Mechanism Structure and Process As mentioned earlier, one of the key challenges in operational-ising the SWAp will be to ensure stakeholder participation and support from the outset.

This may be overcome by designing the SWAp framework, and hence the implementation mechanism for a Joint Sector Strategy, to incorporate the well-established NES stakeholder consultation mechanism which was created to develop the NES. This will allow the momentum and enthusiasm gained from stakeholders for the NES to be captured and capitalised on by the SWAp to ensure its impact is felt across the sector.

Capturing this momentum is essential to ensuring stakeholders do not lose the interest and buy-in gained during the NES meetings, thereby increasing the attendance at SWAp meetings and hence the quality of meetings. The momentum of the NES development phase will be maintained through a transition period that allows for necessary meetings of the existing sub-groups to be run, while the SWAp Secretariat starts up its operations, hires a dedi-cated a technical assistant and prepares the sub-groups for their role as TWGs / the SWG.

The SWAp framework and JSS implementation mechanism are pre-sented below in Figure 1.2. The critical elements of the implemen-tation mechanism are:

A. Stakeholder Representation and Dialogue Structure.

i. This structure will consist of:

- Trade, Industry and PSD Sector Working Group (SWG) – apex body of the SWAp with high-level representation of each stakeholder group. The SWG is a high-level body chaired by the Principal Secretary of the Ministry of Industry and Trade. It reviews and approves the Joint Sector Strategy and Programme of Works to be developed by the Technical Working Groups (TWGs), as well as rec-ommendations regarding implementation made by them. It will also ensure the TWGs are functioning correctly and that there is coordination and syn-

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chronisation between them.

- Six Technical Working Groups (TWGs) – techni-cal stakeholder representation bodies to drive cross-cutting action plans and priority cluster strategies through developing and implementing the Programme of Works to implement the Joint Sector Strategy, and hence the NES. The TWGs re-port to the SWG and are:

• Access to Markets

• Access to Finance, Inputs, Information and Business Development Services

• Access to Skills and Labour

• Oil Seed Products

• Sugar Cane Products

• Manufacturing

• Technical Committees – focused committees of the TWGs to deal will particular aspects of the TWGs that require additional technical attention. These will be established on a needs basis. Existing committees, including the National Working Group on Trade Policy and the Trade Logistics Working Group, and other proposed committees, such as the MSME Committee, will be incorporated within the mechanism. This is presented in Figure 1.3 below.

• The NES Steering Committee will transform into the Trade, Industry and PSD Sector Working Group, with the addition of other critical members where necessary, particularly those who were part of the original proposed SWG/TWG membership list. It is also worth considering whether the EIF National Steering Committee should be merged with the new SWG under the SWAp. This is discussed further in Section 1.7(i);

• The sub-committees established under the NES stakeholder consultation mechanism will transition into TWGs to the Trade, Industry and PSD SWG, which would take the place of the originally pro-posed TWGs. This would be achieved via certain modifications to the sub-committees’ membership and mandate to ensure consistency with the aims of the originally proposed TWGs. This is further ex-panded on below (see page 12);

• The highest-level of each stakeholder group will be included within the mechanism, including: govern-ment, private sector, financial sector, other enabling

sectors (e.g. transport, education, agriculture and energy), civil society and development partners.

• The correct chairmanship of the TWGs by passion-ate and effective leaders who can maintain the focus on the implementation of the Joint Sector Strategy is also essential.

• The TWGs should have a key presidential advisor involved in the Presidential Initiative on Poverty Reduction and the Presidential Advisory Committee on the Economy.

B. Joint Sector Strategy and Programme of Works

i. Existing key sector documents are to be adopted as key building blocks of the Joint Sector Strategy. In this way the Joint Sector Strategy will take full account of the NES, the DTIS, the MSME Policy and Strategy, PSD Policy and Strategy, the Coopera-tives Development Policy, the Trade and Industrial Policy, the Microfinance Policy, the Communiqué on Malawi National Dialogue along with its proposed operational plan, and any other relevant sector documents.

ii. The Joint Sector Strategy will be used by the TWGs to formulate a sector Programme of Works, which will lay out a costed and prioritised investment pro-gramme for the sector with agreed timelines for the implementation of all actions.

C. Secretariat, Coordination and Resourcing for the Strategy

i. Effective and adequate secretariat sup-port through a dedicated SWAp Secre-tariat - including staff who will work full-time on the SWAp - is to be established in the Department of Planning of the Ministry of Industry and Trade. This role is crucial to the success of the SWAp since departments are very stretched with day-to-day operations, attending meetings, reporting to politicians and central government and fire-fight-ing. The secretariat’s role is two-fold:

1. Taking a proactive role in driving the moni-toring and implementation of the Joint Sector Strategy through ensuring that there is ap-propriate follow up on prioritised actions and actions that emerge through the meetings.

2. Serve as an effective secretary to the Sector Working Group and, when needed, to TWGs

16

Annex 1

and technical committees.

This role is further expanded on in Section 1.5 below, as well as in the Terms of Reference for the SWAp Secretariat provided in Sub-Annex 1 to this chapter.

ii. An Action Task Force will operate in the first year following the launch of the NES to maintain the momentum of the development phase of the NES, while the NES stakeholder consultation mechanism is transitioning into the SWAp. The Action Task Force will include the chairs of each of the TWGs and a few, high-level stakeholder representatives who can champion priority actions. It will meet on an ad hoc basis, whenever necessary (on average once a quarter) to: take immediate action on mat-ters of importance, ensure progress on priority NES actions, and to meet with senior officials where lobbying is required. The need for a continued role for the Action Task Force will be assessed after the first year of its activities.

iii. Given the high degree of technical capacity re-quired to operationalise the SWAp and develop the JSS, provision of experienced technical assistance in the initial stages, until the SWAp Secretariat is up and running, will be important for the success of the SWAp. A key aspect of this role will be to provide on-the-job training to permanent Ministry staff in managing the SWAp process. These ser-vices would be provided either by an individual Technical Assistant or a designated company.

iv. A permanent link in to the Malawi Growth and De-velopment Strategy II is to be established through a day-to-day working relationship between the Real Sector Policy Analysis (RSPA) Section in the Department of Planning of the Ministry of Eco-nomic Planning and Development and the SWAp

Secretariat.

v. A link to the Public Sector Investment Programme and the central government budget will be main-tained. The Department of Development in the Ministry of Economic Planning and Development is the custodian of the Public Sector Investment Programme and close ties will be established and maintained with this department by the SWAp Sec-retariat.

vi. Clear reporting lines are to be established, par-ticularly in Government, with Cabinet at the helm.

D. Link to the Highest Level of Stakeholder Groups

i. Cabinet – the outcomes of the SWG will feed into the Cabinet through the Minister of Industry and Trade. It will be the responsibility of the Minister to present reports from the SWG to the Cabinet Com-mittee on the Economy on a quarterly basis. These reports should contain issues and recommenda-tions emanating from the SWG and TWGs which require political attention and decision-making at a political level.

ii. Economic Management Committee – the outcomes of the SWG will feed into the Economic Manage-ment Committee of Principal Secretaries, through the Principal Secretary of the Ministry of Industry and Trade.

iii. PPD Forum – where there are actions that require political attention in order to be expedited, the SWG will feed such actions through the PPD Forum to ensure high-level political attention.

iv. Appropriate representations of the private sector, labour, civil society and farmer organisations.

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Figure A1.3: The Sector Working Group, its Technical Working Groups and Technical Committees

Figure A1.2: Proposed SWAp Framework for implementation of Joint Sector Strategy based on the NES

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Annex 1

Transition of Technical Working Groups

As described above, under the revised SWAp framework being pro-posed in this chapter, TWGs formed from the NES Sub-Committees, which have already been established under the NES stakeholder consultation mechanism, would take the place of the TWGs originally proposed under the SWAp (which have been described above). It is important to note that this would be largely a cosmetic change. Mod-ifications will be made to the NES Sub-Committees’ membership and mandate to ensure consistency with the aims of the originally pro-posed TWGs. Thus each issue which had previously been identified for consideration by the TWGs will be absorbed by one of the new TWGs.

The areas covered by the new Cross-Cutting TWGs are:

1. Access to Markets

• Trade Policy

• Trade Facilitation including Customs and Trade Licens-ing

• Investment Promotion and Facilitation including Export Processing Zones and Special Economic Zones

• Export Promotion and Facilitation

• Standards

• Transport

• Taxation, including Incentives

• Regulation, including Business Registration

• Foreign Exchange Policy

• Macroeconomic Policy

2. Access to Finance and Secure Tenure of Property

• Financial Sector Development

• MSME Access to Finance

• Micro-finance

• Secure Tenure of Property including Access to and Se-cure Tenure of Land; Contract Law; Movable Property

3. Access to Business Development Services, Inputs and Information

• Business Development Services including Professional Services, Extension Services, MSME Support Services, Cooperatives and Farmer Organisations, NGO support

• Farm Inputs

• Energy

• Commodity Exchanges, Warehouse Receipts and Stor-age

4. Access to Skills and Labour

• National Skills Development Plan linked to the produc-tive economy

• Labour Market Information System

In addition there will be three Priority Cluster TWGs in the areas of Manufactures, Oil Seed Products and Sugar Cane Products.

Table A1.1 below demonstrates how the issues earmarked for the original TWGs can fit directly into the scope of one or more of the new TWGs.

TAbLE A1.1: LInkAgE bETwEEn SCoPE of orIgInAL TwgS And nEw TwgS

New TWGs

Old T

WGs

Access to Markets

Access to Fi-nance, Inputs, Information and BDS

Access to Skills and Labour

Manu-fact-ures

Oil Seed Products Sugar Cane Products

Trade

Business Environ-ment

Access to Finance

Industry and SME

Labour and Tech-nology

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The rationale behind this revised TWG structure is the following:

3. The cross-cutting structure allows for more efficient mechanism: As Figure 1.4 above demon-strates, many of the original TWGs were concerned with similar issues. As an example, the Trade TWG, Industry and SME TWG, the Business Environment TWG and the Access to Finance TWG would all have had some element of access to finance within their mandate. The more cross-cutting nature of the new TWGs means that the same pertinent issues can be discussed as had originally been intended, but within a framework which avoids over-lap and duplication of efforts between TWGs.

4. Established and well-functioning groups: The NES Sub-Committees have been meeting regularly, they are functioning well and have already made progress in producing detailed action plans for their respective ar-eas. As such they provide a strong platform with existing support from which effective and functional TWGs can be launched under the SWAp.

5. Focus on Priority Clusters: The three Priority Clus-ter TWGs are required because it is critical for Malawi to prioritise clusters that can complement tobacco and drive export growth, relative to the growth of imports. Prioritisation requires coordination and commitment, and therefore it is essential for these TWGs to report directly to the Sector Working Group, while also feeding in to the Cross-Cutting TWGs.

In cases where certain agencies are relevant to more than one TWG but may not be consistently needed at every TWG meeting, these agencies will form a group of “specialist members” who will be called to TWG meetings as and when they are required to provide guidance on a particular topic. The SWAp secretariat will be responsible for calling the relevant “specialist member” to that TWG according to the pre-set agenda for the meeting. An example of a specialist member might be the Ministry of Justice, where they may be required to provide specialist insight on legal and regulatory matters in a number of areas such as Access to Finance and Access to Markets, as well as advising on the regula-tory framework surrounding a particular product cluster.

The TWGs will be chaired by one public sector and one private sec-tor co-chair since this system has proven to work well with the NES Sub-Committees to date. In addition, given that the current chairs have demonstrated strong commitment to the sub-committees, it has been agreed that during the transition period from NES sub-committees to SWAp sub-groups a decision will be taken by each group on whether to maintain these chairs. Where objections are raised to maintaining the chairs, members will vote to elect new chairs in the first meetings of the new TWGs following the launch of the SWAp/NES implementation process.

In these first meetings, the groups will also review their member-ship, refine their Terms of Reference, define a Code of Conduct

for members and vote for two members of the group to act as a sub-secretariat for that TWG which will liaise with the SWAp Sec-retariat.

Importance of a Dedicated Secretariat The success of this implementation mechanism hinges on strong and effective secretariat support more than any other factor. In turn, achieving strong and effective secretariat support relies on having a team of staff who are dedicated full time to the process. As an example, the progress made on the NES and in operation-alising its consultation mechanism is in large part attributable to the presence of a three-person team who have dedicated a sub-stantial proportion of their time to the development of the NES.

The role of the secretariat will be to:

1) Take a pro-active role in driving the im-plementation and monitoring of the Joint Sector Strategy through ensuring that there is appropriate follow up on prioritised actions. Where im-plementing agencies have the capacity to drive these actions, the secretariat will play a supportive role, but where this capacity is constrained, the secretariat will play a pro-active role to ensure that the priority actions are progressing. This might be done by, for example, as-sisting with and coordinating analytical work or research done by members of the TWGs; or by assessing whether the membership of a TWG is sufficiently well-placed to progress a particular action and if not, ensuring that the relevant organisations and representatives of suf-ficient seniority are adequately informed and involved in the work.

2) Serve as an effective secretary to the Sector Working Group and where a TWG lacks capacity to car-ry out the function itself, to that TWG. This will involve the following tasks: consolidating work plans; convening meetings of the various bodies under the framework and setting their agendas; liaising with key stakeholders to ensure participation; ensuring timely reporting; con-solidating quarterly reports from the TWG for review by the Sector Working Group, preparing proposals for the SWG’s endorsement; and coordinating the annual sector progress review.

The detailed Terms of Reference for the SWAp Secretariat are provided in Sub-Annex 1 of this chapter.

Given the scope and importance of this work as the driving force behind the SWAp, it is intended that a dedicated SWAp Secretariat be established in the MoIT. A dedicated SWAp Secretariat with ad-equate staff, skills and capacity within the Department of Planning in the Ministry of Industry and Trade is critical to the success of

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the NES. This lies at the heart of an effective stakeholder dialogue forum and driving mechanism that can mobilise adequate resources to ensure the implementation of the Joint Sector Strategy.

The objective should be for the SWAp Secretariat to be staffed with at least two full-time staff. Ideally, the officials in the SWAp Secretariat should be vested with sufficient authority or be of sufficient seniority to allow them to unite and coordinate across departments within the MoIT, across ministries and to engage with stakeholders at the highest level.

It is also important that the SWAp Secretariat work together as a unified team with high levels of information-sharing and cooperation. For that reason, it would be preferable for the SWAp Secretariat team to share a single office space within the Ministry.

TABLE A1.2: SECRETARIAT STAFFING ARRANGEMENTS FOR OTHER SECTOR WIDE APPROACHES IN MALAWI

Sector Secretariat Staffing ArrangementsEducation Dedicated secretariat of 4/5 full time permanent members of staff plus a larger high-level group of 10-12 representatives,

chaired by DoP, and including key offices such as finance, HR and procurement.

Health Four members of dedicated SWAp staff: 1 Director, 1 Deputy Director, 1 Chief Planning Officer, 1 Economic Planning Officer (currently part time as doing a PhD). Positions are seconded from other departments. SWAp secretariat has significant authori-ty as it reports directly to the Secretary for Health

Agriculture Three members of staff: 1 coordinator, 1 deputy responsible for management and 1 deputy for technical issues. Proportion of time spent circa 50 per cent. Aim to move towards fully committed roles due to size of workload.

Secretariat Staffing Arrangements – Short and Long TermAs outlined above, it is intended that the SWAP Secretariat should be created in the Department of Planning of the MoIT and should be staffed with two Ministry staff members who are mandated to dedicate 100 per cent of their time to SWAp secretarial duties. It is widely acknowledged that the Ministry is currently understaffed and therefore it may not be realistic to propose that existing Ministry employees be allocated to this role. However, given current budget constraints and the procedural constraints of creating and filling new positions in the Ministry, it is also acknowledged that introducing two new employees into the Ministry for this role might be a medium-term goal rather than an immediate action point. However, given that the NES has been completed in 2012 and given the importance of achieving the sectoral coordination that is required for its implementation, it is imperative that suitable interim arrange-ments be put in place in the immediate and short term in order to ensure that the NES implementation mechanism runs smoothly from the outset and, crucially, that the momentum of the NES sub-groups is not lost as they transition into the SWAp sub-groups. It is also important that the process of creating the new secretariat positions, and requesting a budget for these positions, be started as soon as practicable.

To this end, the following is an outline of proposed interim arrangements for the NES/SWAp Secretariat:

1) Immediately on NES completion, while awaiting launch, August - December 2012:

Members of the NES Team within the Ministry of Industry and Trade will continue working on implementation of the NES and its transition into the Joint Sector Strategy as the Secretariat. Imani Development will also support in this transitional phase and with Technical Assistance. Meanwhile a TA will be selected to provide full time support to the Secretariat.

2) January – December 2013:

a. The TA contract starts in January providing full time secretariat support.

b. The two permanent members of Ministry staff will continue to dedicate 40-50 per cent of their time to the Secre-tariat.

c. In addition, each department will allocate a representative who will have approval to spend twenty per cent of their time as a departmental liaison point to the SWAp Secretariat.

d. The two original NES team members will continue to dedicate 50 per cent of their time to the SWAp Secretariat..

e. The ToRs of the TA will contain the specific mandate to advocate having one or two dedicated Secretariat positions created for the Ministry for inclusion on the government payroll starting from 2013/2014. The SWAp Secretariat will be part of the Department of Planning and therefore the process of creating a SWAp coordination position must be led by the Ministry of Economic Planning and Development (MEP&D). During the first half of 2013,

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the TA and Human Resources will approach MEP&D and work closely with them to lobby for approval from the Department of Public Services Management (DPSM) for those po-sitions and, thereafter, for a specific govern-ment budget to be allocated for these posi-tions in June 2013. Following that, the TA will assist Human Resources and MEP&D in the process of receiving final formal endorsement from DPSM. Finally, the TA will oversee the Civil Service Commission’s process of advertising and filling these positions.1

3) January 2014 – June 2014:

a. The employees who will fill the two newly-cre-ated positions will take up their posts as the SWAp secretariat.

b. They will work side-by-side with the TA for the first 6 months in order to build up their capac-ity in this role.

c. The two original ministry staff members will continue to spend 40-50 per cent of their time on the Secretariat.

d. The TA’s contract expires in June 2014 and the interim arrangement phase ends.

4) July 2014 – Onwards:

a. The permanent SWAp team is now in place, consisting of i) the two new members of per-manent staff who will spend 100 per cent of their time on the SWAp Secretariat; and ii) the two original members of Ministry staff, who will spend 50 per cent of their time on the SWAp Secretariat. One original NES team member will continue to dedicate 50 percent of his time to the SWAp Secretariat. In addition, it is envisaged that the EIF Project Adviser may also be able to continue providing some sup-port to SWAp activities as part of his role.

1 It has been suggested that in preparation for this process, the need for the SWAp Secretariat positions, and the role envisaged for these positions, should be included in the revised functional review which is currently being drafted (June/July 2012).

Links with other Initiatives• Link with the Enhanced Integrated Framework

(EIF)

The key principles of the EIF share much common ground with those of the SWAp, including: country-ownership of the process; a demand-driven and tailor-made approach; and a participatory approach, especially by involving the private sector at all stages.

It is intended that the SWAp should build on, further develop and concretise the basic principles and mechanisms set forth in the EIF.

Meanwhile, many of the objectives of the EIF coincide with those of the NES, such as the mainstreaming of trade into national development plans; coordinated delivery of trade-related tech-nical assistance; and development of national capacity to trade through capacity building and addressing supply constraints.

The Diagnostic Trade Integration Study (DTIS), which acts as the foundation of the EIF process, is intended to function as a means by which trade can be mainstreamed into national development strategies and an action plan developed for trade-related assis-tance in partnership with development partners. For this reason, the NES incorporates the existing DTIS and its 2007 action plan. Meanwhile, the process of updating the DTIS itself is planned for 2012. It is hoped that this update can build on the strategies and actions outlined in the NES.

In this way, the Joint Sector Strategy will encompass the DTIS, whilst also providing a more holistic approach, and the required linkages to the productive sectors which the DTIS could be said to lack. As such, it is envisaged that the EIF funding mechanism can act as one possible funding channel for implementation of the Joint Sector Strategy.

In terms of implementation arrangements, it is proposed that a member of the EIF Secretariat should liaise with the SWAp Secre-tariat on EIF-specific matters under the SWAp and to drive the im-plementation of actions emanating from the JSS which are eligible for funding under the EIF.

The EIF process should be supportive of the implementation of the Joint Sector Strategy under the SWAp framework. However, given that there is significant overlap in the EIF and SWAp frame-work, efforts should be made to assess how the two can be made complementary to each other without the EIF simply becoming an extra administrative burden within the SWAp framework.

Further assessment will be made on how the EIF National Steering Committee should be integrated into the SWAp framework, and where this body might fit best. For instance, it may be worth as-sessing the merits of a merger between the EIF National Steering Committee (NSC) and the SWAp SWG given that the composition

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of the two bodies would be similar and that, under the proposed framework, the SWAp would encompass the EIF mechanism. Mat-ters for the attention of the EIF NSC would thus become part of the agenda for the SWG’s discussions, thereby avoiding overlap between the two bodies. The feasibility of combining the chairing systems of the SWG (PS of MoIT chairs with a private sector co-chair) and the NSC (PS of MoIT chairs with a donor co-chair) would also need to be examined. One possible solution may be to maintain the PS of the MoIT as chairman, with one private sector co-chair and one donor co-chair.

• Link to Malawi Growth and Development Strat-egy II

It is the role of the Real Sector Policy Analysis (RSPA) Section in the Department of Planning in the Ministry of Economic Planning and Development to analyse sectoral policies in all sectors for consistency with the development aspirations of Malawi as set out in the Malawi Growth and Development Strategy II. The RSPA Section is tasked with coordinating real sector policy issues with relevant line Ministries and other institutions in the public, civil society and private sector.

A strong link is to be established between the SWAp Secretari-at and this section to ensure complementarity, synchronisation and coordination. This link will be through a day-to-day working relationship whereby the RSPA Section will not only attend TWG meetings, but also work with the SWAp Secretariat in following-up with implementing agencies after the TWG meetings, and assisting with the analytical and research work that is required in the SWAp.

• Link with the PPD Forum

Under the PPD Forum, a number of sub-committees were formed to isolate relevant policy, regulatory and operational issues and provide implementable recommendations to the PPD Forum.

To avoid duplication and enhance coordination, it is proposed that these sub-committees should be absorbed by the various TWGs formed under the SWAp framework:

• The Access to Finance Sub-Committee would merge with the Access to Finance TWG.

• The mandate of the Export Diversification Sub-Committee would be absorbed by a number of the TWGs, including the Priority Cluster TWGs and the Access to Markets TWG.

• The mandate of the Macroeconomic Environment Sub-Com-mittee would be absorbed by the Access to Market and the Access to Finance TWGs.

• The Transport Sub-Committee will be absorbed by the Access to Markets TWG.

Given that the PPD sub-committees have not been active in recent months, this merger with the SWAp framework would not have

negative consequences for their work and would allow greater focusing of efforts by participants.

Regarding the PPD Forum itself, further assessment will be made as to how it may fit into or interact with the SWAp. One sugges-tion is that the PPD Forum may be best placed within the SWAp framework, given its sector-wide nature. It will continue to operate as a high-level forum for dialogue between the public and private sectors but it will also receive recommendations on specific issues via the SWG and will assist the SWG and its Action Task Force in gaining cabinet support for those recommendations.

• Link with the MSME Strategy

An updated MSME Strategy is currently being developed under the Ministry. As mentioned above, this strategy, once completed, should form an essential part of the Joint Sector Strategy. It is therefore proposed that the implementation mechanism for the MSME Strategy should also form part of the SWAp framework.

As part of this implementation mechanism, an MSME Strategy Working Committee (the MSME Committee) will be established to prioritise and drive those elements of the Joint Sector Strategy which emanate from the MSME Strategy and any other elements which are particularly relevant to MSMEs.

The MSME Committee will ensure that matters relating to MSME development receive the focus and resources they warrant, given the importance of MSMEs to the economy and the vital role they can play in achieving national development goals. Indeed, one of the key conclusions from the MSME Policy and Strategy is that the MSME sector does not receive the attention it merits in the national arena and is in need of a strong platform through which it can influence policy. One way of achieving this is to establish an effective MSME Committee which has a prominent position with-in a sector framework. It is therefore proposed that the MSME Committee should be formed as a Technical Committee within the SWAp framework. Its role will be to identify obstacles impeding the growth of the MSME sector, and to work with the TWGs which are relevant to those obstacles to develop recommendations for ac-tion which can then be taken to the inter-ministerial Sector Work-ing Group. As such, the MSME Committee will provide an effective lobbying platform and will act as a voice for policy advocacy for MSMEs.

The co-chairs of the MSME Committee will also be members of both the SWG and the cross-cutting TWGs which are relevant to the sector to further ensure that the MSME voice is prominent throughout the SWAp framework.

The SWAp Secretariat will have responsibility for ensuring that matters pertaining to the MSME sector are given sufficient atten-tion at the inter-ministerial SWG level and are taken up to Cabinet level where necessary. The MSME Committee will also make peri-odic presentations to the SWG on MSME specific matters.

It is proposed that the MSME Committee should be led by SMEDI

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and NASME, but will additionally comprise of other key represen-tatives of MSMEs, government, and development partners. The group will vote for its own specific secretariat, which will develop a strong working relationship with the SWAp Secretariat and coor-dinate the MSME Committee’s interactions with other parts of the SWAp framework.

Finally, the institution of a national biennial conference is proposed in the MSME Strategy. The purpose of the conference would be to focus public attention on the importance of the MSME sector in Malawi’s economy; review the implementation and impact of sup-port initiatives to the sector; and provide a platform for MSMEs to directly engage with government. It is further proposed that the SWG and MSME Committee should make presentations at this conference to inform attendees of the progress made against their targets set out in the Joint Sector Strategy.

• Link with Other Sector Wide Approaches and Sector Working Groups

The SWAp Secretariat will liaise and meet on a regular basis with other SWAps and Sector Working Groups which are relevant to Trade, Industry and PSD matters. It is proposed that minutes and recommendations should be shared between the SWAps/SWGs. The SWAp Secretariat will also ensure representatives of other key SWAps/SWGs are adequately represented in the Trade, Indus-try and PSD SWAp, and it will evaluate whether there is a need for ad hoc meetings between representatives of the SWAps.

There is a particular need to establish strong links between:

i) The Access to Finance TWG and the proposed Fi-nancial Sector Working Group (FSWG) being spear-headed by Ministry of Finance: The optimal link be-tween these two groups will be explored and built in to the design of both the FSWG framework and Trade, Industry and PSD SWAp framework as they each undergo their establishment processes.

ii) The Agriculture SWAp and the Trade, Industry and PSD SWAp (in particular the Access to Business De-velopment Services, Inputs and Information TWG). It should be noted that strengthening coordination between the two groups has been proposed as a target outcome of the Business Environment com-ponent of the ASWAp-Support Project.

iii) The Access to Skills and Labour TWG and the Edu-cation SWAp (ESWAp).

Potential Sources of FundingEU Financing Agreement

The Financing Agreement between the European Union and the Republic of Malawi has been identified as a potentially significant source of funding for the Sector Wide Approach.

Under the financing agreement an indicative amount of EUR700,000 (US$883,800 or MWK238.6 m) in total over three years is given to support the Sector Working Group on Trade, Industry and Private Sector Development.2

A Programme Estimate (PE) has been developed for the year to 30th November 2012 which allocates an amount of c.MWK19.7m. (US$72,800) However, due to a lack of awareness of these funds to date, under MWK2m of this has been used, leaving MWK17.9m (US$66,300) remaining to be used be-fore 30th November 2012. The PE will be implemented un-der the responsibility of the NSO under the supervision of the PS in the MoIT as designated by the NAO under a direct decentralised operation.

The following activities were identified for this funding3:

1) Networking/ Sensitisation Workshops (3) to network, assess, solicit input and feedback from key stakehold-ers in the trade policy process environment. It would also enable the SWG practical understanding of the in-stitutional arrangements regarding foreign trade data/statistics generated by MRA, NSO, RBM, MITC and MoIT. It will also provide a platform to introduce best practices in the generation and use of trade statistics.

2) Periodic Technical meetings with the SWG on specific issues regarding trade statistics with respect to the dy-namics on the national, regional and international trade markets.

3) Quarterly reports to the SWG. The reports shall contain information relating to trade statistics for Malawi.

4) Trade sector-wide review under the direction of the MoIT.

It is evident that the activities specified under the PE for the year are not entirely appropriate in the context of the current situation. Importantly, a key assumption of the PE document is that the SWG

2 Specifically, the Financing Agreement states that “this activity will involve provision of technical assistance to this group to assist in the streamlin-ing of trade information systems to the policy decision making processes, including the development of a trade sector-wide review and a monitoring system.

3 Taken from Programme Estimate 1st December 2011 to 30th November 2012.

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is fully operational. Given that this is not the case, an argument could justifiably be made to amend the activities to allow them to better reflect the situation and the current needs for funds to operationalise the SWAp. The intention is to a hold a working meeting with NSO and NAO as soon as possible to discuss funding under the current year’s PE for the revised activities drawn up for the SWAp initiative, as well as potential funding from subsequent years’ allocations.

Efforts are being made to reassure the relevant parties that the requested funds will be utilised in the 2012/2013 year despite the low utilisation rate this year. The momentum around the NES process, and the clear need for funds to operationalise the NES/SWAp implementation mechanism could be a persuasive argu-ment for this.

ASWAp-SP

Under the ASWAp-Support Project the Ministry will be taking the lead on designing and coordinating the “Improving the Business Environment in Agriculture” component. One of the activities which the Ministry has submitted for funding is support for the opera-tionalisation of a SWG. The amount requested is c. US$67,900 (MWK18.3m) in total and US$32,500 (MWK8.8m) for 2012/2013.

The Enhanced Integrated Framework

The 2012/2013 workplan and budget for the Tier 1 EIF funding outlines a number of budgeted activities which could be applied to progress the operationalisation of the SWAp, if there were agree-ment from the EIF side. In particular:

• There is a budget allocation for conducting workshops and training for stakeholders on mainstreaming trade into na-tional development strategies and sectoral policies.

• There is a budget allocation for an external Project Adviser. The possibility of this individual supporting the SWAp as part of their duties should be considered given that the Terms of Reference for this individual already include an aspect of carrying out SWAp-related functions.

Furthermore, whilst the budgets and activity plans for years 2 and 3 have already been approved, the workplans have not yet been created. There will be need to find synergies and linkages between the budgeted EIF activities and planned SWAp activities, which could then be reflected in the workplans.

Departmental Budgets

The Department of Planning has a budget of around MWK3.3m (US$12,200) allocated for SWG/TWG-related activities.

Unfortunately, other Ministry departments did not budget for SWG/TWG-related activities in their 2012/2013 budgets. It is important that the inclusion of SWAp activities in all departmental budgets is considered for 2013/2014. Those amounts could be used to fund SWG/TWG activities which are envisaged under this proposal.

Proposed Roadmap Below is a proposed roadmap for the initial transition phase for the NES to the SWAp (from June 2012 – December 2012) and following that, for a full year of SWAp operations (continued on page 26).

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roAdMAP for oPErATIonALISATIon of SwAPTimeline Activity

June - December 2012 Internal meetings with management to discuss transition proposal and gain support Meeting with all senior management. Plus, on a needs basis, one-on-one meeting with Directors.

August 2012 Approval secured for SWAp mechanism; SWAp Secretariat established: Approval for i) 2 permanent MoIT staff from Dept of Planning to dedicate 40-50% of time to SWAp; ii) 1 members of original NES team to dedicate 50% of their time to SWAp; iii) ODI Fellow to dedicate 40% of time to SWAp; iv) each division to allocate a representative to act as divisional SWAp liaison point; v) Imani to dedicate 15 days during November and December 2012 until SWAp TA contract starts.

December 2012 SWAp Presented to Stakeholders at NES Launch Symposium

December 2012 onwards SWAp Secretariat to ensure new SWAp-dedicated secretariat positions (and associated responsibilities) are included in the Functional Review and that a budget for these positions is approved Positions to be included at P7 and P5, reporting to the Director of Planning.

September 2012 - March 2013 Recruitment process for Overall SWAp Technical Assistant (SWAp TA) plus Technical Assistants for the three Prioritised Cluster TWGs

January 2013 Capacity-building workshop for Divisional SWAp Liaison Staff Particularly on SWAp process, key issues, implementation modalities, interaction with other initiatives, etc

January 2013 First TWG meetings Agenda: 1) Validate priority issues from existing sector strategy action plans, where there can be immediate implementation. 2) Orientation on role as TWG under SWAp. Re-define TORs, code of conduct and membership in preparation for role as TWG.

January 2013 First SWG (Steering Committee) meeting Agenda: 1) Consider priority issues from existing sector strategies for immediate implementation and TWG recommendations regarding these issues. 2) Orientation on role as SWG under SWAp. Re-define ToRs, Code of Conduct and refine membership in preparation for role as SWG.

Ongoing January 2013 - January 2014

Action Task Force Activities and Meetings Operational for first year following NES Launch. TWG chairs and other key members meet on an ad hoc basis when required (on average once a quarter) to take immediate action on matters of importance, to ensure progress on prioritised NES actions, and to meet with senior officials where lobbying is required.

January 2013 Specialised SWAp TA in place

January 2013 End of NES-SWAp transition phase Launch of JSS development phase under SWAp framework.

January / February 2013 Quarterly SWAp progress report Compiled and disseminated by SWAp Secretariat.

February 2013 Quarterly SWAp progress report Compiled and disseminated by SWAp Secretariat.

Timeline Activity

February 2013 Capacity building For Ministry staff with SWAp secretarial duties on managing SWAps

February - March 2013 Three Technical Assistants for the Prioritised Cluster TWGs commence work These are dedicated to implementation of Annexes 2, 3 and 4 of the NES and will report to the SWAp Secretariat.

March 2013 TWG meetings Agenda: 1) Commence development of the JSS/POW/M&E framework; 2) Continue progressing initially identified priority actions from existing sector strategies.

March 2013 (TWG plus two weeks) SWG (Steering Committee) meetings Agenda: Review work of TWGs in 1) development of JSS/PoW/M&E framework and 2) Implementation of priority actions from existing sector strategies.

March / April 2013 Quarterly SWAp progress report Compiled by Secretariat.

June 2013 OPC approval and budget approval for establishment of two full time SWAp Secretariat positions Civil Service Commission recruitment process begins

June 2013 TWG meetings Agenda: 1) Finalise JSS/PoW/M&E framework. 2) Continue progressing initially identified priority actions from existing sector strategies.

June 2013 SWG (Steering Committee) meeting Agenda: 1) Endorse JSS/PoW/M&E framework. 2) Review implementation of priority actions from existing sector strategies.

June 2013 JSS/PoW/M&E framework published

June / July 2013 Quarterly SWAp progress report Compiled by Secretariat.

September 2013 TWG meeting Agenda: 1) Begin implementation of JSS (including development of programme proposals by relevant TWG members with assistance from the SWAp Secretariat). 2) Continue progressing initially identified priority actions from existing sector strategies.

September 2013 SWG (Steering Committee) meeting Review work of TWGs in implementation of: 1) JSS. 2) priority actions from existing sector strategies.

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Sub-Annex 1: Terms of Reference for the SWAp Secretariat TERMS OF REFERENCE FOR THE TRADE, INDUSTRY AND PRIVATE SECTOR DEVEL-OPMENT SWAP SECRETARIAT

1. Background

The Ministry of Industry and Trade (the Ministry or MoIT) has been leading the process of developing a Sector Wide Approach (SWAp) for Trade, Industry and Private Sector Development (TIPSD).

The objectives of the SWAp framework are as follows:

• To function as a single, comprehensive mechanism for negotiation, policy dialogue, and agreement of plans among stake-holders across the sector, in order to provide Malawi with the long-term strategic focus and concerted effort towards building the productive base of the economy which it crucially needs and which is currently lacking. The SWAp should act as a vital tool to allow the Ministry of Industry and Trade to become a true facilitator of trade and investment, whilst developing the capacity of all spheres of government to be drivers of the productive base of the economy.

• To support government in the development of a comprehensive, clearly prioritised Joint Sector Strategy (JSS) to build the productive base of the economy. This will be developed in consultation with sector-relevant stakeholders, with a prioritised accountable, budgeted and monitorable sector Programme of Works (PoW) aligned to government priorities and systems, allowing harmonised support by donors. The JSS and PoW will allow the broad spectrum of factors on which development of the productive base depends to be taken into account and addressed in a prioritised, targeted and collaborative manner by public and private stakeholders.

• To function as an efficient framework to enhance effective implementation of the JSS as a way to achieve the goal of the MGDS II to “develop and promote a conducive environment that will enhance inclusive private sector growth and competitiveness”.

To achieve coordination and avoid duplication of efforts, the SWAp should function as a true umbrella framework for the development, implementation and monitoring of all sector initiatives. It should not be viewed as a stand-alone initiative but as a support mechanism for all of the MoIT’s existing and planned initiatives.

Given the scope of the framework, it is crucial that there is a dedicated SWAp coordination office within the Department of Planning of the MoIT where staff should work exclusively on the coordination of the SWAp framework and the implementation of the Joint Sector Strategy. Such a dedicated SWAp Secretariat, with adequate staff, skills and capacity, is critical to ensure the SWAp is an effective stakeholder dialogue forum and driving mechanism that can mobilise adequate resources to ensure the implementation of the Joint Sector Strategy.

roAdMAP for oPErATIonALISATIon of SwAPTimeline Activity

September/October 2013 Quarterly SWAp progress report Compiled by Secretariat.

December 2013 TWG meeting Agenda: 1) Continue implementation of JSS (including development of programme proposals by relevant TWG members with assistance from the SWAp Secretariat). 2) Continue progressing initially identified priority actions from existing sector strategies.

December 2013 SWG (Steering Committee) meeting Review work of TWGs in implementation of: 1) JSS. 2) Priority actions from existing sector strategies.

December 2013 / January 2014 Quarterly SWAp progress report Compiled by Secretariat.

Jaunary 2014 Two full time SWAp Coordination staff recruited and take up posts in SWAp Secretariat Six-month hand-over period with TA begins

February 2014 Capacity building short courses for two new full time staff Regarding SWAp management

February 2014 First Annual Joint Sector Review

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2. Objectives of the SWAp Secretariat

The objectives of the SWAp Secretariat are to:

a. Ensure participation of stakeholders across the sector - including involvement of all MoIT divisions - and to strive to make the SWAp a true umbrella framework for all initiatives related to building the productive base of the economy and supporting trade, industry and PSD in Malawi, whilst maintaining momentum of existing initiatives during the SWAp start-up phase.

b. Proactively drive the implementation and monitoring of the JSS and the PoW. Where implementing agencies or another dialogue forum has the capacity to drive actions specified in the JSS and the PoW, the SWAp Secretariat will play a sup-portive role. However, where this capacity is constrained, the SWAp Secretariat will play a proactive role in working with the implementing bodies to ensure that progress is made on actions.

c. Serve as an effective secretary to the Sector Working Group (SWG) and the Technical Working Groups (TWGs) and where needed, the technical committees, to ensure the smooth functioning of the framework and the efficient flow of informa-tion within the framework, and outside it when necessary.

3. Specific Tasks of the SWAp Secretariat

In order to achieve these objectives the specific tasks to be carried out by the SWAp Secretariat will include (but will not be limited to):

1. Sensitise and inform subgroup members of the objectives and functional arrangements for the SWAp and consult with them on their role as members of SWAp subgroups, particularly during the transition phase from National Export Strategy subcommittees to SWAp subgroups.

2. Assist subgroup members to refine their membership, Terms of Reference and Code of Conduct during the transition phase from National Export Strategy subcommittees to SWAp subgroups.

3. Develop the JSS and the PoW with assistance from the specialised SWAp Technical Assistant (who will work as part of the SWAp Secretariat) and with significant input from the TWGs and SWG. This should be done by uni-fying and building on existing sector documents. A major building block of the Joint Sector Strategy should be formed by the National Export Strategy given that it provides a comprehensive roadmap on how Malawi’s productive base can be built through development of the private sector. At the same time, areas from other sector documents, which stakeholders feel have not been sufficiently addressed in the NES, should also be incorporated into the Joint Sector Strategy. In particular, this would include elements of the updated DTIS; the MSME Policy and Strategy; the PSD Policy and Strategy; the Cooperatives Development Policy; the Trade and Industrial Policy; the Microfinance Policy; and the Communiqué on Malawi National Dialogue and the operational plan developed from its recommendations, amongst others.

4. Update and amend the JSS and the PoW as and when necessary, for example to take into account completion of certain activities and the development of follow-on activities, changes in circumstance/environment or receipt of new information.

5. Coordinate analytical work or research done by members of the TWGs, and where a member does not have sufficient capacity to conduct this work alone, provide assistance wherever possible.

6. Where it is necessary for a study, assessment or research exercise to be conducted on an issue raised during development/implementation of the JSS, which might normally be carried out by external Technical Assistance, the SWAp Secretariat should assess whether its members (including the specialised SWAp Tech-nical Assistant) have the capability and resources to carry out that exercise and if so, the SWAp Secretariat should conduct this work in-house.

7. Liaise with other relevant technical groups or fora. In particular:

• meet and communicate regularly with other relevant SWAps (including attending meetings of the Agri-culture SWAp, Financial Sector Working Group and the Education SWAp); and

• maintain a close day-to-day working relationship with the National Implementation Unit (NIU) for the Enhanced Integrated Framework (EIF) to ensure complementarity between the EIF and the SWAp, while

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avoiding misalignment by ensuring that the Diagnostic Trade Integrated Study (DTIS) is a sub-compo-nent of the JSS.

8. Ensure adequate representation of other key SWAps in the TIPSD SWAp subgroups and evaluate whether there is a need for ad hoc meetings between representatives of the SWAps.

9. Ensure that where issues pertinent to the development of the Trade, Industry and PSD sector are not ade-quately addressed in other fora, that these are addressed by the TIPSD SWAp.

10. Minimise overlap and duplication between the TIPSD SWAp and other fora by keeping up to date with the agendas of other fora and ensuring that, where issues of interest for a TWG under the TIPSD SWAp are already adequately addressed in another forum or SWAp (from the perspective of private operators), the relevant TWG is informed that this is the case, the agenda of that TWG is amended accordingly to avoid duplication of effort, and the TWG is updated of progress from that forum on a regular basis.

11. Assess the functioning of the SWAp framework and subgroups on an ongoing basis and suggest amend-ments – for example to the structure or membership of the TWGs and SWGs - where those amendments would increase efficiency or efficacy.

12. Ensure that there is appropriate and timely follow up on: i) prioritised actions identified for implementation during the development of the JSS and PoW; ii) actions emanating from the JSS and the PoW; and iii) other actions that emerge through the SWG, TWG and Technical Committee meetings. In addition, the SWAp Sec-retariat should monitor and evaluate progress and completion of actions and targets under the JSS and the PoW.

13. Where certain actions are not progressing sufficiently, investigate the true underlying causes of bottlenecks to implementation by scrutinising the situation thoroughly using economic, technical, and political judgement accordingly, and viewing the specific action within the context of the sector as a whole and the various fac-tors and institutions which impact on that action. The SWAp Secretariat should then examine and, wherever possible, implement remedies to these bottlenecks, including recommending to the SWG where the Action Task Force of the SWG should be deployed, for example, to meet with/lobby key agencies.

14. Assess whether the membership of a TWG is sufficiently well-placed to progress a particular action and if not, ensure that the relevant organisations and representatives of sufficient seniority are adequately informed and involved in the work. This should be done by maintaining an up-to-date list of sector stake-holders and members of TWGs and SWGs, and the roles of individuals within those organisations, in order to ensure that the membership of each sub-group includes appropriate individuals and organisations.

15. Ensure that sufficient management time and resources, including both financial and staff resources, are allocated to priority actions across all ministries, agencies or institutions involved in implementation. Where this is not the case, consider and adopt strategies to increase resources allocated. For example, where approved by the SWG, the SWAp Secretariat should prepare proposals for funding of actions specified in the JSS and emerging from TWG discussions.

16. Ensure that the SWAp Secretariat is appropriately staffed and resourced. In the initial phases of SWAp operations (during last half of 2012 and first half of 2013) the SWAp Secretariat should advocate to have two full time dedicated SWAp Secretariat positions created in the Department of Planning in the MoIT, for inclusion on the government payroll in the 2013/2014 budget. In doing this, the SWAp Secretariat should i) ensure that the two SWAp Secretariat are included by Department of Human Resources in the Functional Re-view for the Ministry; ii) support the Human Resources Management Section of the Ministry in approaching Ministry of Economic Planning and Development (MEP&D) regarding creation of these positions and work closely with them to lobby for approval from the Department of Public Services Management (DPSM) for the positions; iii) thereafter, work with the aforementioned bodies to lobby for a specific government budget to be allocated for these positions in June 2013; iv) following this, assist the Human Resources Management Section and MEP&D in the process of receiving final formal endorsement from DPSM; v) oversee the Civil Service Commission’s process of advertising and filling these positions; and vi) consider whether any other actions must be taken for the creation and filling of these positions and if so, undertake the necessary tasks;

17. Ensure long term sustainability of the TIPSD SWAp framework (including sustainability of resources for meetings and the operations of the SWAp Secretariat) by exploring funding options and, importantly, ensur-ing that from the 2013/2014 budget funding for the TIPSD SWAp framework is included in the government

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budget. This will include working with MoIT departments to ensure the inclusion of SWAp activities in de-partmental budgets.

18. Provide custodianship, oversight and guidance for the sector as a whole by considering specific issues emanating from the SWAp framework in a wider sectoral context, with a long term focus on building the pro-ductive base of the economy, and with a view to external factors such as certain macroeconomic conditions or issues of political economy.

19. Assess the need for other initiatives to be linked to or incorporated into the SWAp framework whenever nec-essary (for example, by establishing lines of communication or incorporation into the JSS), and if relevant, assess how this can be effectively achieved.

20. Maintain a strong day-to-day working relationship with MEP&D.

21. Ensure recommendations requiring high level political consideration are taken to Cabinet by the Minister for Industry and Trade when necessary.

22. Ensure SWG and TWG meetings (and where a Technical Committee does not have its own secretariat, the SWAp Secretariat will assist in this task for the committee) are well-structured, focused and appropriately attended by:

a. convening quarterly meetings of the SWG and TWGs and communicating the date to members at least 5 working days in advance;

b. setting the agendas of the SWG and TWG meetings (and Technical Committee meetings when required) and inform-ing members if they will be required to provide any specific information at a forthcoming meeting;

c. assessing which stakeholders’ attendance will be crucial at a forthcoming meeting to ensure that the issues out-lined in the proposed agenda can be addressed efficiently, and liaising regularly with those stakeholders to ensure their participation in the meeting. As an example, if an upcoming meeting’s agenda includes discussion on the new National Energy Policy, the SWAp Secretariat should ensure that relevant officers involved in the initiative from the Department of Energy Affairs should be present, as well as officers, with good knowledge on the subject, from ES-COM and MERA to discuss implementation issues where relevant. It may also be necessary to ensure participation from staff, with sufficient authority and awareness of the topic, from Ministry of Finance, OPC and MEP&D, in order to address resourcing issues surrounding the policy;

d. assess whether representation is required during a particular meeting from “Special Members”4 or other bodies which are not usually represented on a particular SWG/TWG, and ensure participation from that body;

e. assessing whether overall membership of each subgroup is appropriate (both in terms of institutions included and the standing of the representatives sent to the meeting) for fruitful discussions to be held, and ensuring that each subgroup has a strong champion member who can garner support from other stakeholders and assist in driving priority actions. Where this is not the case, the SWAp Secretariat should deliberate with the relevant institutions and individuals to ensure that correct membership and championing is achieved;

f. provide key information relating to the upcoming meeting’s agenda to potential participants in advance.

23. Minute SWG and TWG meetings (and Technical Committee meetings when required).

24. Prepare reports, based on meeting minutes, from i) the TWGs for review by the SWG; and ii) the Technical Committees for review by the TWGs when necessary. The reports should contain proposals for the SWG’s endorsement based on recommendations from the TWGs.

25. Produce quarterly reports and annual reports for the SWAp and disseminate them to sector stakeholders in a timely manner.

26. Organise and coordinate the annual Joint Sector Review.

4 Special Members are those bodies which are relevant to a number of subgroups and will therefore be called in for particular meetings as and when the need arises, rather than being required to attend every meeting.

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Annex 1

As discussed in Chapter 1, each of three priority clusters will have a Technical Working Group under the Trade, Industry and PSD Sector Wide Approach. These will serve as the stakeholder ownership and driving bodies for the cluster strategies. The TWGs will be supported by the SWAp secretariat to ensure regular and effective meetings, together with action follow up.

The three priority cluster TWGs (oil seed products, sugar cane products and manufacturing) will:

• Recognise that all stakeholders have a role to play in ensuring the success of the cluster and assisting those stakeholders to secure the capacity needed to play that role;

• Ensure the alignment and coordination of all key stakeholders such that they prioritise these clusters in their work plans and programmes. Such stakeholders include the private sector; Ministries (including the Ministry of Finance and Ministry of Economic Develop-ment and Planning); Government support agencies such as MBS, MITC and SMEDI; farmer organisations (e.g. trusts); smallholder farmer associations; enabler sectors (such as energy, finance and transport); civil society; and development partners;

• Manage stakeholder expectations so that sustainable market-led cluster development is not undermined by excessive expectations of short-term gains;

• Ensure the implementation of the prioritised actions necessary to ensure the sequenced, sustainable development of the cluster;

• Ensure resource mobilisation, resource allocation and the provision of adequate man-agement attention to implementation bottlenecks (which inevitably arise in any implemen-tation process);

• Provide, through participation in the SWAp, a direct reporting line to the highest level of each stakeholder group, including Cabinet for Government; and

• Will be co-chaired by passionate, effective leaders from the public sector and the private sector, who will be elected by the members of the TWGs. It will be supported by the SWAp Dedicated Secretariat that is being established by the Ministry of Industry and Trade as detailed in Chapter 4 of the strategy. The TWGs will report through the co-chairs and the SWAp Dedicated Secretariat to the Sector Working Group.

Chapter 2 – Resourcing of Priority Clusters

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Through the TWG, the three priority cluster strategies will be ex-plicitly prioritised for facilitation by critical public sector support agencies in their strategic plans, budgets and work programmes. Such agencies include:

a. Ministry of Economic Planning and Development

b. Ministry of Finance

c. Ministry of Industry and Trade

d. Ministry of Justice

e. Ministry of Agriculture and Food Security, including:

• Agriculture Sector Wide Approach

• Department of Agricultural Extension

• Department of Agricultural Research

f. Ministry of Irrigation and Water Development

g. Ministry of Education, Science and Technology, including the Education Sector Wide Approach

h. Ministry of Labour

i. Ministry of Transport and Public Works

j. Ministry of Environment, Natural Resources and Energy

k. Malawi Investment and Trade Centre

l. Small and Medium Enterprise Development Institute

m. Malawi Bureau of Standards

n. Reserve Bank of Malawi

o. Malawi Revenue Authority

p. Technical, Entrepreneurial and Vocational Education and Training Authority

q. Malawi Industrial Research and Technical Development Centre

r. Universities

s. Department of Immigration

Resourcing

Resourcing for the development of the cluster will support the Oil Seed Products TWG, the Sugar Cane Products TWG and the Manufacturing TWG, recognising this as the driver of the cluster.

Resourcing will be at two levels:

1. Resourcing for the three prioritised cluster TWGs.

a. This will occur through the Trade, Industry and PSD Sector Wide Approach. The dedi-cated secretariat for the SWAp will also serve as secretariat for the three prioritised cluster TWGs.

b. Dedicated support for the three prioritised cluster TWGs may be through a lead devel-opment partner for each cluster or through a coordinated structure emerging through the respective TWG. Partners would help oversee the holistic development of the cluster. They would fund a long-term Technical Assistant (TA) to be dedicated to the TWG and to the implementation of this strategy. The TA will work with the dedicated secretariat and sup-port the secretariat’s capacity development on cluster development technique as per this strategy.

2. Resourcing for actions in the strategy

a. Funding would come from all stakeholders depending on the nature of the action. The TWGs will determine the optimal owner of the action and the funder. Implementers will either be private sector or the local public sector. Development partners will support actions as required, either through pooled or individual-ly kept budgets allocated to the development of the cluster as required by the action plan and the TWG. Funding should be catalytic and unlocking (e.g. a key piece of research or analysis, a strategic piece of infrastructure), and dependence on funding should be mini-mal. Flexibility of use of funds for the TWG and for development partners is important. Trusts for pooling of funds could be considered. The ideal modality for funding of the cluster strat-egies and TWG actions will need to emerge through the TWG. Funding will be based on a holistic approach to develop the cluster. Typi-cally a development partner support package would equate to approximately:

i. $13 million for oil seed products

ii. $40 million for sugar cane products (with $40 million accounting for irri-gation investment)

iii. $15 million for manufacturing

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These costs are based on indicative costings prepared for each cluster strategy. These are presented in Tables 2.1 to 2.3 below. This funding would cover five years and is merely an indicative benchmark for development partners. It will need to be revised on a programme of works to emerge from the TWGs.

b. The allocation of sufficient government management time and funding for the cluster is essential to develop per-manent enablers for the cluster. Funding will be dependent on the nature of the actions set out in Chapter 7 of Annexes 2, 3 and 4 (the cluster strategies). Government management time and funding will develop capacity for key institutions to address bottlenecks to the cluster. This will take the form of:

i. Oil Seed Products: operationalising the land reform package, operationalising MITC, SMEDI, the oil seed extension programme, seed research etc, all geared to oil seeds.

ii. Sugar Cane Products: operationalising the land reform package, community and land development, op-erationalising MITC, SMEDI, the sugar cane extension programme, seed research etc, all geared to sugar cane.

iii. Manufacturing: operationalising MITC and SMEDI, establishing Special Economic Zones/Industrial Parks, enabling commercial farming and providing reliable energy supply, among others.

Government commitment to funding such key actions is fundamental to secure additional funding by development partners and investment by the banks and the private sector.

c. Private sector investment will complete the resourcing arrangement, with the support of the financial sector, though the degree of such investment will depend on resourcing commitment by government to the three prioritised cluster strategies.

In the three tables below, the indicative costs for the components of the three cluster strategies are presented. These costs are not meant to be accurate and final. They are purely illustrative and will need to be refined through the NES implementation mechanism (the programme of works to be developed by the priority cluster Technical Working Groups under the TIPSD SWAp).

The costs in the tables below are used to calculate the total costs for the relevant section of the indicative cost summary (Priority Area 1a), which is presented in Chapter 4 below.

The tables below make reference to the action codes for each component/action. The full list of actions and action codes are presented in Chapter 7 of Annex 2 for oil seed products, Chapter 7 of Annex 3 for sugar cane products and Chapter 7 of Annex 4 for manufac-turing.

Phases in the tables below correspond to completion of activities based on the following timeline:

• Phase 1: December 2010

• Phase 2: June 2013

• Phase 3: December 2014



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Source: NES Technical Team. Note pa stands for per annum. Where a cost is marked as pa, it reflects a recurrent expenditure. Costs not marked by pa are one-off costs, or capital costs.

TAbLE A1.4 oIL SEEd ProduCTSPhases Components Reference in

Annex 2 for details

Indicative Cost Government

Indicative Cost Dev. Partners

Duration of Dev. Partner Programme (Years)

Phase 1: Immedi-ate Actions

Cluster stakeholder representation and coordination mechanism: Oil Seed Products Technical Working Group

OS2.1 to OS 2.4

$0 Financed as part of TIPSD SWAp. In addition Dedicated TA $400,000

5 years

Phase 2: Main critical actions

Access to Land Programme including operationalisation of the land reform package

OS5.2 Captured through Cross-Cutting Action 6.2.4 in Section 3.4 of Annex 1 & in Annex 5

5 years

Banning of Export Bans OS8.2 $0 $0 n/a

Explicit Oil Seed Prioritisation in key government agencies OS2.1 $0 $0 n/a

Phase 3: Kick-start enablers

National Oil Seed Extension Programme including support by NGOs through an extension coordination mechanism

OS7.1 & OS7.2 Captured through Cross-Cutting Action 7.1.2 in Section 3.4 of Annex 1 & in Annex 5

5 years

Oil Seed Products Investor Facilitation Programme including operationalisation of MITC

OS3.1 $100,000 pa $1,500,000 5 years

Standards and accreditation plan to penetrate targeted markets, including aflatoxin mitigation measures in groundnuts

OS3.4 $100,000 pa $2,000,000 5 years

Expedite operationalisation of Memorandum of Understanding on Harmonisation of Seed Regulations in SADC and Comesa

OS5.1 Covered in Cross-Cutting Action 5.4 in Section 3.4

n/a

Warehouse receipts and commodity exchanges OS4.2 to OS4.9 Covered in Cross-Cutting Action 4.1 in Section 3.4

n/a

Government farmer confidence mechanism for short-term kick-start to agricultural production (eg as with cotton 2011, but smaller scale)

OS4.1 $1,000,000 pa $5,000,000 5 years

Banks to offer favourable lending windows for Oil Seed Products TWG registered members

OS6.1 to OS6.4, OS6.7

$0 $0 n/a

Micro-finance agencies to prioritise oil seeds and offer saving schemes to oil seed farmers on large scale

OS6.5, OS6.6 $0 $0 n/a

Export Development Fund guarantees for investors in oil seed processors, supported by Malawi Innovation Challenge Fund

OS6.9, OS6.10 $0 $0 n/a

Inclusion of packaging companies in Oil Seed Products TWG OS3.6 $0 $0 n/a

Phase 4 MSME oil seeds support plan, including operationalisation for SMEDI

OS7.3 $100,000 pa $500,000 5 years

Oil Seed Products Skills Plan OS1.1 to 1.6 Captured through Cross-Cutting Action 1.1.1 in Section 3.3

5 years

Branding and Marketing Programme OS3.2 $100,000 pa $1,500,000 5 years

Access to Energy Plan OS5.5 to be estimated $0 n/a

Tax efficiency and support OS8.1 covered in Cross-Cutting Action 8.1 in Annex 5

covered in Cross-Cut-ting Action 8.2 in Annex 5

n/a

Research and Seed Plan OS5.4 & OS5.1.2 to 5.1.9

$1,000,000 + $100,000 pa

$1,000,000 5 years

Oil Seed Irrigation Programme OS5.3 covered in Green Belt Initiative

open ended n/a

Phase 5 License and Customs fast-tracking: through Trade Logistics TWG OS3.3, OS3.7 $0 $0 n/a

Fair competition reviews in transportation and oil seed stake-holders

OS10 $20,000 pa $300,000 5 years

Transport Sector Implementation Plan prioritisation of oil seed area rural feeder roads. Target Lusaka, Harare, Tete, Mbeya

OS3.5 covered in Cross-Cutting Action 3.7 in section 3.8

n/a

Trade Policy OS3.8 $40,000 pa $500,000 5 years

Maintain market-determined exchange rate OS9.1 $0 $0 n/a

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Annex 1


TAbLE A1.5 SugAr CAnE ProduCTSPhases Components Reference in

Annex 3 for details



Duration of Dev. Partner Pro-gramme (Years)


Establish an appropriate stakeholder representation and coordina-tion mechanism: Sugar Cane Products Technical Working Group

SC2.1 $0 Financed as part of TIPSD SWAp. In addition Dedicated TA $400,000

5 years

Develop a regulatory framework for sugar cane production SC2.1 $0 $200,000 1 year


Develop and Implement an Access to Land Programme SC5.1 Captured through Cross-Cutting Action 6.2.4 in Section 3.4 of Annex 1 & in Annex 5

5 years

Secure Explicit Sugar Cane Prioritisation by Government agencies SC2.1 $0 $0 n/a


Investor Facilitation Programme prioritising milling capacity, linked to Access to Land Programme and Sugar Cane Extension Programme.

SC3.1 $100,000 pa $1,500,000 5 years

Develop and Implement Irrigation and Cultivation Infrastructure Programme to match Access to Land Programme

SC5.2 $10,000,000 $30,000,000 8 years

National Sugar Cane Extension Programme SC7.1 & SC7.2 Captured through Cross-Cutting Action 7.1.2 in Section 3.4 of Annex 1 & in Annex 5

5 years

Access to Energy Plan (including pricing strategy for processors to supply electricity grid).

SC5.3 to be estimated $100,000 1 year

Plan for meeting standards and accreditation in targeted markets, eg Vitamin A.

SC3.4 $100,000 pa $2,000,000 5 years

Banks to offer favourable lending windows for Sugar Cane Products TWG registered members.

SC6.1 to SC6.4 $0 $0 n/a

Micro-finance agencies to prioritise smallholder sugar cane and offer saving schemes to sugar cane small holder farmers on large scale.

SC6.5 $0 $0 n/a

Export Development Fund guarantees for investors in sugar cane processors supported by Innovation Challenge Funds/Matching Grant Programmes.

SC6.7, SC6.8 $0 $0 n/a

Transport Plan, inc.Transport Sector Implementation Plan prioriti-sation of sugar cane cultivation area rural feeder roads and linking to target African markets (Lake Tangyanika, Lusaka, Tete, Harare) & Nacala

SC3.5 covered in Cross-Cutting Action 3.7 in section 3.8

n/a

Inclusion of packaging companies in Oil Seed Products TWG. SC3.6 $0 $0 n/a

Phase 4 MSME sugar cane support plan, including operationalisation for SMEDI

SC7.4 $100,000 pa $500,000 5 years

Sugar Cane Products Skills Plan SC1.1 to SC1.4 Captured through Cross-Cutting Action 1.1.1 in Section 3.3

n/a

Access to research and extension SC5.5 $500,000 one-off & $200,000 pa thereafter

$1,000,000 5 years

Tax efficiency and support SC8.1 covered in Cross-Cutting Action 8.1 in Annex 5 n/a

Trade Policy SC3.8 $40,000 pa $500,000 5 years

Phase 5 License and Customs fast-tracking through the Trade Logistics Technical Committee

SC3.3, SC3.7 $0 $0 n/a

Fair competition reviews in transportation and sugar cane stake-holders

SC10.1 to SC10.6

$20,000 pa $300,000 5 years

Branding and Marketing Programme SC3.2 $100,000 pa $1,000,000 5 years

Access to fertilizers and herbicide SC5.4 $0 $1,500,000 n/a

Outreach programme to regulators of sugar cane cluster members SC8.2 $0 $0 n/a

Use of mobile phone technology in extension services SC4.1 to SC4.2 $100,000 pa $500,000 5 years

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TAbLE A1.6 MAnufACTurIngPhases Components Reference in

Annex 4 for details



Duration of Dev. Partner Programme (Years)


Establish an appropriate stakeholder and policy maker represen-tation and driving body: Manufacturing Technical Working Group;

M2.1 $0 Financed as part of TIPSD SWAp. In addition Dedicated TA $400,000

5 years

Use this strategy as a basis for Industrial Policy: including Special Economic Zones/Industrial Park Development

M2.1 $5,000,000 capital and $500,000 pa

$7,000,000 5 years


Access to Reliable Energy Plan linked to Manufacturing M5.1 Covered in Cross-Cutting Action 5.1 in Annex 5 and Section 3.6

n/a

Access to Land for Commercial Farming linked to Manufacturing M5.2 Captured through Cross-Cutting Action 6.2.4 in Section 3.4 of Annex 1 & in Annex 5

n/a

Set cluster as explicit priority for key agencies M2.1 $0 $0 n/a


Investor Facilitation Programme including Export Processing Zones/Industrial Parks and Access to Land for Commercial Farming; and operationalisation of MITC.

M3.1 $100,000 pa $1,500,000 5 years

Plan for meeting standards and accreditation in targeted markets. M3.4 $100,000 pa $2,000,000 5 years

Transport Support Plan: Transport Sector Implementation Plan focus on link to growth centres: Tete, Lusaka, Harare and Mbeya; and prioritisation of dairy and wheat cultivation area rural feeder roads.

M3.5 covered in Cross-Cutting Action 3.7 in section 3.8

n/a

Warehouse receipts and commodity exchanges. M4.1, M4.2 Covered in Cross-Cutting Action 4.1 in Section 3.4

n/a

Banks to offer favourable lending windows with long-term credit for Manufactures TWG registered members.

M6.1 to M6.4 $0 $0 n/a

Micro-finance and banks to target smallholders supply the cluster, to offer long-term savings and lending plans, and to be intricately involved in Extension Services & Sub-Committee, prioritisation for smallholders.

M6.5 $0 $0 n/a

Export Development Fund guarantees for investors in manufac-tures cluster complemented by Challenge Funds/Matching Grant Funds.

M6.7 $0 $0 n/a

Tax efficiency and support M6.8 covered in Cross-Cutting Action 8.1 in Annex 5

covered in Cross-Cut-ting Action 8.2 in Annex 5

n/a

Phase 4 MSME manufactures support plan, including operationalisation for SMEDI

M7.1 $100,000 pa $500,000 5 years

License and Customs fast-tracking: through Trade Logistics TWG M3.3 $0 $0 n/a

Branding and Marketing Programme M3.2 $100,000 pa $1,500,000 5 years

Manufactures Skills Plan M1.1 to M1.5 Captured through Cross-Cutting Action 1.1.1 in Section 3.3

Phase 5 Fair competition reviews of cluster M10 $20,000 pa $300,000 5 yers

National Industrial Extension Programme M5.3 $200,000 pa $1,000,000 5 years

Trade Policy M3.6 $40,000 pa $500,000 5 years

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Annex 1

This chapter describes the key actions within the eight top cross-cutting priorities and provides indicative stakeholder roles and indicative costs. Please note that indicative implementation and resourcing is only provided for top priorities: those actions marked with priority number 5 or 6 in the comprehensive action plan matrices that are provided in Annexes 5 to 7 of the NES.

The top eight priority cross-cutting issues are:

1. Deliver policy coherence, comprehensiveness and coordination in setting the right environment for Malawi’s productive base to be built. This includes delivering a fiscal and monetary policy that is conductive to the productive base.

2. Prioritise the development of economic institutions, Government agencies and Ministries whose behaviour determines Malawi’s ability to be productive and compete on regional and export markets.

3. Prioritise permanent solutions to connect the demand for and the supply of skills and knowledge;

4. Significantly improve coordination efforts to connect smallholder farmers to proces-sors and to markets;

5. Enable smallholder farmers and micro, small and medium enterprises to access af-fordable finance;

6. Prioritise the delivery and implementation of a long-term energy plan that will allow access to reliable and cost-effective energy;

7. Invest in institutional capacity to facilitate MSMEs to meet the standards, accreditation and product quality requirements of target export markets;

8. Improve access to cost-effective transport both for exporters accessing regional markets and for domestic suppliers into the priority clusters, particularly smallholder farmers supplying processors.

The costs in the tables below are used to calculate the total costs for the relevant sections of the indicative cost summary (Priority Areas 2 and 4), which is presented in Chapter 4 below.

Chapter 3 – Cross-Cutting, Institutions and Skills & Knowledge Resourcing

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Policy coherence, comprehen-siveness and coordination for productive base to be builtThis is covered in Chapter 1 of this Annex. Please refer to that chapter. The implementation mechanism for the NES is the main tool available to mainstream the development of the productive base of the economy, and hence to mainstream trade.

Favourable economic institu-tions The implementation of Focus Area 3 of the NES – favourable economic institutions – has to be specific and has to contain five ingredients. Otherwise it is set to fail. The ingredients are:

1. Genuine prioritisation by central Government;

2. Appropriate support by development partners based on the reality of existing institutional capacity and not based on the expectations of development partners. Support mechanisms such as shadowing and mentoring are strong-ly recommended, together with the terms of references of technical assistants being focused on capacity development of local staff rather than solely on technical outcomes;

3. Investing for long-term, permanent gains and through not short-sighted, ineffective capacity-building mechanisms; and

4. Proper understanding of where an institution is com-ing from, where it lies on its development path and what it requires to meet its mandate in supporting the emergence of the productive base of the economy, and hence Malawi’s export capacity.

5. Tie institutional development to the NES pri-ority clusters so that the limited human and financial resources available are focused on supporting clusters that have the potential to drive export growth. Such a direction, focus and targeted approach is also essential to increase the odds of permanent capacity development.

To secure these ingredients, there will first be a capacity needs assessment with genuine support from the institution relative to their mandate under the National Export Strategy and Trade, In-dustry and PSD Joint Sector Strategy. These mandates are sum-marised in Section 3.4 of the main document of the NES and in Annex 11. Specific actions for the institutions are provided in Annexes 5, 6 and 7 for institutional development and Annex 2,3 and 4 for actions specific to the prioritised clusters. The capacity needs assessment will be overseen and driven by the relevant Technical Working Group of the Trade, Industry and PSD SWAp.

The capacity needs assessment should aim to detail number of staff required and ideal budget size, relative to the scope of the mandate. This assessment should not be a cumbersome exercise and it should build on any recent assessments and institutional reviews. Where no recent assessment has been conducted, it may need to be more detailed. For example, such is the case with the Department of Agricultural Extension Services.

Once this capacity needs assessment is complete it is essen-tial for there to be a clear and strong government role and a supportive development partner role. If the central government role (as opposed to merely the targeted institution) is not being fulfilled, development partners should significantly taper down their support.

Central Government Role

• Ensure genuine prioritisation in policy documents and cabinet meetings.

• Ensure effective, dynamic and passionate leadership of the institutions.

• Ensure a scaled increase in the budget resources for staff numbers and operational expenses as called for in the respective capacity needs assessments.

• Assign the following levels of priority:

1. Critical Organisations whose full operationalisation needs to be expedited:

• Malawi Investment and Trade Centre

• Small and Medium Enterprise Develop-ment Institute

• Malawi Bureau of Standards

2. Top Priority Organisations and Departments:

• Ministry of Industry and Trade

• Department of Agricultural Extension Ser-vices and Human Resources in the Ministry of Agriculture and Food Security

• Technical, Entrepreneurial and Vocational Education and Training Authority

• Ministry of Labour

• Ministry of Economic and Development Planning, Real Sector Policy Analysis

• Departments of Planning in various Minis-tries, such as the Ministry of Industry and Trade, Ministry of Education, Science and Technology and Ministry of Agriculture

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and Food Security, Ministry of Irrigation and Water Development

• Ministry of Lands and Housing, Depart-ments of Land, Physical Planning, Policy and Planning and Surveys

• Financial Sector Policy Unit

• Micro-finance Department, Reserve Bank of Malawi

• Warehouse Receipts Department, Reserve Bank of Malawi

• Department of Cooperatives

• Department of Irrigation

3. Second Tier Priority Organisations and Depart-ments:

• Export Development Fund

• Department of Energy

• Ministry of Justice

• Ministry of Agriculture and Food Security Departments of Crops, Planning (ASWAp), Irrigation, Agricultural Research)

• Secondary, TEVET and Higher Education Departments, Ministry of Education, Sci-ence and Technology

• Competition and Fair Trade Commission

• Malawi Industrial Research and Technical Development Centre

• National Statistics Office

4. Third Tier Priority Organisations and Departments:

• Reserve Bank of Malawi

• Greenbelt Initiative

• Directorate of Registrar General

• Malawi Revenue Authority

• Department of Immigration

• Public Private Partnership Commission

• Commercial Court

Development Partner Role

One development partner will assume a support role for each prioritised institution. The support role is a delicate one that needs specific attention. It is not about engaging consultants and sitting back. Rather it is all about development partners building a long-term constructive relationship with the management and staff of the institution and to facilitate tailored mentoring, shadowing and support programmes for key departments and staff in a way that they ensure knowledge transfer and the development of departments. It is about building the capacity of departments and the institution, rather than about delivering a deliverable on a TOR.

There is no single way to provide such support, so the development partner and the institution will need to work out the appropriate mechanisms based on the objective of long-term institutional development. It must be based on the principle that support for and engagement with an institution will be provided at the pace of the institution and not at the pace of the development partner. It requires patience and an adjustment of expectations to the absorptive capacity of the institution. Another key principle is that institutional development is all about human capacity. Infrastructure, cars and computers are secondary. Development partner support needs to take into account competencies and skills relative to time available for staff to work to their TOR. Often staff have the necessary competencies and skills to meet their TOR but do not have the time to do so as they get taken up in day-to-day administrative duties and fire fighting. Recent capacity building programmes have failed because it has not adequately taken into account this factor. The number of skilled staff per function is important and needs to be adequately accounted for, which is why the central government role is fundamental.

Support could include management advisory, support for resource advocacy, staff mentoring and shadowing, demand-driven tailored courses, demand-driven tailored technical advisory whose objective is capacity building not merely box-ticking. Infrastructure support should then be provided where the costs are too high for the government to bear (such as with the Malawi Bureau of Standards) or where infrastructure is critical for the development of the organisation. It is important to note that the critical factor for institutional development is not infrastructure, but rather it is local human capacity.

The key factor is that services by development partners are demand driven and that there is adequate backing by central government to the management and resourcing of the institution. Where there is a sense that there is official support for an institution but it has not yet translated into a commitment to resourcing and management staffing, then development partners should tailor their support appropriately. In such cases it is essential to lower expectations for the pace at which an institution’s capacity can be developed and work with existing staff and management to make a case to central government for

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the legal, financial and human resource commitment required to kick-start the development of the organisation.

Another key principle is that development partners should not merely provide consultants as technical assistants and then sit back, checking only where the consultant has ticked the boxes of their TOR. They need to be engaged and ensure that the con-sultant is transferring knowledge, has the flexibility to adapt their TOR where needed and truly cares about the development of the target staff, unit or department. Part of this is developing TORs that prioritise knowledge transfer, mentoring and shadowing. The development partner then has to ensure that these factors are enabled by the institution, so that target staff are allowed ade-quate time to work with technical assistants.

Such support should ideally be provided as a central component of development partner projects and should be focused on the

NES priority clusters, in order to ensure the focus of limited re-sources on areas that can provide Malawi with the highest growth and development returns.

Competencies, skills & knowl-edgeThe overseeing structure and driving body for this priority area is the Skills and Labour TWG of Trade, Industry and PSD SWAp.

The costs in the table below are used to calculate the total costs for the relevant section of the indicative cost summary, which is presented in Chapter 4 below.


TABLE A1.7: NATIONAL COMPETENCIES AND SKILLS PLAN (NCSP) – SECTION 1.1 OF ANNEx 7:

Component Action Code in Action Matrix Annex 7

Resourced Indicative Cost Govern-ment


1: Identification of Competencies & Skills required to build productive base of economyApply ILO’s STED to 3 priority NES clusters (oil seed products, sugar cane products, manufacturing). Cost of $200,000 per cluster

1.1.1.1 No $0 $600,000

Apply ILO’s STED to energy and finance enabling sectors. 1.1.1.2 No $0 $400,000

For Public Sector refer to section 3.2 of this document. Outcome of 3.2 to feed in to NCSP.

1.1.1.3 No n/a n/a

2: Labour Market Information SystemComprehensive capacity needs assessment of Ministry of Labour and TEVETA to maintain Labour Market Information System.

1.1.2.1 to 1.1.2.3

No $0 $50,000

Ministry of Labour and TEVETA dedicate 2 full-time staff each (secure new budget from central government for new positions) to Labour Market Information System.

1.1.2.4 & 1.1.2.5

No $15,000 pa per agency

$0

Develop comprehensive Labour Market Information System that can be effectively maintained by the Ministry of Labour and TEVETA, including staff development and staff retention plans.

1.1.2.6 to 1.1.2.9

No, only $150,000

under HEST

$0 $1,000,000

Conduct review of market-based information solutions, such as voucher schemes.

1.1.2.11 No $0 $50,000

3: Resource and policy implicationsReview resource and policy implications through a reconciliatory report that links the NES and the Trade, Industry, PSD Joint Sector Strategy competencies and skills requirements to education policy makers, the private sector and to development partner support from both the education sector and the Trade/PSD sector to filling the gaps between competency and skills required. Indicative cost $100,000

1.1.2.16 No $0 $100,000

Develop and maintain a scare skills list to inform immigration policy for skills required in short-term to fill skills gaps that cannot be supplied domestically.

1.1.2.17 No n/a n/a

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· TEVET, Secondary Education and Higher Edu-cation. Indicative costs for sections 1.2 to 1.4 in Annex 7 could not be worked out in the development phase of the NES, and will need to be worked out through the Pro-gramme of Works for the Labour and Skills Technical Work-ing Group (TWG) of the Trade, Industry and PSD SWAp. This TWG will include the Department of Planning at the Ministry of Education, Science and Technology as well as the Minis-try of Finance, education sector development partners and PSD/Trade development partners.

· Research and Technology. For Action 1.5 (Malawi Industrial Research and Training Development Centre sup-port), refer to section 3.2 above.

Addressing farmer processor disconnect The overseeing structure/driver for this priority area is the Access to Inputs and Information TWG of Trade, Industry and PSD SWAp. It includes the Ministry of Agriculture and Food Security, Ministry of Irrigation and Water Development, the Ministry of Finance, the Reserve Bank and the Ministry of Economic Planning and Devel-opment, among others. This TWG will have a close link to the Oil Seed Products TWG of the Trade, Industry and PSD SWAp.

The costs in the tables below are used to calculate the total costs for the relevant section of the indicative cost summary, which is presented in Chapter 4 below.


TABLE A1.8: FARMER PROCESSOR DISCONNECT PRIORITy ACTIONS

Action Code in Ac-tion Matrix Annex 5

Resourced Indicative Cost Government

Indicative Cost Dev. Part-ners

1: Warehouse receipts, storage and commodity exchangesRBM to serve as regulator of a national warehouse receipts system. Explicit mandate given to RBM by Ministry of Finance.

4.1.1 n/a $0 $0

Fast-track approval of regulatory requirements by organisations establishing commodity exchanges.

4.1.2 n/a $0 $0

Complete ACE pilot of warehouse receipts (with NASFAM, Farmers World, OIBM and NFRA): Complete documentation for warehouse receipts system to protect banks and obtain approval of Credit Committee to kick start the system.

4.1.3 Yes RBM staff/ACE $0

Develop and implement a conducive national regulatory framework for warehouse receipts 4.1.4 No $100,000 $0

RBM establish a unit dedicated to the regulation of warehouse receipts. Allocate 4 staff. 4.1.5 No $40,000 pa, RBM $0

Implement a staff development and training package for the warehouse receipts unit. 4.1.6 No $200,000, then $40,000 pa

$0

Government introduce a policy to not ban the export of key crops in the NES: sugar cane, groundnuts, sunflower, soya and cotton.

4.1.7 n/a $0 $0

Include warehouse receipts in Oil Seed Extension Programme under the Oil Seed Products Strategy. Refer to Annex 2 of the NES.

4.1.12 n/a $0 $0

2: Agriculture credit guarantee scheme for processors Launch Export Development Fund and ensure sufficient scale, monitoring and ease of access. Prioritise NES clusters and enabling sectors such as energy and information. Indicative value of fund: $3,700,000 capital value of EDF (1bn Malawi Kwacha) plus approx $93,600,000 (25bn Malawi Kwacha) in lines of credit by banks. Start up costs for the EDF are approx $200,000 to be funded by the Reserve Bank of Malawi.

6.4.1 Yes $3,900,000 $0

Launch Malawi Innovation Challenge Fund targeting MSMEs to support EDF. Tie to NES priority clusters and enabling sectors.

6.4.2 Partial, $7m is unfunded

$0 $18,000,000

3: review of the government’s role in the micro-finance sectorDevelop and operationalise an enabling legal and regulatory framework for micro-finance. 6.3.2 No $0 $100,000

Conduct a review of the ownership structure of the micro-finance sector, particularly the efficiency of public sector organisations involved in micro-finance.

6.3.3 & 6.3.4

No $0 $25,000

Operationalise Micro-finance Act & Financial Cooperatives Act through gazetting of directives. 6.3.5 n/a $0 $0

Develop the capacity of RBM’s directorate for micro-finance to serve as an effective regulator so that the the Micro-Finance Act and the Financial Cooperatives Act may be fast-tracked in their implementation. Indicative costs: staff and operational costs by RBM $100,000 per year; Staff development and training support $200,000 first year and $40,000 per year.

6.3.6 & 6.3.7

No $200,000 first year & $140,000 pa

open ended

Establish a competitive, transparent supply window for MFIs through an Apex fund. 6.3.8 No $1,000,000 open ended

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TABLE A1.8(CONTINUED): FARMER PROCESSOR DISCONNECT PRIORITy ACTIONS

Component Action Code in Ac-tion Matrix Annex 5



4 and 10: operationalisation of Land bill and Commercial farmingEnactment of Land Bill. Indicative cost $0 6.2.1 n/a $0 $0

Preparatory project for the Land Development Support Programme, as part of ASWAp Support Project, funded by World Bank

6.2.3 $3,000,000

Operationalisation of land reform legal package, including the Land Bill, through a development partner Land Development Support Programme led by the Ministry of Land and Housing with the active participation of Ministry of Agriculture and Food Security, Ministry of Irrigation and Water Development, the Malawi Investment and Trade Centre, the Ministry of Finance, the Ministry of Industry and Trade and the Ministry of Economic Planning and Development, through the Trade, Industry and PSD SWAp. Include land compensation packages. Sub-actions are:

6.2.2 & 6.2.4

No $250,000 pa

$25,000,00

• survey all land and determine its suitability for crops, particularly the priority crops in the NES: sunflower, groundnuts, soya, cotton, sugar cane, dairy (livestock), maize, wheat

• survey all customary land and determine exact ownership, eg by village/village head

• expedite implementation of Land Information Management System Project which will assist in improved provision of information for sustainable land management.

• feed this information into the land programmes of the priority cluster strategies (sugar cane products, oil seed products, manufacturing). See Annexes 2, 3 and 4.

• complete procurement and installation of computerised land registration system, including payment system

• expedite implementation of the Automated Lands Registry System being developed under Business Environment Strengthening Technical Assistance Project (BESTAP) to assist banks to speedily verify ownership of land titles at a low cost.

• register all customary land with the Land Registry through land titling

• conduct a capacity needs assessment of the Departments of Lands, Physical Planning and Surveys and in Land Registry and determine requirements for staff numbers, skills and IT and equipment capacity

• recruit staff in each of the Departments of Lands, Physical Planning and Surveys and Land Registry to levels call for in capacity needs assessment

• provide staff development support as called for in the capacity needs assessment to all 4 departments

• ensure appropriate land titling for commercial and industrial land, and for acquisition of land (including long-enough leases to allow profitability) for new commercial farming projects. Allocate 1 million hectares of non-smallholder arable land or unused arable land to commercial farming, linked in to the priority NES clusters and to the investment facilitation programmes (which will package available land into available plots of land for commercial farming) that are to be developed for these clusters.

• develop and implement a framework to put unused arable land to economic use for priority crops under the NES. Link to extension programmes in priority cluster strategies (sugar cane products, oil seed products, manufacturing). See Annexes 2,3 and 4

• Follow up on 2-year clause for undeveloped land. Include compensation fund

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5: Farmer Organisation and ExtensionConduct an expert assessment of the way extension services and cooperative support services are delivered, the capacity of extension and cooperative support services and identify what capacity is required to deliver effective extension and cooperative support services in prioritised crops under the NES (groundnuts, sunflower, soya, cotton, sugar cane and dairy).

7.1.1 No $0 $200,000

Develop and implement an NES Extension and Cooperatives Support Programme that focuses on the development of capacity in extension services and cooperative support services by tying these services to the prioritized NES cluster crops and on the delivery of these services on sufficient scale as required by the NES priority crops. It centres on the Department of Agricultural Extension Services and the Department of Cooperatives. Indicative cost $20,000,000 by development partners through a project and $1,000,000 additional recurrent spending per year from 2017/18 (scaled increased in prior years) by Government on staff development and new recruitment. Of this $756,000 is the increase in spend on the Department of Agricultural Extension Services. Spend in 2012/13 budget was $744,000 (MK201,000,000). A major part of the funding for this will be through the Agriculture Sector Wide Approach Support Project. See action plan in Annex 5 for more details, section 7.

7.1.2 Possibly partially by ASWAp

$1,000,000 pa

$20,000,000

6. Cost-effective transport for smallholder farmersRefer to Section 3.7 below

7. Ensure coordination between the Greenbelt Initiative and the National Export StrategyEnsure coordination & coherence between Greenbelt Initiative, ASWAP, National Irrigation Policy & NES/Trade, Industry PSD Joint Sector Strategy, to ensure that investment in irri-gation is timely & reaps greatest economic rewards. Link irrigation efforts to NES priority clusters to ensure highest returns, based on market demand and value added potential through proper participation of key officers in ASWAp and Trade, Industry and PSD SWAp.

5.2.1 & 5.2.2

n/a Through existing dialogue mecha-nisms (Greenbelt Initiative, ASWAp and TIPSD SWAp)

8: Access to affordable quality seed by smallholders through an enabling seed policy; and 9: Farmer production support mechanismBuild on liberalisation efforts to improve remote access by fast-tracking implementation of the MoUs on the Harmonisation of Seed Policy in SADC and in Comesa. Ensure proper application of rule that says that if a variety is released in 2 SADC countries, it can be automatically released in Malawi. Indicative cost: Unknown, to be assessed through ASWAp or through Inputs and Information TWG under Trade, Industry and PSD Swap. This is not resourced.

5.4.1 & 5.4.2

No Unknown, to be assessed through ASWAp or TIPSD SWAp

Completion of pest list harmonisation and harmonisation of laws 5.4.3 Yes $0 FANOPAN, SIDA

Review pest list and laws for harmonisation under Comesa MoU, such that it is syn-chronised with the SADC requirements

5.4.4 No Govt staff $0

Push SADC for rapid operationalisation of the SADC seed centre in Lusaka 5.4.5 No Govt staff $0

Through liberalisation efforts, ensure maximisation of competition among seed compa-nies as a measure to keep seed prices down and stimulate innovation

5.4.6 No Govt staff $0

Conduct a review of the incentive structure for seed companies and for smallholder farmers to invest in NES priority cash crops (groundnut, sunflower, soya, cotton, sugar cane) and make recommendations for how to incentivise, in a sustainable manner, seed company

5.4.7 No $0 $100,000

Based on Action 5.4.3, develop a mechanism, to incentivise private sector to ensure affordable & well-distributed access to good quality seed for prioritised NES crops (groundnuts, soya, sunflower, cotton, sugar cane).

5.4.8 No Unknown, dependent on 5.4.3

Based on Action 5.4.3, develop a mechanism to ensure smallholder farmers are not dis-incentivised from investing in groundnuts, soya, sunflower, cotton and sugar cane. Review whether follow similar approach as with cotton in 2011. Use Oil Seed Products TWG as the control mechanism. Tie to Oil Seed Products Strategy.


Introduce and implement a policy to allow increased research on new varieties, partic-ularly in growth cash crops, to take into account demands in international markets for varieties.


Introduce tax incentive scheme to help attract priority seeds by reducing taxes on import-ed inputs - seed needs to be imported in the short-term.


Based on outcome of Action 5.4.3, establish standards for multiplication of priority NES seeds: sunflower, groundnut, soya, cotton, sugar cane at Bunda College and the Dept of Agricultural Research. MBS to then ensure standards for domestic market, ensuring it does not add to cost for smallholder farmers.


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Smallholder farmer and MSME access to affordable financeThe overseeing structure/driver for this priority area is the Access to Inputs and Information TWG of Trade, Industry and PSD SWAp. It includes the Ministry of Agriculture and Food Security, the Ministry of Finance, the Reserve Bank and the Ministry of Economic Planning and Development, among others.






Facilitation of trade licenses for sunflower, soya, cotton, groundnut and sugar cane seed by Ministry of Industry and Trade, Ministry of Agriculture and Food Security, Ministry of Irrigation and Water Development. Indicative Cost $0

5.4.13 n/a $0 $0

TABLE A1.9 ACCESS TO FINANCE PRIORITy ACTIONS




Develop capacity of the Reserve Bank of Malawi to balance its regulatory function through adequate risk-based supervision and its role in supporting the development of the financial sector. Indicative Cost $5,315,000 through Component 1 (Financial Sector Regulation and Supverision) of FSTAP and $13,218,000 through Component 2 (Financial Infrastructure) of FSTAP. These figures include government counterpart. Already resourced in comprehensive project (Financial Sector Technical Assistance Project)

6.1.1 Yes $18,533,000

Build capacity of Financial Sector Policy Unit in the Ministry of Finance to coordinate formulation of financial policies and regulations effectively. Indicative Cost $3,393,999 through Component 4 (Ministry of Finance Financial Sector Policy, Governance Capacity and Long-Term Finance) of FSTAP. This includes government counterpart. Already resourced in comprehensive project (Financial Sector Technical Assistance Project)

6.1.2 Yes $3,393,999

Encourage greater competition between financial institutions in lending and non-lending businesses in order to encourage innovation in lending markets and greater targeting of the SME market.

6.1.3 n/a The resourcing for this is covered through Actions 6.1.1 and 6.1.2.

Conduct a review on measures to develop market structure that encourages greater competition between financial institutions in lending & non-lending businesses to encourage innovation in lending markets & greater targeting of MSMEs.

6.1.4 n/a $0 $200,000

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TABLE A1.9 ACCESS TO FINANCE PRIORITy ACTIONS




Increase MSME attractiveness as clients by improving contract law. Sub-actions are: 6.1.5• Implementation of a modern Secured Transactions law. Indicative Cost $200,000 No $50,000 pa $200,000

• Strengthen Moveable Collateral Registry following passage of new Secured Transactions law. Indicative Cost: $500,000 development partner support (inc $300,000 to install the system) and $100,000 additional expenses per year for staff salaries and recurrent expenses at Directorate or Registrar General.

No $100,000 $500,000

• Strengthen Land Registry operations and staff capacity. See Chapter 3.4 for resourcing. See Section 3.4 for resourcing

• Gazetting and implementation of amendments to Insolvency Act. No $0 $50,000

• Improve access to commercial justice for creditors. Cost $1,000,000 to be covered by DFID in BESTAP Supplementary Financing

Yes $100,000 pa $1,000,000

• Develop the Registrar General’s Department to ease the time and cost involved in registering businesses No $100,000 pa $500,000

• Improve the amount and quality of information available on entrepreneurs through development of credit reference bureaus. Included under FSTAP, Indicative Cost included in 6.1.1 and 6.1.2. Requires central government attention to operationalise this.

Yes Cost included in FSTAP, Actions 6.1.1 and 6.1.2

• Improve the amount and quality of information available on entrepreneurs through development of a Nation-al Registration and Identification System. Requires central government attention to operationalise this.

No $1,000,000 open ended

• Improve financial literacy. Unlimited cost: Projects are $3,027,000 through Component 3 of FSTAP; FIMA, UNCDF, UNDP

Yes open ended

• Improving the ease of access to financial information by entrepreneurs, start-ups and MSMEs, through enabling the SME Development Institute (SMEDI) to effectively play this role. Expedite operationalisation of SMEDI (Action 6.1.7.1) Refer to section 3.2 of this document, Favourable Economic Institutions.

Refer to Section 3.2

• Expedite merger of Malawi Rural Development Fund with the Youth Enterprise Development Fund to form the Malawi Rural and Youth Enterprise Development Fund.

No Unknown, to be determined through TIPSD SWAp or FSWG

• Implementation of amendments to the Companies Act. No $0 $50,000

Develop and implement a policy for state investment in the financial sector to strengthen the oversight of state-owned FIs (SOFIs) and government programmes, reduce market distortions created by government in-volvement, and address fragmentation of ownership responsibilities among various bodies. The independence and technical capacity of boards of directors of SOFIs should also be increased, and clear policy mandates defined for them. Partially resourced: reviews and development of policy covered under FSTAP (hence the cost is included in Actions 6.1.1 and 6.1.2), but there is no resourcing for implementation, which will need to be budgeted for through public finances.

6.1.6 & 6.1.7

Cost included in FSTAP, Actions 6.1.1 and 6.1.2

Incentivise the development of the bond market and the stock exchange by: 6.1.8• Assess and improve capacity of capital markets to support the issuance of equities and bonds. Include

examination of impediments to capital market development and capacity building for Capital Market Supervi-sion Department of RBM.

Yes Cost included in FSTAP, Actions 6.1.1 and 6.1.2

• Implement findings of assessment (eg regulatory framework, clearance and settlement structure). Not resourced. Indicative cost unknown and dependent on assessment. To be addressed through PSD Donor Group and FSTD for restructuring

No Unknown, to be determined through TIPSD SWAp or FSWG

• Invest in regulatory capacity & provision of incentives to ensure MSE has an inherent incentive in its governance structure to attract businesses to raise finance through the MSE. Only partially resourced: FSTAP includes funding assessment of options for restructuring MSE, but no funding for implementation of recommendations. Indicative cost unknown. To be addressed through PSD Donor Group and FSTD for restructuring.

Partial Unknown, to be determined through TIPSD SWAp or FSWG

Financial Sector Deepening Trust Fund targeting innovation in financial service provision. Funded through FSTAP. Indicative cost included in FSTAP.

6.1.9 Yes Cost included in FSTAP

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Reliable and cost-effective energyThe overseeing structure/driver for this priority area is the Access to BDS, Information and Inputs TWG of Trade, Industry and PSD SWAp. It includes the Department of Energy, ESCOM, the Ministry of Finance, the Ministry of Economic Planning and Development and development partners involved in the energy sector, among others.



TABLE A1.10 RELIABLE AND COST-EFFECTIVE ENERGy PRIORITy ACTIONS

Component Action Code in Action Matrix Annex 5



1: Inter-connector to MozambiqueBuild energy grid connection to Mozambique: from Matambo in Tete Province to Pombeya in Balaka

5.1.1 No $87,000,000

2: New National Energy PolicyDevelop new National Energy Policy, based on IAEA reviews of supply and demand. 5.1.2 to 5.1.8 No $150,000

Develop Implementation and Resource Plan 5.1.9, 5.1.10, 5.1.11

No

Conduct institutional capacity needs assessment and prioritise investment in institu-tional capacity to implement the new National Energy policy.

5.1.12 $100,000

Include an application of ILO STED to energy sector, see section 3.3 of this docu-ment. To include public and private sectors within the energy sector.

1.1.1.2 See section 3.3

Based on action 5.1.12, develop a programme for development of enough energy policy experts, power engineer/technicians etc. DPSM give 3 scholarships but more capacity is needed to match IAEA supply side study plans. Link to skills cross-cutting action 1.1.

5.1.13 No Unknown, to be estimated through Implementation and Resource Plan

Develop a comprehensive energy support package to allow for the implementation of the new National Energy Policy, funded through government, public private partnerships and development partners targeting a) skills and institutional capacity b) infrastructure:

Composed of actions below:

• Ensure constant access to energy via SADC Power Pool (SAP) for NES priority clusters and enabling sectors

5.1.15 & 5.1.16

n/a $0 $0

• The Millennium Challenge Account Energy Compact is part of this: Rehabilita-tion of Transmission and distribition substations to major cities; Rehabiliation of Nkula A Hydro Power Station; Upgrading of Nkhata Bay to Mzuzu line; Build new line from Lilongwe via Kasungu to Bwengu in Mzimba District and then ensure link to Wovwe Hydrop Station. This is resourced by MCC.

5.1.17 Yes $350,000,000

• The World Bank Energy Support Project. It includes support to the electricity infrastructure system, funding for feasibility studies, demand and efficiency control measures and capacity building. This is resourced by the World Bank.

5.1.18 Yes $84,700,000

• Gaps identified in new National Energy Policy and not funded by MCC or World Bank.

5.1.20 No Unknown, to be estimated through Implementation and Resource Plan

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Standards, accreditation and product quality requirementsThe overseeing structure/driver for this priority area is the Access to Markets TWG of Trade, Industry and PSD SWAp. It includes MBS.



TABLE A1.11: STANDARDS, ACCREDITATION AND PRODUCT QUALITy PRIORITy ACTIONS




1. Coordination and strategic focusEstablish a multi-agency standards coordination platform, chaired by the private sector, under the TIPSD SWAp framework. Its mandate is coordination and strategic focus tied to NES priority clusters, including of SPS (Ministry of Agriculture & Food Secu-rity) and other certification agencies such as MERA, and also an investigation of private sector outsourcing of some MBS services

3.6.1 No Within TIPSD SWAp framework

Amend MBS Strategic Plan to be in line with Prioritized NES Clusters and their target markets

3.6.3 No MBS staff $0

Secure resourcing for implementation of MBS Strategic Plan 3.6.4 No to be estimated

Develop a human resource development plan and implement it to allow for implementation of MBS Strategic Plan, including a long-term training scheme based on trade facilitation, not over-regulation

3.6.5 No to be estimated $50,000 for development phase

Prioritise investments in MBS Strategic Plan to NES Prioritized Clusters

3.6.7 No $0 $0

Establish a programme to facilitate MSMEs in meeting standards for priority products and markets in NES, through SMEDI

3.6.8 No $100,000 pa $500,000

2. International Accreditation and quality frameworkEnsure effectiveness of EU funded SQAM: must be linked to prioritised implementation of MBS strategic plan and to the NES Prioritized Clusters and Markets to ensure international accreditation

3.6.9 No $0 $0

Timely Implementation of SQAM/Infrastructure Development Project, based on its 6 components;

3.6.10

• Review National Quality Infrastructure Yes to be estimated $260,000

• Support to review/development of technical regulations Yes to be estimated $520,000

• Enhancement of MBS’ capacity Yes to be estimated $2,795,000

• Enhance Capacity of National Enquiry Points Yes to be estimated $130,000

• Strengthening SPS infrastructure Yes to be estimated $325,000

• Support to SMEs to meet Quality Standards Yes to be estimated $585,000

Enactment of amended MBS Act 3.6.11 No $0 $0

Implementation of outcomes of MCDA: link standards infrastruc-ture and capacity to NES

3.6.12 No To be determined by USAID

Ensure National Quality Policy is appropriately balanced between domestic consumer protection and export limitation. In exports, its role is not to protect consumers, but to help Malawian firms meet importing country requirements

3.6.13 No $0 $0

Review totality of the NQI legislative framework and promulgate required legislation. Ensure clear roles and consistency with NES

3.6.14 No $0 $200,000

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Cost-effective transport The overseeing structure/driver for this priority area is the Access to Markets TWG of Trade, Industry and PSD SWAp. It includes the Competition and Fair Trading Commission, the Ministry of Transport and Public Works, Road Transport Operators Association, the Ministry of Finance, the Ministry of Economic Planning and Development and development partners involved in the transport sector, among others.


TABLE A1.11: STANDARDS, ACCREDITATION AND PRODUCT QUALITy PRIORITy ACTIONS




1: Support emergence of market structure that ensures relatively fair competition, through the application of Competition PolicyReview findings of 2007 Report on Competition Issues in the Transport Sector and evaluate impact of current market structure on the NES Priority Clusters, both for international trade and for domestic inte-grated supply chains in sugar cane products, oil seed products and the beverages and agro-processing sub-clusters of the manufacturing cluster.

3.7.1 to 3.7.7

No $0 $100,000

Development of capacity of Fair Trading and Competition Commission to implement recommendations. Refer to section 3.2 of this document

3.7.8 No $100,000 pa $1,000,000

2: Explicit tying of Transport Sector Investment Programme to NES priority clusters (sugar cane products, oil seed products and manufacturing)Accessing target markets: rail and road access to key markets, particularly the growth centres in the region (Tete, Lusaka, Harare, Mbeya, Lake Tanganyika to access the Great Lakes region) and ports in the region (Nacala, Beira, Dar es-Salaam).

3.7.11 No To be calculated through TIPSD SWAp

Integrating the domestic supply chain: rural feeder road improvements should be prioritised based on agricultural production centres for sugar cane and for oil seeds (sunflower, groundnuts, soya, cotton) through a close link with land and extension plans at the Ministry of Agriculture and Food Security under the NES cluster strategies.


Prioritise programmes to build capacity of contractors and policy implementators, as per Transport Sector Investment Programme, tied to NES priority clusters, particularly for feeder roads in areas where priority crops are designated.


3: Railway prioritisationEstablish proper regulator for CEAR and other future operators to ensure proper funding, proper staff. The capacity to enforce contracts is fundamental. The regulator needs to be answerable to Parliament. There is also need to ensure that contracts are such to force concessionaire to not breach the contract. There are currently no penalties for lack of compliance to the contract. There is a need to identify a lead agency.


Strengthen implementation and policy capacity to allow effective rail connections as per NES priority clus-ter target markets. Include implementation of Public Private Partnership Act framework for infrastructure, operations and maintenance

3.7.12, 3.7.14 to 3.7.16

No To be calculated through TIPSD SWAp

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Annex 1

In the table below, indicative costs for government and development partners are presented for most of the components of the NES. In certain cases, such as in transport and energy, a number of costs will need to be estimated through the NES Implementation Mechanism. In all cases, costs are purely indicative, meaning they are not presented to be precise and accurate. Rather, they are presented to give implementers and resource holders a rough indication of the likely cost of various components.

It is also essential to note that what matters for the successful implementation of the NES is not whether the costs are financed or not, but whether there is a genuine effort by government and oth-er Malawian stakeholders to facilitate the emergence of the productive base, to genuinely prioritise the NES priority clusters as per the strategy, to genuinely prioritise the major cross-cutting issues, institutional development of key economic agencies and genuinely prioritise competencies, skills and knowledge. Genuine refers to a full internalisation of these priorities in day-to-day operations of key organisations and stakeholders. Financial allocations are important, but the allocation of sufficient management time and attention is much more important for the success of the NES and for the successful implementation of the NES.

Please note that costs are purely indicative and not accurate. They need to be verified by the NES Implementation Mechanism (the Programme of Works to be developed by the TIPSD SWAp Technical Working Groups in the first year of implementation of the NES).

The costs in this summary table are obtained from the costs presented in Chapters 2 and 3 of this Annex. This applies to Priority Areas 1, 2 and 4. For Priority Area 3, the costs are not estimated based on a breakdown of costs elsewhere. Rather they are merely overall costs added directly into this table.

Chapter 4 – Indicative Costs of the NES

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TAbLE A1.13: IndICATIvE CoST ESTIMATES for nESComponents Govt Recurrent Expenditure

Per Year ($ million)Govt Capital Investment ($ million, over 5 years)

Dev Partner Costs ($ million, over 5 years)

Implementation Mechanism: TIPSD SWAp 0.04 0 1.1

Priority Area 1a: Priority ClustersOil Seed Products 2.6 0.0 12.7

Sugar Cane Products 0.8 10.5 39.5

Manufacturing 1.2 5.0 14.7

Total for Priority Area 1a 4.5 15.5 66.9

Priority Area 2: Developing a Conductive EnvironmentFarmer-Processor/Market Connection 1.47 5.4 66.4

Access to Finance 0.25 1.1 23.6

Access to Energy To be estimated through TIPSD Swap

522.0

Standards, Accreditation and Product Quality 0.1 5.4

Transportation To be estimated through TIPSD Swap

Total for Priority Area 2 1.82 6.5 617.4

Priority Area 3: Supportive Economic Institutions (these are additional to current budget & to allocations under other Priority Areas)MITC 1.0 1.0 1.0

SMEDI 3.0 1.0 2.0

MBS 0.5 2.0 5.0

MoIT (planning & coordination capacity, staff development for increased strategic focus)

0.5 0.5 5.0

Dept of Agricultural Extension Services Covered in Farmer-Processor Connection

Dept of Irrigation 9.0 0.0 0.5

Ministry of Labour 0.5 1.0 1.0

TEVETA 1.0 1.0 1.0

Ministry of Economic Planning and Development, & Planning Departments in key Ministries

0.5 0.5 0.5

Ministry of Lands and Housing Covered under Farmer-Processor Connection

Financial Sector Policy Unit 0.1 0.0 covered, Access to Finance

Department of Cooperatives 0.4 0.0 covered, Farmer-Processor Connection

Warehouse Receipts Department 0.2 0.3 0.5

Micro-Finance Department 0.2 0.3 0.5

Ministry of Agriculture and Food Security (SPS certification, planning, HR, research)

0.5 1.0 1.0

Department of Energy 0.1 0.5 0.5

Ministry of Justice 0.1 0.0 0.5

National Statistics Office (for trade statistics) 0.2 0.3 0.5

Competition and Fair Trading Commission 0.2 0.3 0.5

MIRTDC covered under Manufacturing Cluster

Malawi Revenue Authority/Customs (Trade Facilitation) 0.5 4.0 10.0

Directorate of Registrar General covered under Access to Finance

Commercial Court covered under Access to Finance

Total for Priority Area 3 18.5 13.7 30.0

Priority Area 4: Competencies, Skills and KnowledgePrioritisation for National Education Sector Plan n/a n/a n/a

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Source: NES Technical Team. Note: Costs are purely indicative and not accurate. They need to be verified by the NES Implementation Mechanism (the Pro-gramme of Works to be developed by the TIPSD SWAp).

TAbLE A1.13: IndICATIvE CoST ESTIMATES for nESComponents Govt Recurrent Expenditure

Per Year ($ million)Govt Capital Investment ($ million, over 5 years)

Dev Partner Costs ($ million, over 5 years)

First Phase Estimate: National Competencies and Skills Plan and Labour Market Information System

To be estimated through TIPSD Swap

2.2

Second Phase: Responding to National Competencies and Skills Plan. This will include primarily include Secondary (50%), TEVET (39%), Higher Education (10%), as well as Policy and Planning Capacity (1%)

30 30 30

Total for Priority Area 4 30 30 32.2

Total indicative costs.This is not exhaustive as a number of actions cannot be assigned an indicative cost

54.8 65.7 747.5

Total excluding Energy, Transport and Education 24.8 35.7 193.4

Total excluding Energy and Transport 54.8 65.7 225.6

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Annex 2 – Oil Seed Products Strategy

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Annex 2 - ContentsChApter 1 - IntroduCtIon 55

Why prioritise this cluster ...................................................................................... 56Summary of cluster potential ................................................................................. 57Cluster as a complement to tobacco for smallholders .......................................... 58Summary of approach to develop cluster ............................................................... 59Critical factors for success .................................................................................... 60

ChApter 2 – Cluster profIle 61Summary .................................................................................................................. 61Products ................................................................................................................... 62Markets .................................................................................................................... 63Inputs and Import Substitution ............................................................................... 65

ChApter 3 – strengths, weAknesses, opportunItIes And threAts 67

Sunflower ................................................................................................................. 67Groundnuts ............................................................................................................... 68Soya Beans ............................................................................................................... 68Cotton ....................................................................................................................... 69

ChApter 4 – the oIl seed produCts strAtegy 70The strategy framework .......................................................................................... 70The strategy to develop the cluster......................................................................... 71Guiding timeline for cluster development ............................................................... 73Product: Groundnuts ................................................................................................ 74Product: Soya Beans ................................................................................................ 75Product: Cotton seeds .............................................................................................. 75Product: Meals and cake ......................................................................................... 75Product: Cooking Oil ................................................................................................ 76Product: Soaps ......................................................................................................... 76

ChApter 6 – ImplementAtIon And resourCIng 77Implementation Mechanism .................................................................................... 77Resourcing ............................................................................................................... 79


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Annex 2

This Annex to the National Export Strategy presents Malawi’s strategy to develop its Oil Seed Products cluster. This cluster has been identified by the National Export Strategy’s (NES) Cluster Prioritization Method (described in Annex 9) as one of the top three clusters that can drive Malawi’s exports and thus its growth in the medium to long run.

The Oil Seed Products cluster includes value addition products derived from oil seeds as well as raw and semi-raw commodities themselves. The main four oil seeds in the Malawi cluster are sunflower, groundnuts, soya beans and cotton. These will form the basis of the cluster and serve to inform government policy. Other oil seeds—such as sesame, palm, rubber, castor and jatropha—will also be supported and facilitated, but only where there is private sector interest and private investors eager to lead. Examples of value addition products based on these oil seeds include cooking oil, meals, butters, milks, lubricants, varnishes, soaps, cosmetics and paints.

As described below, the strategy to develop this cluster is based on a holistic, concerted approach which requires collaboration and dialogue among stakeholders who determine policies, resources and the establishment of an enabling environment conducive to the development of the cluster. The Oil Seed Products Strategy is presented in Chapter 4 below. This chapter also presents policy recommendations at different levels: trade, investment promotion, MSME, standards, industrial, land, agriculture and others. The strategy’s success depends on the alignment of various such policies and support toward the cluster.

This chapter discusses why the oil seed products cluster is among the top three clusters to be prioritised in the NES and summarises the approach to develop the cluster. Chapter 2 presents the profile of the cluster, including products, markets and inputs. In Chapter 3 the strengths, weakness-es, opportunities and threats to the development of the cluster are presented, as a prelude to the cluster strategy in Chapter 4. Chapter 5 presents the trade policy for target markets and Chapter 6 discusses the implementation mechanism and resourcing requirements of the strategy. The de-tailed action plan with prioritised and sequenced actions is presented in Chapter 7.

Chapter 1 - Introduction

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Why prioritise this cluster This cluster is one of the top three priority clusters in the National Export Strategy because:

1. Malawi can be competitive in it;

2. It can allow for enough value addition to allow the cluster to account for roughly twenty per cent of imports in the medium to long-term;

3. It allows for economic spillovers through reducing the cost to businesses and private operators of investing in new, higher value products; and

4. Demand is strong and growing.

The Steering Committee that was established to oversee the de-velopment of the NES selected the oil seed products cluster for prioritisation. The Principal Secretary of the Ministry of Industry and Trade chaired the committee. The Steering Committee includ-ed representatives of all stakeholder groups, including the gov-ernment, the private sector, farmer organisations, civil society and development partners. The method through which the Steering Committee selected oil seed products as one of the top 3 clusters for prioritisation is called the Cluster Prioritisation Method and a detailed description of this methodology is presented in Annex 9 to the National Export Strategy.

The Cluster Prioritisation Method was composed of six different components to ensure a robust and comprehensive analysis. These were:

1. Trade and Market Analysis; including an application of recent cutting-edge development economics on the re-lationship between exports and GDP growth;

2. Stakeholder/Expert Survey and supporting interviews;

3. A Review of Existing Value Chain Analyses;

4. A Competitiveness Analysis: the prices of Malawi’s ex-ports in importing countries and production prices were analysed against those of competitor nations;

5. A Resource Analysis: this took into account factors such as land suitability for agricultural production; and

6. A risk assessment: this analysis took into account the

impact on Malawi’s economic development of prioritis-ing one cluster over another.

Component 1 of the Cluster Prioritisation Method served as the core of the methodology. It is based on the New Structural Eco-nomics approach to development that is at the forefront of eco-nomic research into the role of industrial policy within developing nations5. This approach highlights the importance of thinking dy-namically when selecting which products a state should support – the clusters supported should not only benefit the country in the short run, but, by lowering investment costs in higher value added production processes and by easing expansion into other products, should naturally aid the country in evolving to a higher stable growth path.

There are two key criteria which have been analysed for each clus-ter under this methodology – economic proximity (spillovers) and wealth creation (value addition). Economic proximity recognises that some products are similar in production systems and skills requirements. Investment in one of these products lowers subse-quent investment costs in these ‘similar’ economically close prod-ucts. Clusters with a high number of economically close products are likely to offer higher returns on investment by encouraging di-versification and future investment through spillover effects. Such spillovers come about through having a skill set easily applicable to a different product, or through having access to information that lowers the commercial risk of trying a new product.

Wealth creation is a historically determined value that looks at the economic makeup of the world’s economies and matches countries’ GDP per capita with their production base. The average income levels of countries that export certain products is deter-mined such that one can assess which production clusters lead to higher levels of average income within a country. Products and clusters with higher associated incomes per capita are typically those with higher value added processes associated with them.

In Table 1 below the number of economic linkages and their as-sociated income levels are displayed for both oil seed products and for a sample of key current Malawian exports such as tea and tobacco by way of comparison.

5 This approach is supported by Dani Rodrik and Ricardo Hausmann of the Harvard Kennedy School – Center for International Development and by Justin Yifu Lin Vice President and former Chief Economist of the World Bank

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Annex 2

Source: NES Technical Team and Imani Development: Application of Hausmann and Rodrik model to Malawi. Note: The methodology to calculate the associated level of income and economic proximity is presented in Annex 9 to the National Export Strategy.

As can be seen, the oil seed products cluster has fairly strong spillovers and high potential for wealth creation when compared with other clusters that Malawi has or has the potential to develop. In particular, sunflower and soya based products allow for invest-ment in products that have high value. The level of economic proximity with other products is not as high as in manufacturing, as can be expected, but when compared with other agricultural clusters, sunflower and groundnuts are second only to wheat.

Another advantage of the oil seeds cluster is that it is not sole-ly dependent on one agricultural crop. Many types of oil seed grow well in Malawi because of land suitability and favourable climate. Malawi is therefore highly competitive in the production of many oil seeds. This is important for agricultural diversification as well as economic diversification because the cluster may be built by using the advantages of some crops to make up for the disadvantages of others. For example, groundnuts do not have a high implied income level, but offer many spillovers into higher value products. Soya is the reverse. In addition, certain high value products in the cluster, such as cooking oil and soaps, can be pro-

duced from more than one oil seed. If one crop goes through a period of price fluctuations because of a period of cheap imports of soya or palm oil, for example, other crops can serve as a buffer both for farmers and for processors.

As with every cluster, there are risks. A big risk is large scale production of crops such as soya and palm in countries such as Brazil, Argentina and Malaysia. In countries such as Tanzania, this has hindered the development of the oil seeds cluster because of Tanzanian importers’ interest to maintain their market share. It is therefore critical for the Malawi Oil Seed Products Strategy to address such risks and threats at the core of the strategy. This strategy includes a SWOT analysis for the cluster.

Summary of cluster potential The potential for the cluster is for it to account for 13.0 per cent of imports (or 14.6 per cent of exports) by 2027, up from just 1.8 per cent in 2010, as presented in Table A2.2 below.

TAbLE 2.1 AnnEx 2: oIL SEEdSClusters and Products Level of income (measured as

GDP per capita) associated to cluster

Level of economic proximity with other products

Oil seed productsGroundnuts & products $2,919 76

Sunflower & others $12,193 74

Soyabean & products $10,493 45

Cotton & products $7,860 65

Articles of plastic $18,529 104

Beverages $12,028 62

Coffee $2,571 19

Dairy products $18,061 73

Glass & glassware $13,075 137

Maize products $11,680 80

Packaging, paper, prints $16,736 92

Pulses products $3,546 36

Rice $6,909 32

Sugar cane products $11,039 61

Tea $2,347 16

Tobacco $2,581 59

Uranium, limestone, minerals $11,756 78

Wheat products $15,230 116

Wood products $8,692 65

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The cluster has the potential to attain this target, but will only do so if a long-term strategy is adopted, as opposed to year by year piecemeal support measures. This is essential to allow for higher value products as opposed to the production and export of raw or semi-raw commodities. The success of the strategy therefore requires the long-term buy in into the Oil Seed Products Technical Working Group by government, processors, smallholder farmers, civil society, MSMEs and development partners.

Cluster as a complement to tobacco for smallholdersSince the oil seed products cluster is based on a number of oil seeds, all of which can be grown feasibly on smallholder plots of land, crops within the cluster can serve as a complement for smallholders to tobacco as Malawi’s main cash crop. The high potential for intercropping with maize and other food crops and the extent to which high yields are possible per hectare means that the cluster is viewed in the NES as the main complement to tobacco for smallholders.

However, the tobacco cluster took years to develop to today’s scale. It was supported by an effective institutional framework based on dialogue and collaboration among stakeholders, gradu-ally addressing obstacles to the development of the cluster. Apply-ing this approach to the oil seed products cluster is fundamental if it is to reach its potential and serve as an adequate complement to tobacco. The long-term production levels (excluding years of one-off booms based on short-term government intervention) of all oil seed crops are currently too low to complement tobacco and too low to allow for value addition. It will be very important for oil seed stakeholders to learn from the tobacco cluster, and likewise for the tobacco cluster to support the development of the oil seed cluster for it to also serve as a viable complement to their investment in tobacco. This strategy calls for synergies, pro-ac-tive support and prioritisation for oil seeds from key institutions such as the Tobacco Association of Malawi, the Tobacco Control Commission, the Agricultural Extension and Research Trust and Auction Holdings Limited.

These considerations are central to the approach to be adopted through this strategy for cluster development.

Sources: Data from www.trademap.org and guideline targets from NES Technical Team.

Note*: Malawian imports halved in 2011 from 2010 because of the foreign exchange crisis and a large decline in Official Development Assistance. This distorts the benchmark figures for 2011. In addition, trade data for 2011 is mirror data and therefore may not be complete. For example trade with Mozambique and Zimbabwe is not available. Exports for the manufacturing cluster in particular will appear lower than it actually was.

Note**: Compound annual growth rates for imports are from 2001 to 2010.

Note***: Total Manufacturing compound annual growth rate is using 2011 as a benchmark, but sub-clusters use the peak year for the sub-cluster, which ranges from 2008 to 2011.

TABLE A2.2: GUIDELINE TARGETS FOR THE NATIONAL ExPORT STRATEGy

vALuE, uS$ MILLIon AS A ShARE OF IMPORTS CoMPound AnnuAL growTh RATE

2001 2010 2011* 2017 2022 2027 2001 2010 2011* 2017 2022 2027 2001-2011**

2011-2017**

2017-2022

2022-2027

Total Imports $733 $2,299 $1,126* $3,248 $4,352 $7,679 100% 100% 100% 100% 100% 100% 13.5% 9.0% 6.0% 12.0%

Total Exports $475 $1,184 $1,192 $2,460 $4,067 $6,824 64.8% 51.5% 106%* 75.7% 93.4% 88.9% 9.3% 12.8% 10.6% 10.9%

Exports of major clusters:Tobacco 262 585 556 699 699 771 35.7% 25.5% 49.3% 21.5% 16.1% 10.0% 7.8% 3.0% 0.0% 2.0%

Mining 0 114 123 246 369 493 0.0% 5.0% 10.9% 7.6% 8.5% 6.4% n/a 12.2% 8.4% 5.9%

Tea 35 81 81 135 206 314 4.7% 3.5% 7.2% 4.1% 4.7% 4.1% 8.8% 8.8% 8.8% 8.8%

Services (exc. Travel)

9 61 71 169 348 716 1.2% 2.6% 6.3% 5.2% 8.0% 9.3% 23.3% 15.5% 15.5% 15.5%

Oil Seed Products

10 41 71 227 599 995 1.4% 1.8% 6.3% 7.0% 13.8% 13.0% 21.4% 21.4% 21.4% 10.7%

Sugar Cane Products

64 69 71 453 768 1136 8.7% 3.0% 6.3% 13.9% 17.6% 14.8% 1.1% 36.1% 11.1% 8.1%

Tourism (Travel)

25 70 70 147 272 503 3.5% 3.1% 6.2% 4.5% 6.2% 6.5% 10.7% 13.1% 13.1% 13.1%

Manufactures, of which

17 77 26 197 502 1376 2.3% 3.4% 2.3% 6.1% 11.5% 17.9% 4.8% 39.8%*** 20.5% 22.3%

Beverages 0.2 2 0.1 11 28 64 0.0% 0.1% 0.0% 0.3% 0.6% 0.8% -3.9% 22.8% 20.8% 17.8%

Agro-Pro-cessing

6 39 12 100 295 874 0.8% 1.7% 1.1% 3.1% 6.8% 11.4% 8.2% 13.2% 24.2% 24.2%

Plastics & Packaging

2 22 4 39 74 169 0.3% 1.0% 0.3% 1.2% 1.7% 2.2% 6.9% 9.9% 13.9% 17.9%

Assembly 9 14 10 48 104 269 1.2% 0.6% 0.9% 1.5% 2.4% 3.5% 1.4% 12.9% 16.9% 20.9%

Other 53 85 122 186 304 520 7.3% 3.7% 10.8% 5.7% 7.0% 6.8% 8.6% 7.3% 10.3% 11.3%

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http://www.trademap.org

Annex 2

Summary of approach to develop clusterThe approach to develop the oil seed products cluster in a manner that it may attain its target in the medium to long-term is based on the following:

1. A comprehensive approach that sequentially develops the enablers necessary to develop the oil seed products cluster in a way that is market-led and sustainable. To secure comprehensiveness, the approach ensures that private operators in the cluster have affordable access to the ten key enablers, and that sustainable, long-term solutions are delivered, centred on the right balance of private and public sector roles. These ten enablers are:

a. Access to markets

b. Access to information

c. Access to inputs

d. Access to finance and secure tenure of property

e. Access to business development services

f. An efficient way of contributing to Government revenues and of meeting regulatory obligations

g. A stable and prudent macroeconomic environment

h. Fair competition

i. Access to supportive economic institutions

j. Access to skills

2. Balancing export competitiveness with economic empowerment of youths, women, the poor, farmers and micro, small and medium enterprises;

3. The strategy has to be appropriate to the cluster’s current level of development:

a. Sequencing is essential to avoid a repeat of Malawi’s sunflower flop of the 1980s which occurred because of exces-sive agricultural production with only one processor in the country;

b. Alignment of short-term efforts with long-term strategy;

c. Based on local capacity to deliver: effectiveness of farmer organisations, ability to provide quality (for example pro-tein levels in cotton are central to value addition), institutional support mechanism as in the tobacco cluster.

4. Balancing short-term exports with a medium to long-term strategy to allow value addition exports. The strategy is for the following drivers of export growth:

a. Short-term

•Groundnuts, cotton, soya, sunflower and other oil seeds backed by the private sector

b. Medium-term

•Soaps, cooking oils, lubricants, paints, cosmetics, meals of oil seeds (such as peanut butters, soya meals)

c. Long-term

• increased soaps, cooking oils, lubricants, paints, cosmetics etc

5. Targeting regional exports, particularly in SADC, COMESA and EAC as opposed to focusing excessively on extra-African mar-kets, and benefiting from Malawi’s geographical access to fast growing neighbouring economies. Viewing domestic markets as essentially equal to regional markets;

6. Recognising that all stakeholders have a role to play in ensuring the success of the cluster and assisting those stakeholders to secure the capacity needed to play that role;

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7. Ensuring the alignment of all key stakeholders to prioritise these clusters in their work plans and programmes. Such stakehold-ers include the private sector, Ministries, Government support agencies, farmer organisations, smallholder farmers, enabler sectors (such as energy, finance and transport), civil society and development partners; and

8. Managing expectations of stakeholders so that sustainable market-led cluster development is not undermined by excessive expectations of short-term gains.

Critical factors for success The critical factors for success are:

• Market-led development, with appropriate measures to address market failures by the public sector;

• An effective stakeholder implementation and representation driving body;

• Alignment and coordination between private operators, government, smallholder farmers

• Appropriate support by development partners that support the establishment of local enablers for the cluster;

• Pooled resources to target, in a sequenced manner, obstacles to cluster development; and

• The development of an appropriate institutional framework to develop the cluster to meet its long-term potential.

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Chapter 2 – Cluster Profile

SummaryThe Oil Seed Products Cluster is composed of numerous products and has a large number of agricultural crops that grow well in Malawi that can serve as base crops for value added products both for the domestic market and export markets. Existing and potential products within the cluster range from raw or semi-raw commodities through to high-value products. The focus of cluster de-velopment for oil seeds is to build the scale required in raw or semi-raw commodities to allow for the gradual but sustainable and competitive development of higher value products allowing for import substitution and for the agricultural segment of the cluster to be integrated into the processing segment of the cluster. In this way, the cluster can be developed in a way that is market led and that allows for the economic empowerment of farmers, MSMEs, youths and women’s groups.

If the cluster is to be developed this way, it is essential for the target markets to centre around neighbouring and regional countries. In line with the NES’s drive to prioritise regional markets in the medium term, taking advantage of rapid regional growth and market access secured through the Southern African Development Community (SADC), the Community of Eastern and Southern Africa (COMESA) and eventually the tripartite agreement between SADC, COMESA and the East African Community (EAC).

Given its central location within the tripartite area, Malawi is well placed to target neighbouring markets to the north and south. Most of Tanzania’s imports of groundnuts and sunflower seeds are from Malawi. It is the greatest supplier of imported soya and cotton seed into Zambia. For raw or semi-raw commodities, such markets will be complemented with specific targeting of extra-African markets through preferential access deals such as the USA’s African Growth and Opportunities Act, the EU’s Everything But Arms deal, and preferential access offered to Least Developed Countries (LDCs) by countries such as Japan. Through targeted trade policy, there is also scope for nego-tiating preferential LDC access to markets such as China and Thailand for commodities such as groundnuts.

Adding value to commodities through processing and branding can also strengthen Malawi’s ability to target both regional and extra-regional markets.

However, in most extra-African markets, market access for certain commodities in the cluster is dependent on addressing issues in standards. For example, this is critical for groundnuts where high rates of aflatoxins impede Malawi’s ability to access extra-African markets despite having preferential access through its LDC status.

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When it comes to the export of oils, oil cakes and higher val-ue products, the strategy has to be almost entirely focused on regional markets—viewing the Malawian market as an integral part of regional markets. The target markets for cooking oils, fertilizers, animal feed, soaps and other higher value products are Mozambique—particularly the booming district of Tete—Zambia, Zimbabwe and South Africa. Tanzania, particularly the Mbeya area, is an opportunity, though trade logistics are pres-ently difficult. The market opportunity in these countries is very large because rapid economic growth is increasing the demand for oil seed products such as soaps, laundry bars and cooking oils. Other regional markets can also be targeted at a later stage if Malawi is able to build its expertise in quality, pricing, branding and marketing.

Import substitution is central to the way the oil seed products strategy is designed, and hence the way the oil seed cluster is viewed. At present, domestic production of oil seeds is too low or of too poor quality to allow for an integrated supply chain in which high value oil seed products such as soaps, cooking oil, lubricants and paints are produced from locally sourced oil seeds such as groundnuts, soya, sunflower and cotton. For some products in the cluster, nearly all raw materials needed in the production of high quality products can be produced by the agricultural sector in Malawi. In the production of cooking oils and soaps, nearly 80 per cent of the inputs (primarily crude oil) are imported at present. This can be reduced to fifteen or twenty per cent through this strategy in the medium term because of the agricultural potential in a number of major oil seed crops.

Yet developing an integrated supply chain in the oil seed cluster has to take into account price and quality (e.g. the protein levels in the oil cake after the crushing of oil seeds) competitiveness when compared with imported crude oil from oil seeds. This is the objective of the oil seed products strategy presented in the next chapter. Awareness of competitiveness is essential if small-holder farmers are to be provided with credible, long-lasting com-plements to tobacco for cash crops. An integrated supply chain within the oil seed products cluster is also important to support the development of farmer organisations, cooperatives, wom-en’s groups, youth entrepreneurs and MSMEs through allowing them to undertake the crushing of oil seeds to produce crude oil. Achieving a critical mass in crushing capacity is important for higher value processing capacity. Companies such as Unilever are not interested in this part of the supply chain because their busi-ness model is focused on the latter stages of the value chain.

Exploiting Malawi’s oil seed potential requires a concerted strat-egy that ensures market-led growth, a connection between farm-ers and processors, a comprehensive and prioritised land and extension programme that takes into account Malawi’s unutilised land and the empowerment of smallholder farmers, youths, wom-en and the poor. The strategy to achieve this is presented in Chapter 3 below.

In this chapter we present a profile of the cluster, covering prod-ucts, markets and both imported and domestic inputs.

ProductsThere are four types of products and potential products within the cluster:

1. raw or semi raw commodities;

2. packaged and branded commodities;

3. oils and oil cakes;

4. higher value products.

Raw and semi-raw commodities:

• Unprocessed or semi-processed (e.g sorted by size) groundnuts

• Unprocessed cotton seed

• Sunflower seeds, sorted or unsorted

• Soya bean, sorted or unsorted

• Other oil seeds invested in by the private sector

Packaged and branded commodities:

• For groundnuts, this includes improving value through quality, branding (including fair trade labelling), differentiation through fairly simple additions: e.g. salting, roasting and flavouring

• For cotton, this includes ginned cotton and lint

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Oils and oil cakes:

• Oils and oil cakes can be extracted from all oil seeds and used for cooking, fertilizer, insecticides and animal feed if they have high protein levels, e.g. for poultry

Higher value products:

• Flour and meals, e.g. soya meals, meat substitute, groundnut powder and pastes

• Butters and milks

• Bio-fuel and bio-diesel

• Confectionary

• Paints, dyes, varnishes, lubricants and polishes

• Cosmetics and soaps

• Laundry soap bars

• Household cleaning materials

• Abrasives and glues

Oils are also a major input into the agro-processing sub-cluster within the Manufacturing Cluster of the National Export Strategy. The strategy for this sub-cluster is presented in Annex 4 of the National Export Strategy.

MarketsTable A2.3 below summarises the degree of potential for different products to be exported and indicates target markets at four levels:

1. The expansion of existing markets due to growth in the market

2. The expansion of existing markets due to gains in market share that Malawi can make

3. Potential for new target markets in the short-run (within 5 years)

4. Potential for new target markets in the long-run (5 years or more)

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Source: NES Technical Team

TAbLE A2.3 oIL SEEdS, hIgh vALuE ProduCTSgroundnuTS, SunfLowEr, SoyA, CoTTon And oThErS AS PEr dEMAnd

Products Long run Potential (10 years) (high, me-dium, some, little)

Short Run Potential (0-5 years) (high, medium, some, little)

Current Markets > $1 million

$10 thousand < Current Markets < $1 million

Market Expansion due to growth in Market

Market Expan-sion Opportu-nities due to Market share gains

Short Run Potential for New Target Markets

Medium - Long run Potential for New Target Markets

high Value ProductsGroundnut Oil High Medium none none - - African market too small,

domestic consumption onlyChina, EU, Lebanon

Soya Oil High Some none Zimbabwe Zimbabwe Zimbabwe South Africa, Zambia, Tanzania, Mozambique including Tete

Cotton Oil High Medium none Zambia - - South Africa, Zimbabwe -

Sunflower Oil High Some none none - - South Africa, Zimbabwe, Kenya, Tanzania

Sudan, Egypt

Margerine & Peanut Butter

Medium Little none none - - S. Africa, Zimbabwe, Mozam-bique inc Tete, Uganda, DRC, Zambia, Tanzania

Sudan, Egypt, Ethiopia

Lubricants and waxes

Medium Some none Zimbabwe - Zimbabwe - South Africa, Zambia, Kenya, Mozambique, Tanzania

Soaps High Medium Zambia Zimbabwe Zimbabwe Zimbabwe, Zambia

South Africa, Mozambique inc Tete, Tanzania, Rwanda

EU, US

Paints and dyes High Little none Mozambique, South Africa

- South, Africa, Mozambique

S. Africa, Kenya, Tanzania, Zimbabwe, Mozambique, Zambia, Uganda

Soya Flour and meals

Medium Little none none - - African market too small, domestic consumption only

Global market not worth investment due to domi-nance of Argentina etc

Bio-fuel High Medium none none - - Domestic Bordering countries, Tete

Essential Oils Medium Little none South Africa - South Africa Tanzania, Zimbabwe More information required

Fairtrade Groundnuts

High Medium none none - - EU, US? EU, US

Cosmetics High Little none Tanzania, S.Africa, Mozambique, Zambia

Mozam-bique

S. Africa, Mozambique, Tanzania, Zambia

Zimbabwe More information required

Low value ProductsGroundnuts Medium High Tanzania,

Kenya, S. Africa, Zambia

Zimbabwe Tanzania, Zambia

Kenya, Zimba-bwe

Ethiopia, Rwanda, Mozam-bique inc Tete

United States, China, Japan, Thailand

Sunflower seed Medium High none South Africa, Zimbabwe

South Africa, Zimbabwe

- Egypt, Turkey, China

Soya Bean Medium Medium Zimba-bwe, Zambia

Kenya, Tanzania, Botswana, Zimbabwe

Zimba-bwe, Botswana

Kenya, Zimba-bwe

Burundi, South Africa, Mozambique inc Tete

Possibly Egypt

Cotton seed Medium High none South Africa, Zambia

Soya Bean oil cake

Medium Some none Zimbabwe, South Africa

Groundnut oil cake

High Medium none none - -

Cotton seed oil cake

High Medium none South Africa, Kenya

Sunflower oil cake

High Medium none none - -

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In Table A2.4 below we present export data on products within the oil seed products cluster that are exported by Malawi. The table indicates existing markets, the largest markets and key competitors.

Source: www.trademap.org. Note: There were no recorded exports of soya, groundnut, cotton or sunflower oils by Malawi in 2011.

Inputs and Import SubstitutionIn this section we present the list of products and services that serve as key inputs into the oil seed products cluster through being key segments of the value chain for various products. The list of critical inputs for oil seed products is divided into: those that are or have the potential to be supplied locally and those that are critical imported inputs necessary for Malawi to be able to produce high value products within the cluster. The most important input for high value products

such as soaps and cooking oil is crude oil from groundnuts, soya, cot-ton, sunflower or other oil seeds. Although these are presently grown in Malawi, in the immediate and short-run they will remain critical im-ported inputs because the quality and quantity produced locally is too low to sustain higher value processing and production. If the cluster can be successfully developed, the imported crude oil can be substi-tuted by oil seeds grown in Malawi, but this will take time and will need appropriate policy and government support.

TABLE A2.4 – CURRENT MARKETS AND ExPORTS IN RAW COMMODITIES IN THE OIL SEED PRODUCTS CLUSTER

Product and Markets

Malawi’s exported value 2011 (uSd million)

Share in Malawi’s exports of each com-modity

Exported growth in value between 2007-2011 (p.a.)

Size of Market (million uSd)

Share of partner coun-tries in world imports

Total import growth in value of part-ner countries between 2007-2011 (p.a.)

Tariff (esti-mated) faced by Malawi (%)

Main exporters into Malawi’s markets, 2010. Data for 2011 if market with * (% market share in brackets)

Two larg-est world markets

World’s main exporters

GroundnutsTotal 13.09 100% 25% 10% EU,

MexicoArgentina, India, China, USA

South Africa 6.40 49% 12% 10.15 0.5% -3% China (36%), Malawi (24%)

Tanzania 5.21 40% 42% 5.21 0.2% 42% 10 Malawi (98%), Zambia (2%)

Zambia 1.24 10% 17% 1.24 0.1% 14% 0 Malawi (100%), South Africa (0%)*

Kenya 0.18 1% -9% 3.7 0.2% 3% 0 Uganda (59%), Tanzania (21%)

Soya BeanTotal 1.7 100% 25% 15% China,

JapanUSA, Brazil, Argentina

Zambia 1.0 60% 76% 1.1 0 -31% 0 Malawi (92%), South Africa (7%)*

Botswana 0.6 33% 2.26 0 0% South Africa (55%), Malawi (25%)*

Kenya 0.0 2% 167% 4.4 0 -16% 0 Uganda (53%), Malawi (3%)

South Africa 0.0 2% -65% 1 0 -58% Argentina (68%), Zambia (22%)

Tanzania 0.0 2% -10% 0.2 0 -17% 10 India (63%), Kenya (19%) *

Sunflower SeedsTotal 0.2 100% -29% 17% EU,

RussiaEU, Ukraine, China, USA

South Africa 0.2 91% -29% 14 0.4% 64% 0 Russia (49%), Romania (37%)

Tanzania 0.0 6% -7% 0.018 0 -22% 10 Malawi (66%), Kenya (33%) *

Mauritius 0.0 2% 0.084 0 15% 0 Canada (45%), Argentina (21%)

Cotton Seeds

Total 0.1 100% -34% 7% China, EU Australia, USA

Zambia 0.1 96% 0.14 0 188% 0 Malawi (100%)

South Africa 0.0 4% -67% 6.4 1.5% -3% Zambia (39%), Zimbabwe (36%)

Soaps, lubricants, waxes, candles, modelling pastesTotal 978 100 -9 100 6 EU, China EU, China

Zambia 970 99.2 -10 45 0.1 23 0 South Africa (68%), Kenya (20%)*

South Africa 6 0.6 293 0.5 12 0 Germany (19%), USA (17%) *

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Critical inputs available domestically are:

• Crude oil (but currently not good quality, volumes, pricing)

• Refined oil (not currently)

• Land and extension services: yields, hectarage. Currently there is a lot of idle land (contract farming, commercial farming etc)

• Warehouse receipts/commodity exchange to link farm-ers to processors

• Packaging and labelling

• Farmer organisation management business develop-ment services and MSME/farmer organisation/cooper-ative support

• Seed (not currently, but potentially)

• Electricity

Critical inputs into the oil seed products cluster that need to be imported are (bracketed is the import substitution potential in the medium run):

• Crude oil (very high)

• Refined oil (very high)

• Agricultural Inputs: fertiliser, seed, pesticides, herbi-cides etc (high for seed and organic fertilisers such as

from legumes)

• Machinery and vehicles (low, though possible link to assembly sub-cluster in Manufacturing cluster of the NES)

• Packaging materials (medium, through link to plastics and packaging sub-cluster in Manufacturing cluster of the NES)

• Crushing equipment (low)

• Processing equipment (low)

• Consumables for processing equipment such as filter-ing equipment (low)

• Energy/fuel (some, through bio-fuels and sugar cane electricity production)

• Branding and marketing expertise (medium, if skill based is prioritised)

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SunflowerStrengths and Opportunities

• 38,000 MT of annual consumption, of which only 20-25 per cent is met through domes-tic production.

• Easy access to smallholder value addition processes: current sunflower seed varieties in Malawi contain around 40 per cent of oil which, if mechanically extracted, can obtain around a third of the weight of the seed in oil. Therefore a ton of seed can provide 300 litres of good quality pure sunflower oil through cold extraction. This oil may be used for cooking, for paints, for biodiesel and for soaps.

• Sunflower oil achieves high prices, and high margins can be achieved by farmers.

• Sunflower has a short growing season and requires low inputs in terms of fertiliser and chemicals if grown after a well fertilised maize crop – making it highly suitable for inter-cropping with maize.

• Malawi’s historical involvement with sunflowers means that there is reasonable institu-tional knowledge within the extension services of MoAFS, ADMARC, NASFAM etc.

• Recent private sector interest has been seen through companies such as Ex-Agris and BERL.

• Sunflower is more drought tolerant than other crops.

• The sunflower cake that is obtained after the pressing is rich in proteins and fibres, making it suitable for animal feed.

• Seed provision is already done by Pannar and Monsanto, while technical support is al-ready provided from Bvumbwe and Chitedze agricultural research stations and the Nat-ural Resources Centre (NRC).

• Reports have identified sunflower production and processing as potentially pro-women.

• Yields have the potential of rising by up to four times with use of best farming practices.

Weaknesses and Threats

• Low prices for the raw crop disincentivises farmers from producing the crop.

• A small international market means that value addition processes are almost essential in order to produce exports.

Chapter 3 – Strengths, Weaknesses, Opportunities and Threats

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GroundnutsStrengths and Opportunities

• Widely grown and adaptable to numerous environ-ments, groundnuts are an easily scalable crop.

• There is potential for value addition for groundnuts by converting them into oil.

• Global demand for groundnuts is growing, both for the nuts themselves and for the oil that they can be used to produce.

• Malawi is already a large producer of groundnuts; Ma-lawians are familiar with groundnut farming methods.

• There is strong European and regional demand.

• There are niche markets in Europe and locally for ther-apeutic foods.

• Growing groundnuts is coherent with government food security policies.

• Nitrogen fixing properties mean that a booming groundnut industry would have strong positive spill-overs, such as reducing the dependency on nitrogen based fertilisers which are imported.


• Poor storage techniques lead to large losses before crops can be brought to market.

• Smallholder farmers use inefficient production tech-niques meaning that they experience low yields compa-rable to what is possible.

• New seed varieties, developed by ICRISAT, offer large yield improvements but experience low up take due to their upfront expense. There is also a disconnect be-tween seeds which are developed by research institu-tions and those that are demanded internationally.

• The largest constraint of Malawian exporters is their in-ability to control aflatoxin levels (a carcinogenic fungus which grows on groundnuts), preventing them from ex-porting to the EU and other developed markets.

• Low awareness of farmers to aflatoxin issue makes it hard to penetrate the European market.

• There is no system to pay for quality groundnuts at the farmgate, measing that farmers are not incentivised to grow groundnuts in such a way as to avoid developing aflatoxin.

• Markets which are not regional will be hard to pene-trate due to Argentina’s market dominance.

• The SADC groundnut market is only $20,000,000, a large amount of which Malawi already accounts for – until the aflatoxin constraint is overcome, expansion of groundnut production will be constrained by the size of regional markets.

• Until more affluent markets are accessed, prices of groundnuts will mean that they are hard to target as a cash crop ahead of tobacco.

• Limited storage capacity exists within Malawi, leading to lost output and increased aflatoxin levels.

Soya BeansStrengths and Opportunities

• Soya is competitive with maize and cassava from a nu-tritional standpoint.

• Soya bean demand has risen by 43per cent over the past ten years and there is strong regional demand from countries such as Zambia and Zimbabwe.

• The majority of soya crop production reaches market as only 30per cent of it is consumed locally or by the household.

• Soya can be simply processed by a farmer to make milk, oil, and other products but this practice is not en-grained in Malawian farm culture.


• Low productivity (around 0.5MT/ha) is a major limiting factor for Malawi’s competitiveness. Low yields can be attributed to poor quality seeds, poor soil fertility and low use of inoculants, low plant density and poor ac-cess to technical assistance. Despite the existence of improved seed varieties, these are seldom available in the rural areas.

• High, and growing, production in South America is a constraint on market capacity. This coupled with high production and transport costs in Malawi, means that it is unlikely that soya production in the country will ever be internationally competitive.

• Export bans due to lobbying by sectors such as poultry.

• There are questions as to the environmental suitabil-ity of the crop i.e. it cannot be grown in all areas of Malawi.

• There is a high degree of processing required to cre-ate value addition – soya beans must be processed before they are fit for human consumption.

• Lack of reliable market linkages has resulted in a high degree of uncertainty regarding market opportunities. Part of the problem is that there is little coordination, both between farmers and between farmer groups and potential trading partners.

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• The lack of facilities for storing soya beans by small-holder farmers also constitutes a problem for reaping the maximum advantage from market dynamics. Farm-ers will sell early in the season for a low price rather than wait for higher prices later in the season in order to meet short term consumption needs and because the post-harvest losses from poor quality storage are greater than the price compensation.

CottonStrengths and Opportunities

• Cotton has been one of the major cash crops in Malawi, ranking fourth as a foreign exchange earner after to-bacco, tea and sugar.

• Grown on approximately 30,000 ha of land, the crop supports the livelihood of up to 80,000 to 90,000 farm families and production is mostly suited to the lower lying areas of the country.

• Lots of potential for input into the oil seed cluster, to make up for Malawi’s limited capacity to develop a gar-ment and textiles industry.


• Low usage of inputs because of cost and availability resulting in low yields;

• Lack of credit for buying farm inputs;

• Lack of farmer organization for buying inputs and mar-keting cotton and also for an efficient delivery of tech-nical support and training;

• Poor husbandry practices due to limited knowledge of basic issues (spacing, etc.);

• Limited effectiveness of government extension workers who, in addition to not being cotton specialists, are not able to reach the vast majority of cotton growers;

• Weak world prices for cotton which are beyond the con-trol of the industry directly but impact on the relative attractiveness of growing cotton;

• Reduction in the number of cotton buying points, re-sulting in smallholder farmers getting worse terms and being exploited by not only the buying points but also traders (middle men);

Key Constraints on Cotton Lint Production

• Low ginning out-turn in the country reported at 33 per cent -35 per cent which results in lower returns for the ginners;

• High contamination of polypropylene reduces cotton’s attractiveness in the international market. The major cause is the lack of awareness of the importance of reducing contamination as well as low economic incen-tives for reducing contamination.

Key Constraints on Garment Production

• Production inefficiencies, delay and product defects especially in textiles have limited the use of locally pro-duced cloth for quality and price reasons;

• Poor finishing of fabrics as a result of insufficient in-vestment to maintain and upgrade equipment has con-strained the textile industry from providing the appro-priate product;

• Relatively low levels of productivity with a high ratio of supervisors to workers required;

• High cost of electricity, as the industry tends to be charged at peak usage rates or “Maximum Demand tariff”;

• Problems with In-House theft resulting in high security costs;

• Inefficiencies in the operation and support for EPZ companies resulting in lost entitlements, inefficiencies and added costs on producers.

General weakness in the export of raw oil seeds or crude oil:

• Argentina crushes between 40,000 tonnes and 60,000 tonnes per month of oils while Malawi crushes between 3,000 tonnes and 6,000 tonnes per month.

• The cost of transport from Argentina to Durban is 80$ per tonne, while Blantyre to Johannesburg is 120$ per ton.

• Therefore raising production, raising yields and lower-ing transport costs are key.

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The strategy frameworkThe strategy framework is based on ensuring the provision of the ten enablers of private operators in the cluster by government or by enabling sectors. Private operators include smallholder farmers, commercial farmers, micro, small and medium enterprises, farmer organisations, women organisa-tions, youth entrepreneurs, cooperatives and large businesses.

If the oil seed products cluster is to develop on the scale envisioned by the National Export Strategy, the strategy must account for all ten enablers of the cluster, in an appropriately prioritised manner. Success lies in comprehensiveness and coordination among stakeholders. The ten enablers are:

1. Access to markets:

a. Investment facilitation

b. Export promotion

c. Meeting target market standards

d. Trade facilitation including customs clearance and trade licenses

e. Trade policy

f. Transportation

g. Packaging

2. Access to information

a. Addressing the farmer-processor disconnect

3. Access to inputs

a. Access to farm inputs

b. Access to land

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Annex 2

c. Access to water and irrigation

d. Access to research

e. Access to energy

4. Access to finance and secure tenure of prop-erty for

a. Smallholder farmers, farmer organisations, wom-en’s groups and cooperatives

b. Micro, Small and Medium Enterprises including youth entrepreneurs

c. Commercial farmers

d. Processors

5. Access to business development services

a. Smallholder Farmer Organisation

b. Extension Services

c. Micro, Small and Medium Enterprise and Youth En-trepreneur Support

d. Support by Non-Government Organisations

e. Information Technology and Professional Services

6. An efficient way of contributing to Govern-ment revenues and of meeting regulatory ob-ligations

a. Efficient tax contribution system

b. Taxation support

c. Balancing regulation obligations with regulation facilitation

7. A stable and prudent macroeconomic envi-ronment

a. Stable and favourable inflation, interest rates and public sector debt

b. Access to foreign exchange

8. Fair competition

9. Access to supportive economic institutions

a. Oil Seed Products Technical Working Group as part

of Trade, Industry and PSD SWAp

b. Linkages and Support for Cotton Development Trust, Legumes Development and Trade Associa-tion and Bio-fuels Association

c. Institutional Support by Tobacco Institutional Framework

10. Access to skills

a. Competencies and Skills Plan for Cluster

These enablers cannot be provided immediately to the cluster. It is fundamental to provide sustainable solutions for the enablers and to:

• prioritise the provision of these enablers;

• identify which stakeholder is best placed to provide the enabler, whether public sector or private sector. If pub-lic sector, which institution is best placed to provide it in the long-term;

• ensure external players such as development partners and international non-government organisations sup-port the provision of these enablers in the long-term by the private sector or by the Malawian public sector.

The next section prioritises these enablers by setting out a road map for their provision.

The strategy to develop the clusterBased on this framework, the strategy to develop the oil seed products cluster is:

• in the short-term to develop the scale in the produc-tion of the four key oil seeds (sunflower, groundnuts, soya and cotton) and to improve quality and ensure favourable pricing. This is fundamental for capital investment in processing.

• in the medium to long-term, on the back of investment in processing capacity, move toward scaled high value processing.

The strategy is divided into phases. Phases related to which factors should be prioritised first, and hence com-mence first. They do not imply that a phase has to be completed before another phase starts. Actions in later phases do not necessarily need

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to wait until a previous phase is complete, particularly if key actions in earlier phases are facing slow implemen-tation and are not essential for the commencement of actions in a later phase. The phases are:

Phase 1: Establish an appropriate stake-holder and policy maker representation and coordination body

This will be the Oil Seed Products TWG under the Trade, Industry and PSD Sector Wide Approach. Private oper-ators in the cluster will register with the TWG. It will be based on the NES Sub-Committee for Oil Seed Products that operated in the development phase of the NES. The registry of members of the cluster will be used to help with access to finance, tax support etc. Resourcing and modalities for support for this body are discussed in Chapter 5. See Matrix of Actions in Chapter 7, Sec-tions OS2.1 to OS2.4.

Phase 2: Access to Land Programme, Banning of Export Bans and Oil Seed Prioritisation

A top priority is conducting a land study based on land suit-ability and socio-economic data in order to know where oil seeds should be promoted and facilitated for both smallholder farmers and Access to Land Programme for oil seed agriculture, small-holder and commercial, including operationalisation of Land Bill and securing tenure for commercial farming. The land study will include short, medium and long term and include land suitability mapping to inform smallholder extension and commercial farming. See Matrix of Actions in Chapter 7 Section OS5.2

A second priority is an explicit and an adhered to Government policy to not ban the export of commodities unless agreed to by the Oil Seed Products TWG and to ensure a conducive licensing environment for the development of commodity production in Ma-lawi. See Matrix of Actions in Chapter 7 Section 8.2

In addition, in this phase it will set Oil Seeds as an explicit pri-ority for stakeholders including key agencies such as:

• Ministry of Economic Planning and Development

• Ministry of Finance





• Small and Medium Enterprise Development Institute

• Ministry of Industry and Trade, including the Depart-ment of Cooperatives


• Ministry of Agriculture and Food Security inc ASWAp, De-partments of Research, Extension Services and Human Resources

• Ministry of Irrigation and Water Development

• Tobacco Control Commission and Agricultural Research and Extension Trust


• Ministry of Transport and Public Works

• Ministry of Lands and Housing


• Ministry of Education, Science and Technology


• TEVETA

• MIRTDC

Phase 3: Provision of kick-start enablers

• National Oil Seed Extension Programme including sup-port by NGOs through an extension coordination mech-anism. Please refer to Actions OS7.1, OS7.2 and OS7.4 in the action matrix in Chapter 7.

• Investor Facilitation Programme including operational-isation of MITC. Refer to Action OS3.1 in Chapter 7

• Plan for meeting standards and accreditation in target-ed markets, including aflatoxin mitigation measures in groundnut agriculture and domestic testing facilities for certification. Refer to Action OS3.4 in Chapter 7

• Expedite operationalisation of Memorandum of Under-standing on Harmonisation of Seed Regulations in SADC and COMESA. Refer to Action OS5.1.1. in Chapter 7

• Warehouse receipts and commodity exchanges. Refer to Actions OS 4.2 to OS4.9 in Chapter 7

• Government farmer confidence mechanism for short-term kick-start to agricultural production (similar to the government support mechanism for cotton in 2011, though on a smaller scale). Refer to Action OS4.1

• Banks to offer favourable lending windows for Oil Seed Products TWG registered members. Refer to Actions OS6.1 to 6.3

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• Micro-finance agencies to prioritise oil seeds and offer large scale saving schemes to oil seed farmers. Refer to Actions OS6.4 to 6.5

• Export Development Fund guarantees for investors in oil seed processors, supported by Challenge Funds/Matching Grant Programmes. Refer to Actions OS6.8 and OS6.9

• Inclusion of packaging companies in Oil Seed Products TWG. Refer to Action OS3.6 in Chapter 7

Phase 4: Provision of second-level enablers

• MSME oil seeds support plan, including operationalisa-tion for SMEDI. Refer to Action OS7.3 in Chapter 7

• Oil Seed Products Skills Plan. Refer to Actions OS1.1 to 1.6 in Chapter 7

• Branding and Marketing Programme. Refer to Action OS3.2 in Chapter 7

• Access to Energy Plan. Refer to Action OS5.5 in Chapter 7

• Tax efficiency and support. Refer to Action OS8.1 in Chapter 7

• Research and Seed Plan. Refer to Action OS5.4 and 5.1.2 to 5.1.9 in Chapter 7

• Oil Seed Irrigation Programme. Refer to Action OS5.3 in Chapter 7

Phase 5: Provision of third-level enablers

• License and Customs fast-tracking, particularly improv-ing delays under export licensing scheme for oil seeds: through Trade Logistics Technical Committee. Refer to Actions OS3.3 and OS3.7 in Chapter 7

• Fair competition reviews in transportation and oil seed stakeholders. Refer to Actions OS10.1 to 10.5 in Chapter 7

• Transport Sector Implementation Plan prioritisation of oil seed area rural feeder roads. Target Lusaka, Harare, Tete, Mbeya. Refer to Action OS3.5 in Chapter 7

• Trade Policy. Refer to Action OS3.8 in Chapter 7

• Maintain market-determined exchange rate. Refer to Action OS9.1

Guiding timeline for cluster developmentThe guiding timeline is set in Table A2.5 below. These dates are guidelines and their purpose is to give a sense of the sequenced, gradual development of the cluster up to its potential of fifteen per cent of exports in 2027 (up from three per cent in 2010) through the transition from the export of raw or semi-raw com-modities to higher value product exports.


TABLE A2.5 GUIDING TARGET DATES FOR COMPLETION OF IMPLEMENTATION

Phase Guiding Date for Completion of ImplementationPhase 1 By December 2012

Phase 2 By June 2013

Phase 3 By December 2014



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The market analysis in this section focuses on markets where Malawi is already present. In order to create a vibrant cluster with high investment and value addition processes, the first priority must be to build a sustainable production base. By expanding Malawi’s share of these markets, it is hoped to raise production levels to those which are required to encourage significant investment in the cluster and a move into value addition.

Having established quantitative foundations for supporting the oil seed cluster, a qualitative analysis was also conducted looking at each product grouping within the oil seed cluster separately. These were: groundnuts, soya beans, cotton and sunflower. Sesame, while a potential oil seed to be grown in Malawi, has almost no current production base in Malawi. As such, it should be viewed as a more long term crop.

Product: GroundnutsCurrent Markets: Tanzania, South Africa and Zambia

New regional markets: Zimbabwe, Kenya and Rwanda

Long run target international markets: United States, China, Japan

Tanzania, South Africa and Zambia: Malawi supplies 99 per cent of both Tanzania’s and Zambia’s market, despite facing a 10 per cent tariff barrier in Tanzania. Malawi should aim to negotiate the removal of this barrier in order to improve its comparative advantage and maintain its dominant market share. Similarly Malawi supplies 64.5 per cent of South Africa’s market, with no tariff barrier, suggesting there is little need for policy support in this market.

Zimbabwe, Kenya and Rwanda: Malawi has a low level of exports to both Kenya and Zimbabwe in groundnuts and none to Rwanda. None of these countries present Malawi with tariff barriers or significant non-tariff barriers. Policy should focus on increased liberalisation in trade in services to lower transport costs and increase competitiveness in these regions.

US, China and Japan: China is a large and rapidly growing market for groundnuts and primarily imports from India. China’s MFN tariff barrier on groundnuts (which applies currently to both India and Malawi) is 15 per cent, if Malawi could negotiate with China to gain preferential access based on its LDC status, it could potentially penetrate this huge market. The US and Japan are both markets with high levels of protection that Malawi has preferential access to. Currently however, Malawi can-not reach the standards required due to aflatoxin levels, policy should focus on addressing aflatoxin

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issues in production.

Product: Sunflower seeds

Current Markets: South Africa

New regional markets: None

Long run target international markets: Egypt, Turkey, China

South Africa: South Africa is the largest market for sunflower seeds in the region, importing $14 million of sunflower seeds in 2011. Key competitors in this market, Argentina, China and the United States, all face a 9.4 per cent tariff barrier to export to South Africa, as such Malawi is at a significant advantage com-peting on this market. Malawi’s key constraint is its production levels, it must focus on producing higher volumes so that potential trading partners can import from Malawi on a large scale.

New regional markets: Outside of South Africa, regional markets in sunflower seeds are very small in SADC and COMESA (with the exception of Egypt which is addressed below), as such focus should be on expanding market share in South Africa, where most value can be earned.

Egypt, Turkey, China: These three countries all represent large importers of sunflower seeds. In the case of Turkey and China, both have large tariff barriers to imports (21.5 per cent and 9.8 per cent respectively), Malawi needs to focus on negotiating the removal of these barriers in order to have an opportunity to compete on these markets. Egypt meanwhile does not impose large barriers on sunflower seeds (2 per cent to those outside of its trading partnerships), however in the long run as the largest market on the continent, Malawi should seek to lower transport costs to Egypt and as such aim to gain market share.

Product: Soya BeansCurrent Markets: Zimbabwe, Zambia

New regional markets: South Africa, Tanzania, Mozambique, Ken-ya

Long run target international markets: Egypt

Zimbabwe, Zambia: Zimbabwe and Zambia are both natural trade partners for Malawi due to their close proximity. Neither pres-ents tariffs on soya bean imports, nor do they present significant non-tariff barriers which need to be addressed by Malawi trade policy. Policy focus here should be on transport links and border management processes.

South Africa, Tanzania, Mozambique, Botswana and Kenya: In the past five years Malawi has exported Soya Beans to all of these regional partners. Similar to Zimbabwe and Zambia none of these nations present significant tariff or non-tariff barriers to soya bean trade. The two key issues are market size and stability of demand. The size of the entire SADC regions demand in 2011 for soya bean imports was $7 million, similarly, COMESA’s imports, excluding Egypt, only totalled $10 million. This creates a limit to

the potential for Malawian exports to the region. Stability of de-mand is also a key factor with Malawi’s exports of soya beans to any of these given countries varying dramatically from one year to the next, in order to sustain exports and avoid this, policy should focus on MITC trying to link Malawian growers with processors in these markets to create more stable trading partnerships.

Egypt: International trade in Soya Beans is a huge market of over $50 billion, however it is highly liberalised (there are few coun-tries with high tariff barriers on soya beans) and dominated by large producers such as Brazil and the United States, making it very difficult to penetrate international markets. Egypt presents a $900 million market in soya beans. If Malawi becomes a regional exporter and increasingly competitive in soya bean production, it may eventually be able to gain a small share of this. This howev-er is a long run goal and would require a significant increase in transport linkages between Malawi and Egypt – this should be an objective of policy.

Product: Cotton seedsCurrent Markets: South Africa, Zambia

New regional markets: None

Long run target international markets: China

South Africa, Zambia: Malawi has close to 100 per cent of Zam-bia’s import market for cotton seed, however Malawi has less than 1 per cent of South Africa’s market. There are no large tariff or non-tariff barriers which block access to this market. Trade policy should focus on liberalising this market so that farmers can gain the best possible prices for their crops, encouraging them to grow more. The current cotton seed export ban, disincentives the pro-duction of cotton seed in Malawi.

New regional markets: Outside of South Africa, regional markets in cotton seed are very small in SADC and COMESA, as such focus should be on expanding market share in South Africa, where most value can be earned.

China: China is the world’s largest importer of cotton seeds, im-porting $135 million worth in 2011, with almost all of its imports coming from Australia to whom it applies a 7.5 per cent tariff. Malawi also faces a 7.5 per cent tariff barrier to exports to China. Trade policy should focus on removing this tariff barrier to help Malawian cotton seed exporters compete with their Australian counterparts in this large and rapidly growing market.

Product: Meals and cakeCurrent Markets: Mozambique, Zambia, Zimbabwe, South Africa

New regional markets: none

Long run target international markets: None

Mozambique, Zambia, Zimbabwe, South Africa: Malawi does not face tariff or non-tariff barriers to these regional trading part-

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ners. What is important to recognise is that meals and cake that are by-products of crushing oil seeds; this has important impli-cations for how to support the export and production of cake and meals. Increasing demand for meals and cake are unlikely to increase their production as price rises will have little impact in the profits of producers. This is because their profit margins will pri-marily be determined by the oil they produce. As such to increase production of these goods policy should focus on supporting oil processors and farmers of oil seeds, this will increase production of both the seeds and the oil, resulting in a greater quantity of meal and cake being produced.

New regional markets and Long run target international markets: Cake and meals of oil seeds are by products which have low value; as such they are not highly traded internationally as they can usu-ally be produced cheaper locally. What international trade there is, is typically regional. Malawi should focus on regional trade in ex-isting markets and producing for its domestic market to support its livestock industry.

Product: Cooking OilCurrent Markets: None

New regional markets: South Africa, Zambia, Zimbabwe, Zambia and Tanzania

Long run target international markets: Egypt, EU is self sufficient

South Africa, Zambia, Zimbabwe, Zambia and Tanzania: None of South Africa, Zimbabwe or Zambia present tariff barriers or non-tariff barriers to Malawian cooking oil exports. South Africa offers a market for cooking oil exports of over $350 million which is still expanding with around twelve per cent annual growth for the last five years. While this is a highly competitive market, with a large amount of the imports coming from European nations facing no tariffs, $70 million worth of imports come from Brazil and Argentina who face a ten per cent tariff barrier. Malawi should be able to use this protection to its advantage and aim for a ten per cent share of the South African market. Both Zambia and Zimbabwe are supplied by South Africa, if Malawi can penetrate the South African market, it will clearly be able to also able to compete on these sizeable markets as well. Improving transport costs and border processes will be a key requirement for this, as will increasing production of cooking oil to satisfy domestic de-mand. To increase domestic production, Malawi needs to work to link farmers to processors better through both contract farming and introducing more estate farms in an anchor farm model of production.

Tanzania is a sizeable market that Malawi should seek to pene-trate. Supplied almost solely by Argentina, Tanzania applies a 25 per cent tariff barrier to all cooking oil imports. Malawi should pressure Tanzania to remove this for its regional partners and as such take advantage of the price advantage that would then be available relative to non-regional competitors in order to gain market share.

Egypt: Demand for cooking oils in the region is huge, while ar-eas like the EU are self-sufficient at producing cooking oils. As such policy should focus on improving regional integration, with the eventual goal being to export to Egypt, the largest regional market in COMESA. MITC should aim to establish strong links with Egypt, while policy should focus on liberalising transport and improving infrastructure links to bring down costs for exporters.

Product: SoapsCurrent Markets: Zambia

New regional markets: Zimbabwe, South Africa, Democratic Re-public of Congo,

Long run target international markets: EU, COMESA

Zambia: With almost $1 million of soap exports from Malawi to Zambia, Malawi is well established in this market. Malawi has a 7.5 per cent market share in Zambia, compared to 40 per cent by Kenya and 50 per cent by South Africa. To gain market share Ma-lawi must increase its production, this requires both the increase in production of oil seeds as an input into production and the attraction of investors in the production process. To achieve this MITC needs to work on attracting potential investors, while gov-ernment focuses on improving the enabling environment. This is key in this sector: the biggest exporter Unilever halted operations in 2012. Malawi must also increase production to satisfy domestic demand before it can increase its exports.

Zimbabwe, South Africa, Democratic Republic of Congo: These three countries all offer large markets, which present significant tariff barriers to key suppliers. Zimbabwe has a market for soap imports of $80 million, 86 per cent of which is supplied by South Africa who face a 40 per cent tariff barrier. South Africa has a market for imports of $52 million, 40 per cent of which is supplied by China, the United States and the United Kingdom who face a twenty per cent tariff. The Democratic Republic of Congo imported $42 million of soap in 2011, all from regional suppliers such as Kenya, Tanzania, Zambia, South Africa and Uganda, who face a tariff barrier in excess of 15 per cent. Malawi can reasonably ex-pect to penetrate all of these markets if production is increased. Policy can also focus on getting the Democratic Republic of Congo to reduce its tariff barriers, although this will likely have little effect as it would reduce them for all its regional partners, who are its main suppliers currently.

EU, COMESA: The COMESA market for soaps is around $400 mil-lion, as such large scale production of soaps in Malawi need not attempt to export out of this region. There is however significant opportunity to provide fairtrade soaps to markets in the EU. Niche market opportunities provided by fairtrade branding allow for in-crease price mark ups on goods, which compensates for uncom-petitive transport costs faced by Malawi. Policy should focus on MITC linking processors with fairtrade organisations and retailers.

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Chapter 6 – Implementation and Resourcing

Implementation MechanismAt the core of the National Export Strategy is the implementation mechanism that is necessary to ensure its successful application. This is centred around the Trade, Industry and PSD Sector Wide Approach (SWAp). This implementation mechanism is presented in Chapter 4 of the Main Document of the National Export Strategy and is presented in further detail in Annex 1 of the National Export Strategy.

The Approach is spearheaded by the Sector Working Group (SWG) which includes representatives of the key stakeholder groups such as government, civil society, the private sector and development partners. The SWG will be supported by seven Technical Working Groups (TWGs) reporting back to it. One of these is the Oil Seed Products TWG. This TWG will be formed through the transition of the Oil Seed Products Sub-Committee that ran during the development phase of the NES into a TWG under the Trade, Industry and PSD SWAp.

The Oil Seed Products TWG will act as the stakeholder-wide representa-tion body that will ultimately own and drive the development of the cluster through this strategy. The TWG:

• Recognises that all stakeholders have a role to play in ensuring the success of the cluster and commits to assisting those stakeholders to secure the capacity needed to play that role;

• Ensures the alignment and coordination of all key stakeholders such that they prioritise these clusters in their work plans and programmes. Such stakeholders include the private sector; Ministries (incuding the Ministry of Finance and Ministry of Economic Develop-ment and Planning); Government support agencies such as MBS, MITC and SMEDI; farmer organisations (e.g. trusts); smallholder farmer associations; enabler sectors (such as energy, finance and transport); civil society; and development partners;

• Manages stakeholder expectations so that sustainable market-led cluster development is not undermined by excessive expectations of short-term gains;

• Ensures the implementation of the prioritised actions necessary to ensure the sequenced, sustainable development of the cluster;

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• Ensures resource mobilisation, resource allocation and the provision of adequate management attention to implementation bottlenecks (which inevitably arise in any implementation process);

• Provides, through participation in the SWAp, a direct reporting line to the highest level of each stakeholder group, including Cabinet for Government; and

• Will be co-chaired by passionate, effective leaders from the public sector and the private sector, who will be elected by the members of the TWGs. It will be supported by the SWAp Dedicated Secretariat that is being established by the Ministry of Industry and Trade as detailed in Chapter 4 of the main document of the NES and in Annex 1. The TWGs will report through the co-chairs and the SWAp Dedicated Secretariat to the Sector Working Group.

Through the TWG, the three prioritised clusters will be explicitly prioritised for facilitation by critical public sector support agencies in their strategic plans, budgets and work programmes. Such agencies include:





















r. Universities


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ResourcingResourcing for the development of the prioritised clusters will be at two levels:

1. Resourcing for the Oil Seed Products TWG.

a. This will occur through the Trade, Industry and PSD Sector Wide Approach. The dedicated secretariat for the SWAp will also serve as secretariat for the three prioritised cluster strategies.

b. Dedicated support for the Oil Seed Products TWG may be through a lead development partner for each cluster or through a coordinated structure emerging through the respective TWG. Partners would help oversee the holistic development of the cluster. They would fund a long-term Technical Assistant (TA) to be dedicated to the TWG and to the implementation of this strategy. The TA will work with the dedicated secretariat and support the secretariat’s capacity development on cluster development technique as per this strategy.


a. Funding would come from all stakeholders depending on the nature of the action. The TWGs will determine the optimal owner of the action and the funder. Implementers will either be private sector or the local public sector. Development partners will support actions as required, either through pooled or individually kept budgets allocated to the development of the cluster as required by the action plan and the TWG. Funding should be catalytic and unlocking (e.g. a key piece of research or analysis, a strategic piece of infrastructure), and dependence on funding should be minimal. Flexibility of use of funds for the TWG and for development partners is important. Trusts for pooling of funds could be considered. The ideal modality for funding of the cluster strategies and TWG actions will need to emerge through the TWG. Funding will be based on a holistic approach to develop the cluster. A develop-ment partner support package would equate to approximately $13 million for five years, although this will need to be revised on a programme of works to emerge from the TWG. See Annex 1 for the estimation of this value.

b. The allocation of sufficient government management time and funding for the cluster is essential to develop per-manent enablers for the cluster. Funding will be dependent on the nature of the actions set out in Chapter 7 below. Government management time and funding will develop capacity for key institutions to address bottlenecks to the cluster. This will take the form of operationalising the land reform package, operationalising MITC, SMEDI, the oil seed extension programme, seed research etc, all geared to oil seeds. Government commitment to funding such key actions is fundamental to secure additional funding by development partners and investment by the banks and the private sector.

c. Private sector investment will complete the resourcing arrangement, with the support of the financial sector, though

the degree of such investment will depend on government’s resourcing commitment to Oil Seed Products Strategy.

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Annex 2

This chapter presents the action matrix for the Oil Seed Products Strategy. It provides the priority level of the action, and informs of the phase of cluster development in which the actions fall. Priority is provided on a score from 1 to 6, with 6 being the highest priority. There are 5 phases: Phase 1 is the first phase. It is divided into ten sections, in keeping with the holistic framework to develop the cluster. These are:

1. OS1: Access to Skills

2. OS2: Conducive, Operationalised Framework & Support Institutions

3. OS 3: Access to Markets

4. OS4: Access to Information

5. OS5: Access to Inputs

6. OS6: Access to Finance and Secure Tenure of Property

7. OS7: Access to Business Development Services

8. OS8: Ease of Meeting Tax and Regulatory Obligations

9. OS9: Stable, Prudent and Conducive Macroeconomy

10. OS10:Fair Competition

Actions in this strategy are coded with OS, which refers to oil seed products.

Chapter 7 – Matrix of Prioritised Actions

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oIL SEEd ProduCTS STrATEgy

1. ACCESS To SkILLSCode Category

and ActivitySub-Activity Priority Lev-

el (highest is 6)

Phase Lead Imple-menting Agency

Critical to Sucessful Imple-mentation

Other Im-plementing Agencies

OS1.1 Apply the ILO's Skills for Trade and Economic Diversification tool to the cluster to develop a critical skills requirement list for the cluster (type of skills x realistic desirable volumes), including:

4 4 Oil Seed Prod-ucts TWG

MoEST, TEVETA, MoAFS, MIWD, Farmer Organisa-tions, Producers

Crushers

OS1.1.1 Cooking Oil

OS1.1.2 Fertilizers

OS1.1.3 Animal Feed

OS1.1.4 Bio-fuel

OS1.1.5 Butters

OS1.1.6 Lubricants

OS1.1.7 Pharmaceuticals

OS1.1.8 Cosmetics and Soaps

OS1.1.9 Butters, flours and meals

OS1.1.10 Paints and dyes

OS1.1.13 Management and implmentation of oil seed products regulatory framework

OS1.1.14 Others as requested by stakeholders

OS1.2 Develop a Oil Seed Products Skills Development Plan. This plan translate the skills requirement into the optimal supply-side response. Include in Plan:


TEVETA, MoEST, Producers, Crush-ers, smallholder associations

Dept of Immigra-tion,Uni-versities Working Committee, MEPD

OS1.2.1 Review modalities and identify optimal institutionalised way how for this Skills Development Plan to perma-nently inform skills providers

OS1.2.2 Review whether to establish voucher/coupon scheme within cluster, similar to Farm Income Subsidy Programme

OS1.2.3 Review tax incentives for private training by companies

OS1.2.4 A scarce-skills list: key skills that cannot be provided locally, and hence need to be imported in the short-term

OS1.3 Establish a Oil Seed Products Account at TEVETA, funded by Oil Seed Processors’ Levy

4 4 TEVETA OPC MoEST, Universities Working Committee, MIRTDC

OS1.4 Use Oil Seed Products Account at TEVETA to solely fund the Oil Seed Products Skills Development Plan


OS1.5 TEVETA reports to Oil Seed Products Sub-Committee on expenditures under Oil Seed Products Account


OS1.6 Once Cotton Council established, fast-track implementation of farmer training component by speclialist trainers employed under council

2 4 CDT OPC

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2. ConduCIvE, oPErATIonALISEd frAMEwork & SuPPorT InSTITuTIonSCode Category

and ActivitySub-Activity Priority

LevelPhase Lead Im-

plementing Agency

Critical to Sucessful Implemen-tation

Other Implement-ing Agencies

OS2.1 Institutional Framework to Drive Cluster DevelopmentOS2.1 Ensure permanency of Oil Seed Products (OSP) Technical Working Group (TWG) as a

dialogue platform because success of cluster is 100% dependent on constant stake-holder-wide dialogue and commitment. Apply similar model to Cotton Development Trust:

6 1 MoIT OPC, MoIT, Oil Seed Products TWG

MoF

OS2.1.1 Secretariat to be SWAp Dedicated Secretariat 6 1 Oil Seed Products TWG

MEDP, MoF, OPC

MoIT, MBS, MRA, MoAFS and others

OS2.1.2 Secretariat to ensure comprehensive stakeholder membership, including Policy Makers and Resource Holders

6 1 Oil Seed Products TWG

MEDP, MoF, OPC


OS2.1.3 Public and private sector co-chairs to be elected by membership. May confirm or change co-chairs of Oil Seed Products TWG in development phase of NES


MEDP, MoF, OPC


OS2.1.4 Establish a Core Team of up to 20 members that includes farmer organisations, civil society, MoIT, TAMA, TEVETA, TCC MoAFS, MIWD, MITC, 3 processors, MBS, MEPD, MoF, 3 crushers/ginners, CDT, Legumes Platform, PSD Donor Group, Bio Fuels Association


MEDP, MoF, OPC


OS2.1.5 Establish reporting structure from Core Team to Wider Platform Membership


MEDP, MoF, OPC


OS2.1.6 Adopt this Oil Seed Products Strategy as base working document 6 1 Oil Seed Products TWG

MEDP, MoF, OPC


OS2.1.7 Develop work plan to ensure timely implementation of this strategy 6 1 Oil Seed Products TWG

MEDP, MoF, OPC


OS2.1.8 Responsibility of co-chairs and secretariat to ensure follow up of actions


MEDP, MoF, OPC


OS2.1.9 Establish policy within cluster that advocacy and lobbying will take place through the Oil Seed Products TWG


Private Operators in the Cluster

OS2.1.10 Establish Sub-Working Groups as is necessary 6 1 Oil Seed Products TWG

MEDP, MoF, OPC


OS2.1.11 Maintain a register of members of each stakeholder group 6 1 Oil Seed Products TWG

OS2.1.12 Ensure active linkages to NES Implementation Framework under MGDS (see cross-cutting action plan section 2) and to other relavant dialogue groups such as Trade Logistics Working Group, Cotton Development Trust and Legumes Platform


MEDP, MoF, OPC


OS2.1.13 Identify and implement legal requirements to institutionalise platform, eg eventual registration as a trust to allow for cash generation in time


MEDP, MoF, OPC

MoIT, MBS, MRA, MoAFS, MoJ and others

OS2.1.14 Identify institutional framework that needs to be dedicated to the cluster, such as re-orientation of Agricultural Extension Services, MITC, TEVETA, SEDOM/MEDI/DEMAT, Dept of Cooperatives, ARET, ACE and others mentioned in this action plan, toward oil seed products


MEDP, MoF, OPC

OS2.1.15 In institutional framework, idenfify if require an equivalent of Tobac-co Control Commission for the Oil Seed Products Cluster


MEDP, MoF, OPC

TCC

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2. ConduCIvE, oPErATIonALISEd frAMEwork & SuPPorT InSTITuTIonS (ConTInuEd)Code Category


LevelPhase Lead Im-

plementing Agency



OS2.1.16 Drive the establishment of this institutional framework so that it effectively addresses critical gaps to the development of the cluster


OS2.1.17 Prioritise this insitutional framework under MGDS and ensure adequate resourcing of key institutions

6 1 MEDP OPC, MoF, MEDP

OS2.1.18 Implement legal requirements 6 1 Oil Seed Products TWG

MoJ, OPC

OS2.1.19 Develop a regulatory support framework for the cluster, following CDT model if relevant.


MoJ, OPC

OS2.1.20 Implement regulatory support framework for the cluster 6 1 Oil Seed Products TWG

MoJ, OPC

OS2.1.21 Develop a clear pricing policy that facilities market based settlement of the market and limits distortions, while incentivising farmer production

6 1 NES Dedicat-ed Secretariat

OPC, MEDP, MoF, MoAWID

OS2.1.22 Implement pricing policy for cluster 6 1 NES Dedicat-ed Secretariat

OPC, MEDP, MoF, MoAWID

OS2.1.23 Regulatory framework to balance fuel and food requirements for bio-fuels


OS2.2 Support to Cotton Development TrustOS2.2.1 Make necessary amendments to Cotton Bill and enact Bill to create Cotton Council

which will regulate industry and also enable establishment of sound extension and research, and provides means for generation of cash to support industry.

5 1 OPC MoJ CDT

OS2.2.2 Ensure Cotton Development Trust is key member of Oil Seed Products TWG 5 1 Oil Seed Products TWG

MoJ

OS2.3 Support to Legumes PlatformOS2.3.1 Ensure Legumes Development and Trade Association is key member of Oil Seed

Products TWG5 1 Oil Seed

Products TWG

OS2.4 Support to Bio-Fuels Association and CouncilOS.2.4.1 Ensure Association is key member of Oil Seed Products TWG 5 1 Oil Seed

Products TWG

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3. AffordAbLE ACCESS To MArkETSCode Category and

ActivitySub-Activity Priority

levelPhase Lead Im-

plementing Agency



OS3.1 Investment FacilitationOS3.1.1 Include in MITC Strategic Plan the explicit focus on Oil Seed Products as one of its top

3 Priorities (with Manufactures and Sugar Cane Products)5 3 MITC

OS3.1.2 Develop an investor profile for the OSP cluster 5 3 MITC Oil Seed Products TWG

MoIT

OS3.1.3 Develop an investor facilitation programme for potential investors in the sector. Sit down with NASFAM and FUM to identify incentives needed for farmers to invest in oil seeds, and with private sector to identify parameters for investment. Identify key parameters and work in to investor facilitation programme. Determine degree of risk that needs to be covered for private sector to invest, without assuming too much risk.

5 3 MITC Oil Seed Products TWG

MoIT

OS3.1.4 Ensure MITC has capacity to develop and implement programme:

5 3 MITC MoF, OPC, MEPD

MoIT

OS3.1.4.1 MITC requires skilled staff who are familiar with the econom-ics and business aspects of the cluster


MoIT, DPSM

OS3.1.4.2 MITC has capacity to effectively engage with relavant Ministries and agencies (eg. Greenbelt Initiative, Dept of Land, Dept of Irrigation, Dept of Energy, Dept of Extension Services, Dept of Environment, Dept of Trade, Dept of In-dustry, Registrar Directorate General etc). This is fundamen-tal as an effective investor faciltiation programme requires providing an investor all it needs to start operating


MoIT

OS3.1.5 Ensure appropriate and adequate financial resourcing of MITC investor facilitation programme

5 3 MoF, MEPD

OS3.1.6 Ensure appropriate and adequatre human resourcing of MITC investor facilitation programme

5 3 OPC DPSM

OS3.2 Export PromotionOS3.2.1 Confirm Target Markets and Products identified in NES development phase 4 4 MITC MoIT MoF

OS3.2.2 Develop a branding and marketing programme, identifying modalities for penetration in new target markets in Africa as per OS3.2.1

4 4 MITC MoIT MoF

OS3.2.3 Ensure programme is fully costed

4 4 MITC MoIT MoF

OS3.2.4 Secure resourcing to implement brand-ing and marketing programme

4 4 MITC MoIT MoF

OS3.3 Licencing, Customs and bordersOS3.3.1 Establish MITC as lead-agency with responsibilities for licensing in the cluster and

provide over-arching powers for licensing over other agencies, but through legislation ensure MITC consults accordingly


OPC MoIT, MoF, MEPD

OS3.3.2 Prioritise One-Stop Shop under Action Cross-Cutting Issue 3.2.5 - One Stop Shop for Trade Documentation - toward Oil Seed Products Cluster


OPC MoIT, MoF, MEPD

OS3.3.3 Minimise delays under export licensing scheme for oil seeds and pulses 4 5 Oil Seed Products TWG

MoIT MoF, MEPD, MoAFS

OS3.3.4 Provide and faciltiate annual export license for all oil seed products exporters, with a guarantee to non suspension except under explicit faults discussed and determined between license bodies and exporters through Oil Seed Products TWG.


MoIT MoF, MEPD, MoAFS, MRA

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levelPhase Lead Im-

plementing Agency



OS3.3.5 Conduct a review of border formalities, through Trade Logistics Working Group, for the the cluster, and allow prioritised processing for cluster


MoIT MoF, MEPD, MoAFS, MRA

OS3.3.6 Engage with MRA to enquire if borders can operate for 24 hours for the cluster 1 5 Oil Seed Products TWG

MRA MoIT, MoF, MEPD

OS3.4 Standards and accreditationOS3.4.1 Identify products in the cluster that require standards for export to target markets 6 3 Oil Seed

Products TWG

MoIT, MoAFS

OS3.4.2 MBS, with Dept of Agricultural Research and Technical Services (DARTS) to prioritise development of standards for products in list in OS3.4.1, relative to regionaltarget market requirement

6 3 MBS MoAFS MoIT, MoAFS

OS3.4.3 MBS and DARTS to orient its organisational structure toward facilitation of oil seed products cluster to meet regional target market standards


OS3.4.4 MBS and DARTS prioritise investment in infrastructure to meet standards developed in OS3.4.2, inc domestic testing facilities


OS3.4.5 MBS and DARTS prioritise investment in staff development to meet standards devel-oped in OS3.4.2


OS3.4.6 Ensure appropriate resource allocations to MBS and DARTS to meet mandate toward facilitating this cluster

6 3 MoF OPC MBS

OS3.4.7 EU funded SQAM ensure prioritisation of oil seed products at MBS 6 3 Oil Seed Products TWG

MoIT, MoAFS

OS3.4.8 Application of USAID funded Multi-Criteria Decision Analysis to fund efforts to address aflatoxin in groundnuts


MoIT, MoAFS

OS3.4.9 To address aflatoxin issue, link groundnut production to commercial farming with proper management for aflatoxin control (as model), with outgrower schemes where same techniques for aflatoxin management are enforced through contract. Link to OS5.2.3


MoIT, MoAFS

OS3.5 TransportationOS3.5.1 Conduct review into impact of transport costs from various rural areas to Blantyre

and Lilongwe on farmers' profit margins4 5 Oil Seed

Products TWG

MoTPW, MoIT MoF, MEPD

OS3.5.2 Investigate whethere there is collusion in transport services provided to the oil seed products cluster, particularly for transport from rural areas to Blantyre and Lilongwe

4 5 CFTC MoIT, OPC MoF

OS3.5.3 Through review and investigation, make recommendations on how to ensure tha transport prices reflect transport costs for the cluster

4 5 CFTC MoIT, OPC MoF

OS3.5.4 Ensure the implementation of recommendations 4 5 Oil Seed Products TWG

MoTPW

OS3.5.5 Road Transporters and Operators Association to self-regulate through understanding and application of the Competition and Fair Trading Act

4 5 RTOA MoTPW

OS3.5.6 In the interim to the application of fair competition, RTOA to negotiate prices with Oil Seed Products TWG

4 5 RTOA MoTPW

OS3.5.7 Prioritise investment in feeder roads for target oil seed agriculture areas, based on action OS5.3.1

5 5 MoTPW MoTPW

OS3.5.8 Prioritise international transport access to Harare, Tete, Mbeya, Lusaka. See Cross Cutting Action 3.7

5 5 MoTPW MoTPW

OS3.6 PackagingOS3.6.1 Ensure Packaging Companies are members of the Oil Seed Products TWG 4 3 Oil Seed

Products TWG

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levelPhase Lead Im-

plementing Agency



OS3.6.2 Ensure mechanism for constant dialogue between cluster and packaging sector, through Oil Seed Products TWG


OS3.6.3 Relay to the Manufacturing TWG the constraints that packaging sector faces in provid-ing affortable packaging to the Oil Seed Products Cluster


OS3.7 Trade FacilitationOS3.7.1 Ensure 5 Oil Seed Products Companies and Chair of Oil Seed Products TWG are

members of the Trade Logistics Working Group4 5 Oil Seed

Products TWG

TIPSD SWAp Secretariat

OS3.7.2 Ensure Trade Logistics Working Group meets every 3 months 4 5 Companies listed under OS3.7.1

Oil Seed Products TWG, TIP SWAp Secretariat

OS3.7.3 Ensure 3 out of the 5 Oil Seed Products TWG members and the chair of the Oil Seed Products TWG attend every meeting of the the Trade Logistics Working Group

4 5 Companies listed under OS3.7.1

Oil Seed Products TWG, TIPSD SWAp Secretariat

OS3.8 Trade PolicyOS3.8.1 Ensure PS at MoIT has access to prioritised target market and products for the

cluster3 5 Oil Seed

Products TWG

MoIT

OS3.8.2 Ensure PS at MoIT has access to a list of critical imported inputs for target products in the cluster


MoIT

OS3.8.3 Align trade policy toward ensuring duty free quota free market access to target regional markets

3 5 MoIT MoF, MRA

OS3.8.4 Align trade policy toward ensuring duty free acess to critical imported inputs required by the cluster

3 5 MoIT MoF, MRA

OS3.8.5 Develop trade negotiation capacity around the needs of the cluster: 2 trade officers to be specialists in all trade issues affecting the cluster

3 5 MoIT MoF, MRA

OS3.8.6 Prioritise application in trade negotiations of the trade policy for the oil seed products cluster developed in NES Development Phase

4 5 MoIT MoF, MRA

OS3.8.7 Ensure market access to both Comesa (Zambia, Zimbabwe) and SADC (for Mozam-bique, Tanzania)

3 5 MoIT MoF, MRA

OS3.8.8 Ensure duties to Comesa and SADC remain low at not higher than 5% 3 5 MoIT MoF, MRA

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4. ACCESS TO INFORMATION - ADDRESSING ThE FARMER-PROCESSOR DISCONNECTCode Category


LevelPhase Lead Im-

plementing Agency



OS4.1 As an interim measure, until achieve cluster wide outreach of agriculture commodity exchange, warehouse receipts scheme, credit guarantee scheme and micro-finance, establish a short-term fund to meet shortfall between price required to incentivise continued farmer investment and market price

6 3 MoF Oil Seed Products TWG

MoAFS, MoIT

OS4.1.1 For each major oil seed (sunflower, soya, groundnut) and based on outcome of Investors Facilitation Programme in Activity OS3.1.2, establish a government fund to support the cost of good quality seed and fertilizer, in similar manner to cotton in 2011 (through levy). Use OSP as link to sector

6 3 MoF Oil Seed Products TWG

MoAFS, MoIT

OS4.1.2 Determine the optimal size of the subsidy per hectare to incentiv-ise enough production

6 3 MoAFS Oil Seed Products TWG

MoAFS, MoIT

OS4.1.3 Adopt gradual phased approach (do not establish too big a fund initially as this may lead to over production in short term

6 3 MoAFS, MoIT

OS4.1.4 Run through independent fund managers (banks) 6 3 MoAFS, MoIT

OS4.1.5 Link to Export Development Fund to allow working capital allowanc-es to account for cash flow lag prior to returns on processing

6 3 MoAFS, MoIT

OS4.2 Finalise the contract farming strategy and ensure it covers oil seeds as a priority 5 3 MoAFS Oil Seed Products TWG

MoIT

OS4.3 Opera-tionalise contract farming srategy, prioritising oil seeds

5 3 MoAFS Oil Seed Products TWG

MoIT

OS4.4 Agriculture Commodities Exchange to include oil seeds (sunflower, soya, cotton, groundnuts, sesame, castor, rubber, jatropha)

5 3 ACE Oil Seed Products TWG

MoAFS

OS4.5 Establish mobile phone based extension services targeting oil seeds 5 3 Esoko Oil Seed Products TWG

MoAFS

OS4.6 Establish mobile phone based market information services targeting oil seeds 5 3 Esoko Oil Seed Products TWG

MoAFS

OS4.7 Develop incentive package for investment in storage capacity for oil seeds and establishment of warehouse receipts systems focused on oil seed products

5 3 MoIT Oil Seed Products TWG

MoAFS

OS4.8 Establish framework for certification of warehouses 4 3 MoIT Oil Seed Products TWG

MoAFS

OS4.9 Design and implement development partner programmes to extend warehouse receipt programmes to oil seeds. Include Admarc, MPICO and others

5 3 ACE Oil Seed Products TWG

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5. AffordAbLE ACCESS To InPuTSCode Category and Activity Sub-Activity Priority

LevelPhase Lead Im-

plementing Agency



OS5.1 Access to Seed and FertilizerOS5.1.1 Expedite complete operationalisation of Memorandum of Understanding on

Harmonisation of Seed Regulations in SADC and Comesa. See Cross Cutting Actions 5.4.1 and 5.4.2.

6 3 OPC

OS5.1.2 Dept of Agricultural Research and ICRISAT to include in its programme research on primary oil seeds unless already in programme (sunflower, soya, cotton, sesame) in order to improve current poor quality of seed

6 4 MoAFS ICRISAT

OS5.1.3 Ensure close working relationship and coordination between Agricultural Research, ICRISAT and processors through Oil Seed Products TWG


MoAFS, ICRISAT

OS5.1.4 Dept of Agricultural Research and ICRISAT to prioritise harmonisation of seeds, particularly for sunflower, groundnuts, soya and cotton

5 4 MoAFS ICRISAT

OS5.1.5 Ensure quality standard and procedures in line with both SADC and COMESA, including ensuring high protein content

5 4 MoAFS

OS5.1.6 Develop incentive scheme for private sectorinvestment in the distribution and reserch of oil seeds (eg as with Quton in cotton) and relevant fertilizers across the country. See Cross Cutting Action 5.4.4


Seed Asso-ciation

OS5.1.7 Develop a programme to re-invigorate Seed Research Stations with priorization on oil seed products, eg Makoka inc privatisation (eg Quton (Seedco), Demeter (scaling and multiplication, but subisdy dependence)) Increase budgetary allocation to seed research


OS5.1.8 Ensure identification of varieties for each major oil seed that respond to climate, to climate changes and to Malawi’s agronomy


OS5.1.9 Evaluate mechanism to address issue of price differential between good seed and recycled seed for oil seeds. Conduct this as part of Action OS4.1


OS5.2 Access to LandOS5.2.1 Conduct matching exercise between land suitability data and land that can realisti-

cally be allocated to oil seeds: see cross cutting action 6.2.4 in Annex 5 to the NES6 2 Oil Seed Prod-

ucts TWGOPC MoLH

MoAFS

OS5.2.2 Develop a clear land guideline for oil seeds for smallholder farmers based on Cross Cutting Action 6.2.4 in Annex 5 to the NES


OS5.2.3 Develop a clear land guideline for oil seeds for commercial farmers with and without proper land titling for commercial farmers. Include Principles of Agricultural Investment.


OS5.2.4 Ensure land titling for commercial farming of oil seeds. Link to Cross Cutting Action 6.2.4


OS5.2.5 Engage Tobacco Control Commission to develop a programme to complement tobacco production with oil seed production


OS5.2.6 Operationalisation of Land Bill, Land tenure system - see Cross Cutting Action 6.2.1 6 2 Oil Seed Prod-ucts TWG

OS5.3 Access to IrrigationOS5.3.1 Allocate 25,000 ha of newly irrigated land under Greenbelt Initiative to oil seed

farming4 4 OPC MIWD, MoLH

OS5.3.2 Explicit prioritisation of groundnuts, soya, cotton, sunflower under National Irriga-tion Policy, by Department of Irrigation and irrigation support projects

4 4 MIWD

OS5.3.3 Develop programme for the establishment of Water User Associations by groups of oil seed farmers

4 4 MIWD

OS5.4 Access to ResearchOS5.4.1 Amend ARET mandate to explicity include and prioritise research in oil seeds 5 3 MoAFS OPC

OS5.4.2 Set oil seeds as top priority for Dept of Agricultural Extension Services

5 3 MoAFS OPC

OS5.5 Access to EnergyOS5.5.1 Ensure prioritized access to energy for registered Oil Seed Product Processors

registered under the Oil Seed Products TWG3 4 ESCOM

OS5.5.2 Provision of rebate on tax for diesel for generators 4 4 MoF

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6. AffordAbLE ACCESS To fInAnCE And SECurE TEnurE of ProPErTyCode Category


LevelPhase Lead Im-

plementing Agency



OS6.1 Ensure Bankers Association, Micro-finance Network and Export Development Fund are part of Oil Seed Products TWG


Bankers Association, MAMN

OS6.2 Develop an Investor Profile for the Cluster 6 3 Oil Seed Prod-ucts TWG

OS6.3 Banks to develop a lending window for investors in the cluster, with favourable rates and collateral requirements, with credit guaranteed by EDF. Prioritise lending for oil crushers and processing

6 3 Bankers Association

Oil Seed Products TWG

OS6.4 Develop information package for accessing finance for stakeholders in the Oil Seed Products Cluster. To include financing pre-conditions



OS6.5 Micro-finance agencies to develop a savings and micro-finance scheme focused on pro-viding oil seed farmer access to micro-finance. Prioritise lending for smallholder farmers and small scale crushers

6 3 MAMN Oil Seed Products TWG

OS6.6 Micro-finance agencies work closely with seed suppliers to evaluate how micro-finance an imporve access to seeds in the oil seed cluster

6 3 MAMN Oil Seed Products TWG

OS6.7 Banks and Insurance sector to be part of Oil Seed Products TWG 4 3 Oil Seed Prod-ucts TWG

Bankers Association, Insurance Association

OS6.8 Prioritization of Oil Seed Product Stakeholders in Credit Reference Bureau 3 3 Credit Refer-ence Bureau

OS6.9 Export Development Fund to actively prioritise credit guarantees for oil seed products cluster investors

5 3 EDF

OS6.10 Establish Challenge Funds/Matching Grant schemes to complement EDF, and be run by it and provide productive grants to group farming.

4 3 EDF


7. AffordAbLE ACCESS To buSInESS dEvELoPMEnT SErvICESCode Category and Activity Sub-Activity Priority

LevelPhase Lead

Imple-menting Agency



OS7.1 Farmer Organisation

OS7.1.1 Prioritization of oil seed products among national level farmer organisations 6 3 MoAFS

OS7.1.2 As part of oil seed extension programme developed in activity 7.2.3 below, prioritise efforts to ‘sell and market’ the benefits of farmer organisations to unorganised farmers. Show real-life benefits that other groups have gained from, particularly in terms of bulk transport, bulk storage and bulk access to micro-finance/finance

6 3 MoAFS

OS7.1.3 As part of oil seed extension programme developed in activity 7.2.3 below, prioritise the provision of management and organisational services for organic, active farmer organisa-tions

6 3 MoAFS

OS7.1.4 As part of oil seed extension programme developed in activity 7.2.3 below, sensitize farm-ers on benefits of good quality seed and micro-finance, savings scheme

6 3 MoAFS

OS7.1.5 Include in oil seed extension programme the following stakeholders, in order to demonstrate benefits of well functioning farmer organisations

6 3 MoAFS

OS7.1.5.1 ACE MoAFS

OS7.1.5.2 Department of Cooperatives MoAFS

OS7.1.5.3 OVOP MoAFS

OS7.1.5.4 Oil Seed Product Processors like Uniliver, CORI etc

MoAFS

OS7.1.5.5 CISANET MoAFS

OS7.1.5.6 FUM MoAFS

OS7.1.5.7 NASFAM MoAFS

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7. AffordAbLE ACCESS To buSInESS dEvELoPMEnT SErvICESCode Category and Activity Sub-Activity Priority

LevelPhase Lead




OS7.1.5.8 Warehouse operators MoAFS

OS7.1.5.9 Micro-finance Network MoAFS

OS7.1.5.10 Cotton Development Trust MoAFS

OS7.1.5.11 Bankers Association MoAFS

OS7.1.5.12 Road Transport Operators Association

MoAFS

OS7.1.5.13 Freight Forwarding Association MoAFS

OS7.1.6 Prioritize work of cooperatives in facilitating and promoting oil seed cooperatives

MoIT

OS7.2 Extension ServicesOS7.2.1 Set oil seeds as No1 priority (after maize) for Dept of Agricultural Extension Services, and

allocate 40% of its resources to oil seed products by 20156 2 MoAFS

OS7.2.2 Confirm yield targets for each major oil seed (sunflower, soya, groundnut, cotton)

6 3 MoAFS

OS7.2.3 Develop a nationwide Oil Seed Extension Programme, that includes participation of NGOS, that adopts yield targets as objective. For example in cotton current yield is 800 kg per ha but potential is for 3 tonnes per ha in large scale planting and 1.5 tonnes or 2 tonnes/ha in smallholder farming. Refer to CDT’s pilot projects where it demonstrates that correct planting, timing, population, and weeding doubles yields. Apply not only to cotton, but to all oil seeds. Include Cooperatives. Link to Cross Cutting Action7.1.2

6 3 MoAFS

OS7.2.4 Include extension on warehouse receipts and commodity exchanges in oil seed extension programme

6 3

OS7.2.5 Priortise oil seed extension to most productive areas for each major oil seed, based on the outcome of the land research under OS5.3.1

6 3 MoAFS

OS7.2.6 Link oil seed extension programme closely to access to micro-finance (eg high cost of weed-ing and herbicides) and to access to seed and other farm inputs

6 3 MoAFS

OS7.2.7 Develop implementation and resource plan for oil seed extension programme that is fully costed and backed by Ministry of Finance and MEPD

6 3 MoAFS MoF, MEPD

OS7.2.8 Inlude in extension programme the training of farmers in how to reduce aflatoxin levels in groundnuts and in informing them of the benefits of using improved seed varities.

6 3 MoAFS

OS7.3 Entrepreneur, Start-up and Micro, Small and Medium Enterprise SupportOS7.3.1 Set oil seed products as one of 3 priority assistance areas for SMEDI in its strategic plan,

with manufactures and sugar cane products5 4 SMEDI MoF, MEPD,

MoIT

OS7.3.2 Develop an entrerpreneur, start-up and MSME training and business advisory support package geared toward oil seed products

4 4 SMEDI MoF, MEPD, MoIT

OS7.3.3 Include in package advistory on how to access training and skills, also through TEVETA insti-tutions. If not available, offer management and other tailor made courses through SMEDI


OS7.3.4 Include in package advistory on how to access finance from banks and micro-finance agencies and how to access markets, via a collaboration with MITC’s export promoition programme and its investment facilitation programme


OS7.4 Non-Government OrganisationsOS7.4.1 As part of oil seeds extension programme, develop a segment that allows for incorporation

of NGO services, on a voluntary basis, in the oil seed extension programme. There are many sustainable livelihood components of NGO programmes that are working in numerous areas in a piecemeal fashion. This is a large opportunity cost given the high cost of extension that the MoAFS struggles to cover. See Cross Cutting Action 7.1.2.5 and 7.1.2.13 in Annex 5 to the NES

4 3 MoAFS CISANET, CONGOMA

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8. EASE of MEETIng TAx And rEguLATory obLIgATIonSCode Category


LevelPhase Lead Im-

plementing Agency



OS8.1 Ease of Meeting Taxation Obligations

OS8.1.1 Develop a comprehensive list of types of companies that qualify as Oil Seed Products Stakeholders


MoF MRA

OS8.1.2 Compile and keep up to date a register of Oil Seed Products Cluster Companies 4 4 Oil Seed Prod-ucts TWG

MoF MRA

OS8.1.3 Develop a tax incentive package that is geared soley to the oil seed products cluster, through the Investment Facilitation Plan in Section OS3.1, including:


MoF MRA

OS8.1.3.1 Sizeable tax incentives for use of local oil seeds in processing. 4 4 Oil Seed Prod-ucts TWG

MoF MRA

OS8.1.3.2 No tax on purchasing of capital and processing equipment, and on investment in processing and crushing factories in the cluster


MoF MRA

OS8.1.3.3 Removal of turnover tax (2% if over 50m MK) for the cluster, given that cluster is based on low margins, high volumes


MoF MRA

OS8.1.3.4 Repeal excise tax of 25% on all locally produced oil 4 4 Oil Seed Prod-ucts TWG

MoF MRA

OS8.1.4 Tax incentive package for the cluster needs to 4 4 Oil Seed Prod-ucts TWG

MoF MRA

OS8.1.4.1 Be oriented toward exports, so incentives increase the greater the share of turnover that is covered by exports


MoF MRA

OS8.1.4.2 Set for the long-term to be predictable and consistent. 4 4 Oil Seed Prod-ucts TWG

MoF MRA

OS8.1.4.3 Communicated through the MRA website 4 4 MRA MoF

OS8.1.4.4 Evaluate if can provide 2 or 5 year support window. Check with time period in Investment Bill (5 not accepted); investment committee


OS8.2 Ease of Meeting Regulatory Obligations

OS8.2.1 Implement Government Policy to not ban the export of raw oil seeds (inc soya, sunflower, cotton) as this undermines efforts to increase oil seed production by reducing farmer willingness to invest. Bans only to be allowed through approval of Oil Seed Products TWG

6 2 OPC MoF, MEPD MoAFS, MoIT

OS8.2.2 Establish Government Policy for to allow market dynamics to play out in this cluster 6 2 OPC MoF, MEPD MoAFS, MoIT

OS8.2.3 Set a clear policy classifying oil seeds as export oriented crops and not as food security crops


OS8.2.4 Set and implement a policy to allow importation of oil seeds for processing purposes by the cluster. This is essential if value addition capacity is to increase. Local farmers have to compete with imported seed, and will be buffered by activity OS5.1



9. STAbLE, PrudEnT And ConduCIvE MACroEConoMIC EnvIronMEnTCode Category


LevelPhase Lead Im-

plementing Agency



OS9.1 Ensure an exchange rate that reflects the market equilibrium in the demand and supply of Malawi Kwachas, and that does not disincentivise exports

5 5 RBM MoF

OS9.2 Ensure monetary policy, in providing a stable prudent macroeconomic environment, takes a holistic approach including the development of the oil seed products cluster

5 5 RBM MoF

OS9.3 Ease exchange controls on Oil Seed Cluster Companies, as per register developed under OS8.1.2

3 5 RBM MoF

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10. FAIR COMPETITIONCode Category


LevelPhase Lead Im-

plementing Agency



OS10.1 Undergo rapid, top level review of degree of fair competition in the cluster, with special attention to:

3 5 CFTC Oil Seed Products TWG

OS10.1.1 Unfair business practices by traders with farmers (eg tweaking of scales)

OS10.1.2 Unfair business practices by ginners, crushers and processors, relative to Fair Trading and Competition Act

OS10.1.3 making market-based recommendations on increasing formality and capacity of informal, low quality crushing sector

OS10.2 Review outcomes of review

3 5

OS10.3 Conduct detailed reviews into fair competition in the cluster if deemed necessary by Oil Seed Products TWG and CFTC


OS10.4 Make recommendations, via OSP TWG to key institutions to prioritise and incentivise formali-sation of businsses in the cluster


OS10.5 CFTC adopt a soft approach to applying the Competition and Fair Trade Act, not through strict enforcement but through working with players along value chain to become aware of their infringements under the Act, and the possibilities of penalties after a 6 month window


guIdIng TIMELInEPhase Guiding Date for Completion of ImplementationPhase 1 By December 2012





93

94

Annex 3 – Sugar Cane Products Strategy

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Annex 3 - ContentsChApter 1 - IntroduCtIon 97

Why prioritise this cluster ...................................................................................... 98Summary of cluster potential ................................................................................. 99Sugar cane as the primary large-scale commercial crop and an alternative smallholder crop ................................................................................................... 100Summary of approach to develop cluster ............................................................. 101Critical factors for success .................................................................................. 102Chapter 2 – Cluster Profile ................................................................................... 103Summary ................................................................................................................ 103Products ................................................................................................................. 104Markets ................................................................................................................. 104Inputs and Import Substitution ............................................................................. 107


Strengths and Opportunities ................................................................................. 109Weaknesses, Threats and Risks ............................................................................ 110

ChApter 4 – the sugAr CAne produCts strAtegy 112The strategy framework ........................................................................................ 112The strategy to develop the cluster....................................................................... 114Guiding timeline for cluster development ............................................................. 116

ChApter 5 – trAde polICy In tArget mArkets 117Product: Sugar ....................................................................................................... 117Product: Ethanol ..................................................................................................... 118Product: Confectionary (Chewing gum, caramel, syrups etc.) ............................. 118Product: Rums/Spirits ............................................................................................ 119

ChApter 6 – ImplementAtIon And resourCIng 120Implementation Mechanism .................................................................................. 120Resourcing ............................................................................................................. 121

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Annex 3

This Annex to the National Export Strategy presents Malawi’s strategy to develop its Sugar Cane Products cluster. This cluster has been identified by the National Export Strategy’s (NES) Cluster Prioritization Method (described in Annex 9) as one of the top three clusters that can drive Malawi’s exports and thus its growth in the medium to long run.

The Sugar Cane Products cluster includes value addition products, derivatives of sugar cane as well as raw and semi-raw commodities themselves. Speciality, white and brown sugars are the main products currently produced in the cluster and exported. There is scope for a significant increase in the production of other sugar cane products such as ethanol, rums, stouts, ales, high value sugar through branding and fair trade labelling, lactose, glucose, bagasse (briquettes, fuel, electricity and building boards), vinasse/filtercake (fertilizer), sugar confectionary (syrups, sweets, caramel etc), cane juice, carbon dioxide and cosmetics. Some of these products have export potential while others, such as carbon dioxide and electricity, could supply the domestic market.

As described below, the cluster development strategy is based on a holistic, concerted approach which requires collaboration and dialogue among stakeholders. This collaboration will shape policy, resource and the establishment of an enabling environment conducive to the development of the cluster. The Sugar Cane Products Strategy is presented in Chapter 4 below. This chapter also pres-ents policy recommendations at different levels: trade, investment promotion, MSME, standards, industrial, land, agriculture and others, while providing the basis for developing a sugar regulatory framework. The strategy’s success depends on the alignment of various such policies and support toward the cluster.

This chapter discusses why the sugar cane products cluster is among the top three clusters to be prioritised in the NES and summarises the approach to develop the cluster. Chapter 2 presents the cluster profile, including products, markets and inputs. In Chapter 3 the strengths, weaknesses, op-portunities and threats to the development of the cluster are presented, before the cluster strategy presented in Chapter 4. Chapter 5 presents the trade policy for target markets and Chapter 6 dis-cusses the implementation mechanism and resourcing requirements of the strategy. The detailed action plan with prioritised and sequenced actions is presented in Chapter 7.

Chapter 1 - Introduction

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2. It can allow for enough value addition for the cluster to account for roughly twenty per cent of imports in the me-dium to long-term;

3. It allows for economic spillovers through reducing busi-nesses and private operators’ costs of investing in new, higher value products; and

4. Demand is favourable and growing.

The Steering Committee established to oversee the development of the NES selected the sugar cane products cluster for prioritisa-tion. The Principal Secretary of the Ministry of Industry and Trade chaired the committee. The Steering Committee included repre-sentatives of all stakeholder groups, including government, pri-vate sector, farmer organisations, civil society and development partners. Sugar cane products were selected as one of the top three clusters for prioritisation by the Cluster Prioritisation Method and a detailed description of this methodology is presented in Annex 9 to the National Export Strategy.


1. Trade and Market Analysis, including an application of recent cutting edge development economics on the re-lationship between exports and GDP growth;

2. Stakeholder/Expert Survey and Supporting Interviews;


4. A Competitiveness Analysis: the prices of Malawian ex-ports in importing countries and production prices were analysed against those of competitors;

5. A Resource Analysis, taking into account factors such as land suitability for agricultural production; and

6. A risk assessment, including the impact on Malawi’s economic development if one cluster was prioritised over another.

Component 1 of the Cluster Prioritisation Method served as the core of the methodology. It is based on the New Structural Eco-nomics approach to development that is at the forefront of eco-nomic research into the role of industrial policy within developing

nations6. This approach highlights the importance of thinking dy-namically when selecting which products a state should support – the clusters supported should not only benefit the country in the short run, but, by lowering investment costs in higher value added production processes and easing expansion into other products, should naturally aid the country in evolving to a higher stable growth path.

There are two key criteria which have been analysed for each clus-ter under this methodology – economic proximity (spillovers) and wealth creation (value addition). Economic proximity recognises that some products are similar in production systems and skills requirements. Investment in one of these products lowers sub-sequent investment costs in these economically close products. Clusters with a high number of economically close products are likely to offer higher returns on investment by encouraging di-versification and future investment through spillover effects. Such spillovers come about through having a skill set easily applicable to a different product, or through having access to information that lowers the commercial risk of trying a new product.

Wealth creation is a historically determined value that looks at the economic makeup of the world’s economies and matches countries’ GDP per capita with their production base. The average income levels of countries that export certain products is deter-mined such that one can assess which production clusters lead to higher levels of average income within a country. Products and clusters with higher associated incomes per capita are typically those with higher value added processes associated with them.

In Table A3.1 below the number of economic linkages and their associated income levels are displayed for the sugar cane cluster and, as a comparison, for a sample of key current Malawian ex-ports such as tea and tobacco.


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Annex 3

As can be seen, the sugar cane products cluster has fairly strong spillovers and high potential for wealth creation when compared with other clusters that Malawi has or has the potential to devel-op. Through its strong linkage to the fuels sub-cluster (electricity and bio-fuel) and to the food processing and beverages sub-clus-ters, as well as through its link to the fertilizer and animal feed industries, sugar cane has high potential for value addition and for wealth creation, while also performing respectably in terms of economic linkages. The level of economic proximity with other products is not as high as in manufacturing, as can be expected, but when compared with other agricultural clusters, sugar cane performs among the better crops. Very few high value food prod-ucts do not require sugar as a key input: it is an important input for value addition in dairy, juices, wheat products and maize products while being a key input into the sugar confectionary sub-cluster.

If properly cultivated, the sugar cane cluster offers Malawi a high return relative to the number of hectares cultivated if properly developed. This rate of return is similar to tobacco’s, while of-fering the economic linkages described above that tobacco does not have. Relative to the oil seed crops and tobacco, sugar cane cultivation can only grow feasibly along the lakeshore, in the Shire Valley and in areas with high water availability and suitable soils. This provides Malawi with a complement to the oil seed products cluster, viewed through the NES as a cluster that can be promoted as the main cash crop complement to tobacco for smallholder farmers. Sugar cane cultivation can complement this as a geo-graphic specific crop that would be primarily focused on large

scale commercial farming and production, supported through outgrower schemes that provide smallholder farmers in the vicini-ty of mills with the know-how, expertise and markets necessary to improve their economic empowerment.

As with every cluster, there are risks—e.g., the large scale production of crops of sugar cane in Brazil—which does not, however, have liberalised access to key markets such as the EU. Another risk is community disruption and land disputes, although as demonstrated by the EU funded study into land allocation and dispute resolution within the sugar sector and other EU irriga-tion development programmes in Malawi conducted in May 2012, this can be addressed through proper community sensitisation, planning and preparation before land development commences. Although sugar cane can be grown under rain fed conditions as currently occurs in Dwangwa, high yielding sugar cane cultivation requires significant investment because of the need for irrigation and land preparation — which is partly why the focus has to be on commercial farming linked to outgrower schemes. It is critical for the Malawi Sugar Cane Products Strategy to take such risks and threats at the core of the strategy. This strategy includes a SWOT analysis for the cluster.

Summary of cluster potential The cluster could account for 14.8 per cent of imports (or 16.6 per cent of exports) by 2027, up from just 3.0 per cent in 2010, as presented in Table A3.2 below.


TAbLE 3.1 AnnEx 3: SugAr CAnE Clusters and Products Level of income (measured as gdP per capita) associated

to clusterLevel of economic proximity with other products


Articles of plastic $18,529 104


Coffee $2,571 19










Rice $6,909 32

Tea $2,347 16

Tobacco $2,581 59




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The cluster will only attain this target if a long-term strategy is ad-opted, as opposed to year by year piecemeal support measures. This is essential to allow for higher value products as opposed to the production and export of raw or semi-raw commodities. The success of the strategy therefore requires government, proces-sors, smallholder farmers, civil society, MSMEs and development partners’ long-term buy-in to the Sugar Cane Products Technical Working Group. Also, sugar cane must not be seen as a traditional cluster. One of the products in the cluster, sugar, is a traditional export but the rest of the cluster’s products in the cluster are not. In addition, exports of sugar alone (as opposed to sugar cane products) can increase by four times if sugar is adequately prior-itised and the investment climate for the cluster significantly im-proved, raising an additional $300 million in exports in 3-5 years.

Sugar cane as the primary large-scale commercial crop and an alternative smallhold-er cropSugar cane can be viably cultivated both as a large-scale com-mercial crop and as a smallholder crop. This is because the plot size in sugar cane cultivation does not matter. What matters is the availability and management of the land, management of the crop and the enabling environment for investment in milling capacity. The highest yields and export returns can be achieved through large-scale agriculture, which allows for high investment costs in







2001 2010 2011* 2017 2022 2027 2001 2010 2011* 2017 2022 2027 2001-2011**

2011-2017**

2017-2022

2022-2027

Total Imports $733 $2,299 $1,126* $3,248 $4,352 $7,679 100% 100% 100% 100% 100% 100% 13.5% 9.0% 6.0% 12.0%

Total Exports $475 $1,184 $1,192 $2,460 $4,067 $6,824 64.8% 51.5% 106%* 75.7% 93.4% 88.9% 9.3% 12.8% 10.6% 10.9%


Mining 0 114 123 246 369 493 0.0% 5.0% 10.9% 7.6% 8.5% 6.4% n/a 12.2% 8.4% 5.9%

Tea 35 81 81 135 206 314 4.7% 3.5% 7.2% 4.1% 4.7% 4.1% 8.8% 8.8% 8.8% 8.8%


9 61 71 169 348 716 1.2% 2.6% 6.3% 5.2% 8.0% 9.3% 23.3% 15.5% 15.5% 15.5%

Oil Seed Products

10 41 71 227 599 995 1.4% 1.8% 6.3% 7.0% 13.8% 13.0% 21.4% 21.4% 21.4% 10.7%

Sugar Cane Products

64 69 71 453 768 1136 8.7% 3.0% 6.3% 13.9% 17.6% 14.8% 1.1% 36.1% 11.1% 8.1%

Tourism (Travel)

25 70 70 147 272 503 3.5% 3.1% 6.2% 4.5% 6.2% 6.5% 10.7% 13.1% 13.1% 13.1%


17 77 26 197 502 1376 2.3% 3.4% 2.3% 6.1% 11.5% 17.9% 4.8% 39.8%*** 20.5% 22.3%

Beverages 0.2 2 0.1 11 28 64 0.0% 0.1% 0.0% 0.3% 0.6% 0.8% -3.9% 22.8% 20.8% 17.8%

Agro-Pro-cessing

6 39 12 100 295 874 0.8% 1.7% 1.1% 3.1% 6.8% 11.4% 8.2% 13.2% 24.2% 24.2%


2 22 4 39 74 169 0.3% 1.0% 0.3% 1.2% 1.7% 2.2% 6.9% 9.9% 13.9% 17.9%

Assembly 9 14 10 48 104 269 1.2% 0.6% 0.9% 1.5% 2.4% 3.5% 1.4% 12.9% 16.9% 20.9%

Other 53 85 122 186 304 520 7.3% 3.7% 10.8% 5.7% 7.0% 6.8% 8.6% 7.3% 10.3% 11.3%

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Annex 3

irrigation and land development. Large scale sugar cane cultiva-tion in Malawi has the potential to drive export growth in the next three to four years, easing Malawi’s trade deficit.

However smallholder sugar cane cultivation in plot sizes of one acre can also be viable if managed properly – as demonstrated in India and Swaziland – and with affordable access to sugar mills. The new Phata scheme which is operating as a large cooperative of 310 hectares with 370 farmers serves as a promising example of this in Malawi. Even in cases where management is not up to standard, the relative income to smallholder farmers can still be higher from sugar cane than from other cash crops. A key factor is smallholder cultivation is block farming.

Therefore the NES views the sugar cane products cluster as Mala-wi’s primary large scale commercial crop that can complement to-bacco, while also serving – in areas suitable to its cultivation – as an alternative smallholder crop for oil seeds and tobacco. Crucial-ly, the strategy ensures that large scale sugar cane cultivation is matched with large enough outgrower schemes. The objective is to maximise the catchment of smallholder farmers in sugar cane cultivation who are in viable proximity to sugar cane mills, while at the same time maximising Malawi’s returns from sugar cane.

Summary of approach to de-velop clusterThe sugar cane products cluster will be developed to meet its tar-get in the medium to long-term based on the following premises:

1. A comprehensive approach that sequentially develops the enablers necessary to encourage sufficient investment to develop the sugar cane products cluster in a way that is market-led and sustainable. Comprehensiveness is en-sured through facilitating private operators’ affordable access to the ten key enablers. Sustainable, long-term solutions will be delivered, centred around the right bal-ance of private sector and public sector roles. These ten enablers are:



c. Access to inputs, including electricity under ba-gasse can sustain the mills





h. Fair competition


j. Access to skills

2. Balancing export competitiveness with economic empow-erment of youths, women, the poor, farmers and micro, small and medium enterprises;

3. The strategy has to be appropriate to the cluster’s level of development:

a. It has to adequately account for the socio-eco-nomic reality of communities in land designated for sugar cane cultivation;

b. It has to be centered on the prioritization of a reg-ulatory framework for sugar cane cultivation;

c. It has to account for the factors necessary to drive the required levels of investment, whether for large-scale or small-scale farming

d. It must ensure proper land preparation and plan-ning prior to land development and cultivation, fol-lowing the guidelines in the EU funded Land Study of May 2012 (these guidelines need to be fully owned by Government). This includes proper civic education; and

e. It has to identify the optimal institutional structure to drive the regulatory framework and cluster strategy. It has to consider following the tobacco model and establish a Sugar Cluster Commission.

4. Balancing short-term exports with a medium to long-term strategy to allow value addition exports. The strategy is for the following drivers of export growth:

a. Short-term

• Speciality sugars, white sugars, brown sugars and value addition through im-proved branding and packaging

b. Medium-term

• Increased sugars plus sugar confection-ary (syrups, sweets etc), ethanol, fertil-izer, animal feed, bagasse products (inc fuel, electricity and building boards), rums and ales

c. Long-term

• Significant increase in sugar confectionary,

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ethanol, fertilizer, animal feed, rums and ales, bagasse products and cosmetics

5. Balancing regional exports, particularly to non-sugar producers in SADC, Comesa and EAC with exports to ex-tra-African markets (which are Malawi’s mainstay and will remain so for a number of years), and benefiting from Ma-lawi’s geographical access to fast growing neighbouring economies for sugar cane high value products. Viewing domestic markets as equal in essence to regional mar-kets;


7. Ensuring the alignment of all key stakeholders such that they prioritise these clusters in their work plans and pro-grammes. These stakeholders include the private sector, Ministries, Government support agencies, farmer organ-isations, smallholder farmers, enabler sectors (such as energy, finance and transport), civil society and develop-ment partners; and

8. Managing stakeholders’ expectations so that sustainable market-led cluster development is not undermined by ex-cessive expectations of short-term gains.


• Market-led development, with appropriate public sector measures to address market failures;

• An effective stakeholder implementation and represen-tation driving body;

• Alignment and coordination between private operators, government, smallholder farmers;

• Appropriate support by development partners with the establishment of local enablers for the cluster;

• Pooled resources to sequentially target obstacles to cluster development; and

• The development of an appropriate institutional frame-work to develop the cluster to meet its long-term po-tential.

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SummaryThe Sugar Cane Products cluster includes a range of products based on sugar cane. It is not only about sugar. It includes products such as gin and rum, sugar confectionary, ethanol, ,molasses, animal feed, fertilizer and electricity. Illovo, at present Malawi’s sole sugar producer, has seventeen high value sugar-based products manufactured in South Africa. In addition, sugar itself is not mere-ly a consumable good by households. It is also a major input for the beverages and agro-processing sub-clusters of the Manufacturing Cluster of the National Export Strategy.

At present, the vast majority of exports from the cluster are of sugar as a household consumable to the EU and African countries such as Kenya and Zimbabwe. In the short-term this product within the cluster will remain the key product, driving the growth of the cluster. In the medium to long-term, if properly implemented, the sugar cane products strategy has the potential to allow a number of other products to grow significantly, thus allowing for increased value addition to take place in the cluster and strengthening linkages to other sectors of the economy. Some of the other products within the cluster are exportable, such as spirits and sugar confectionary, while others, such as electricity, filter mud and vinasse, can supply the domestic market and substitute imports. Vinasse, the downstream product from ethanol production, is very high in potassium so coupled with other components, could serve as a domestically produced fertilizer for maize, tobacco and other crops in Malawi: the Farm Inputs Subsidy Programme (FISP) currently imports potassium.

The key export market for milled sugar will remain the European Union in the next five to ten years. In 2011, 78 per cent of Malawi’s $61 million worth of sugar exports were to the EU, while twenty per cent were to African countries7. Through the Everything But Arms agreement that the EU has with all Least Developed Countries, Malawi has tariff free, quota free access to the EU market. The major world supplier and competitor, Brazil, does not. Therefore the main restraint for Malawi is not market access, but is its capacity to produce. Africa will also serve as an important growth market for sugar, though the focus has to be on countries that are not investing in sugar production or that will maintain a high import bill for sugar, such as the Democratic Republic of Congo, Rwanda, Kenya and South Sudan. Countries such as Mozambique, Tanzania, Zambia and Zimbabwe are investing in sugar cane production and, like Malawi, will become net exporters of sugar but Africa as a whole has a trade deficit in sugar of approximately seven million tonnes.

7 According to trademap.org, there were $28m of sugar exports to Zimbabwe in 2010.


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Malawi’s ability to compete with its neighbours—and with Bra-zil—will depend on its ability to significantly increase sugar pro-duction and reduce its cost of transportation: Malawi is one of the most competitive countries in which to produce sugar, although a lack of investment in milling, cultivation capacity and transporta-tion has significantly limited the cluster’s ability to meet its poten-tial. For example, Illovo calculate that if the company is allowed to invest $300m in sugar production in Malawi, it could generate between $300m to $400m in sugar annually within three to five years. This represents between 26 per cent and 35 per cent of Malawi’s total exports in 2011 The vast majority of the new pro-duction would be exported because only a small percentage is required to satisfy the domestic market—which stands at around $140 million per year. Other sugar producers, both large foreign companies and smaller domestic companies – such as Limpha-sa Sugar Corporation and Ntalimanja Sugar Corporation – are also interested in investing in sugar production and milling, but Malawi’s ability to expand its production centres on proper pro-duction of high quality products to meet market demand, land management, smallholder participation and empowerment mech-anisms and community development: these are areas which have not been invested in enough, and as a result Malawi’s is currently struggling to reach its potential in sugar, and hence in the sugar cluster.

Malawi also has to differentiate its sugar product through invest-ing in speciality sugars, together with brown and white sugar, while also adding value through packaging, branding and the use of favourable labelling, such as fair trade and LDC labelling.

In terms of higher value products based on sugar cane, the key target markets are neighbouring and regional markets, although for some products such as spirits, markets further afield can also be sought. Malawi’s capacity to target such markets will depend on the extent to which the cluster can speedily but appropriately develop productive capacity while investing to produce a range of products based on sugar cane. Packaging, branding and proper targeting of markets in products such as spirits and sugar con-fectionary are essential to secure and build market share while taking advantage of growth markets.

In addition, certain products in the cluster have the potential to allow smallholder farmer organisations and micro, small and me-dium enterprises (MSMEs) to play a larger part in the cluster. Investment in small juice extraction plants, for example, would allow sugar cane to be milled for cane juice, making cane culti-vation further from a mill more feasible. In addition, if adequately supported, MSMEs have the scope to invest in downstream sugar cane products such as sugar confectionary.

ProductsThe sugar cane products cluster includes the following products:

• Sucrose

– Sugar

• Speciality, brown, white

• High value sugar through branding (fair trade, LDC) & packaging (in-cluding packing at source which is easier than exporting bulk sugar)

• Lactose, glucose, iron supplement

– Bagasse/fibre (briquettes for fuel, electricity, building boards)

• Vinasse/filtercake (fertilizer)

• Molasses (animal feed, ethanol)

• Rum, stout, ale and spirits

• Sugar Confectionary

– Syrups

– Caramel, Sweets, Chewing Gum, Marshmal-lows, Sweeteners, Jams etc

• Cane Juice

• Carbon dioxide (in demand by Carlsberg)

• Cosmetics (skin treatment)

Sugar is also a major input into the agro-processing sub-cluster and the beverages sub-cluster within the Manufacturing Cluster of the National Export Strategy. The strategy for these sub-clusters is presented in Annex 4 of the National Export Strategy.

Markets As indicated in the summary, the key markets are the EU and the Great Lakes region for sugar. Table A3.3 below presents the po-tential for other products in the short-run and the long-run. It also presents existing markets and options for new markets.

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SugAr CAnE ProduCTS STrATEgy TArgET ProduCTS And MArkETSProducts Short Run Poten-

tial (0-5 years) (high, medium, some, little)

Long run Poten-tial (10 years) (high, medium, some, little)

Current main markets > $1 million

$100,000 < Other current markets < $1 million

Options for new markets

Sugar: Speciality, brown, white High High Spain, Belgium, United Kingdom, Kenya, Romania, USA, Sweden, Italy, Finland

Rwanda, Uganda, Tanzania, Portugal, Netherlands, Greece, Canada

All European markets are accessible under EBA, most African markets are also realistic (mostly Great Lakes countries; DRC, Sudan, Kenya etc) - the only true constraint is production.

High value sugar through brand-ing (fair trade, LDC) & packaging

Medium High - - All European markets are accessible under EBA

Lactose, glucose, syrup, caramel Low Medium - - South Africa, Kenya

Bagasse/fibre (fuel, electricity) Low Domestic - - South Africa

Vinasse/filtercake (fertilizer) Domestic Domestic - -

Animal feed Low Medium - - South Africa, Uganda, Zimbabwe, Mozam-bique

Ethanol Medium High Uganda Tanzania, Zambia

Rum, stout, ale and spirits Medium Medium Mozambique Tanzania South Africa, Uganda, Sudan, Kenya, Mozambique

Sugar Confectionary (Syrup, Caramel, Sweets, Chewing Gum, Marshmallows, Sweeteners, Jams etc)

Medium High Zambia, South Africa, Kenya

Zimbabwe, Tanzania, Sudan, Mozambique, Uganda, DRC, Rwanda

Cane Juice Medium Medium - Zambia Zimbabwe, Tanzania, South Africa

Carbon dioxide Domestic (in demand by Carlsberg)

Domestic Tazania, Uganda, Zambia, South Africa

Cosmetics (skin treatment) Low Medium - Tanzania, South Africa, Mozambique, Zambia

Zimbabwe

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In Table A3.4 below export data on products within the cluster is presented. The table indicates existing markets, the largest markets and key competitors.

MALAwI’S ExPorTS of SugAr CAnE In 2011Import-ers

Export-ed value 2010 (uSd million)


Share in Mala-wi’s exports of each product, 2011


Exported growth in quantity between 2007-2011 (p.a.)



Total import growth in value be-tween 2007-2011 (p.a.)

Tariff (esti-mat-ed) faced by Mala-wi

Main exporters into Mala-wi’s markets, 2011. Data for 2010 if market with * (% market share in brackets)

Largest world markets

World’s main exporters (share of world exports in 2011 in brackets)

Raw Sugar CaneTotal 69.0 61.0 100% -1% -6% 100% 26% 0% EU,

USA, Russia, China

Brazil (67%), Thailand (12%)

Spain 5.1 13.1 21% 42% 56% 649 3% 123% 0% France (47%), Portugal (21%)*

Bel-gium

6.9 11.0 18% 30% 35% 25 0% 1% 0% France (41%), Germany (37%)*

UK 10.0 8.4 14% -2% 1% 581.4 3% -11% 0% France (19%), Mauritius (16%)*

Kenya 0.2 7.7 13% 0% 0% 21 0% 19% 0% Madagascar (47%), Malawi (37%)

Roma-nia

0.0 5.8 10% 0% 0% 280 1% 23% 0% Brazil (82%), Bulgaria (5%)

USA 3.5 4.1 7% 4% -6% 1716 8% 25% 20% Mexico (22%), Brazil (17%)

Sweden 0.0 3.5 6% 31% 33% 19.5 0% 63% 0% Mozambique (54%), Malawi (20%)

Italy 1.2 3.3 5% 32% 45% 204 1% 55% 0% Cuba (22%), Swaziland (20%)

Finland 1.0 1.2 2% 2% 6% 95 1% 5% 0% Brazil (79%), Aruba (10%)

Rwan-da

0.1 0.9 1% 12% 9% 26 0% 20% 0% Uganda (39%), Zambia (28%)

Uganda 0.0 0.4 1% -18% -28% 19.67 0% 2% 14% Thailand (40%), Inda (28%)

Tanza-nia

0.0 0.4 1% 18% 4% 3.8 0% 7% 68% UAE (61%), India (29%)

Zimba-bwe

28.0 14.47* No 2011 data for Zimba-bwe/Mala-wi trade

84* S. Africa (40%), Mozambique (36%)*

Note: France’s main sources of sugar cane in 2011 was Brazil (61%) followed by Mauritius (13%)

Ethyl Alcohol (ethanol)Total 3.7 1.9 100% -0.11 100 8 EU,

USA, Brazil

EU, USA, Brazil

Uganda 1.0 1.4 76% 0.08 25 0.3 28 5 Kenya (68%), Swaziland (12%) *

Tanza-nia

0.8 0.4 21% -0.09 -0.18 16.4 0.2 37 25 South Africa (53%), Kenya (19%) *

Zambia 0.03 0.1 3% 0.34 0.72 7.7 0.1 79 0 South Africa (73%), Zimbabwe (10%)

Mo-zam-bique

0.9 0.0 0% 3.8* South Africa (71%), Swaziland (28%) *

DRC 0.8 0.0 0% 1.25* South Africa (42%), Kenya (28%) *

Sugar ConfectionaryTotal 0.01 0.001 100% EU, USA EU,

China

Ireland 0.006 600% 111.6

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Inputs and Import SubstitutionIn this section we present the list of products and services that serve as key segments of the value chain for various products in the sugar cane products cluster. The list of critical inputs for sugar cane products is divided into two: those that are or have the potential to be supplied locally and those that are critical imported inputs necessary for Malawi to be able to produce high value products within the cluster. The degree of potential for import substitution is detailed below.

The most important input for sugar cane production is human capacity in smallholder farmer organisation; land preparation and devel-opment; community development; agricultural, irrigation and processing expertise. In addition, agricultural inputs such as fertilizers, herbicides and machinery are essential.

For higher value products within the sugar cane products cluster, such as sugar confectionary and electricity generation, the key inputs are: business management capacity, together with processing machinery and equipment; and machinery consumables such as oils and parts. Fuel is also critical.

Source: www.trademap.org

MALAwI’S ExPorTS of SugAr CAnE In 2011Import-ers



Share in Mala-wi’s exports of each product, 2011


Exported growth in quantity between 2007-2011 (p.a.)



Total import growth in value be-tween 2007-2011 (p.a.)

Tariff (esti-mat-ed) faced by Mala-wi

Main exporters into Mala-wi’s markets, 2011. Data for 2010 if market with * (% market share in brackets)


World’s main exporters (share of world exports in 2011 in brackets)

South Africa

0.005 0.004 400% 42.2

Zimba-bwe

0.006 10.1*

Gin from ethyl spiritTotal 1.69 USA,

SpainUK (77%), Germany (6%)

Mo-zam-bique

1.31 1.31

Tanza-nia

0.33 0.9

South Africa

0.03 2.48

Zimba-bwe

0.14 0.169*

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Critical inputs that are available domestically are:

• Lime for milling, need to improve capacity/organisation/standards for lime for milling

• Potential for vinasse for fertilizer (potassium, nitrogen) needs strategy and investment

• Professional staff for:

– management of trusts and outgrower companies

– engineers

– land allocation

– community development

– business management, including for micro and small businesses

• Electricity

Critical inputs into the sugar cane products cluster that need to be imported are (bracketed is the medium run import substitution potential):

• Milling and processing equipment (low)

• Irrigation equipment (low)

• Agricultural inputs (fertilizer, herbicides)

• Machinery such as tractors and rigs (some through the assembly sub-cluster of the Manufacturing cluster)

• Machinery consumables

• Professional staff in the short-term for:

– Management of trusts

– Engineers

– Marketing

– Sugar cluster expertise

– Economists

• Fuel

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Strengths and Opportunities• The rapid development of Brazil and other emerging economies such as Thailand and

India will eventually put upward pressure on labour costs, presenting an opportunity for African sugar cane production in ten years’ time. It is essential for Malawi to invest in its capacity now to be a strong force when such favourable conditions arise relative to cur-rent emerging economies. This requires preparation and investment from now.

• Global and African demand for sugar cane products is large and growing. Malawi can benefit hugely if it can place itself among the top twenty largest producers in the world. It has the potential to do this. The annual growth in sugar imports by SADC was twenty per cent between 2004/06 and 2008/10, while that of COMESA non-SADC countries was 54 per cent. The annual growth of tonnage imported by Malawi’s current markets between 2006 and 2010 was nine per cent. Africa’s trade deficit in sugar is a large opportunity.

• With the liberalisation of the EU market and the provision of the ‘Everything But Arms’ deal for Least Developed Countries, Malawi, unlike competitors such as Brazil and Thai-land, has unlimited access to the EU market.

• Malawi is competitive in the production of sugar cane: Malawi’s agroecology is favourable to the scaled production of sugar in areas such as the Shire Valley & the lakeshore. There is scope for expansion. Hectarage requirements are low relative to value added generat-ed. Malawi’s production prices – at factory gate – are lower than those of 90 per cent of the other African exporters.

• Malawi already has expertise and knowledge in the cluster: Illovo Malawi has a good model that accounts for 40 per cent of all Illovo’s revenues. It has successfully interlinked good agriculture and good milling. This can be built upon. A key opportunity is pro-active investment promotion. While facilitating domestic and MSME investment in the cluster is fundamental, it is also important to balance this with facilitation for large international companies that provide market access and feasibility on a large scale that Malawi needs to fund its welfare and import bill. A number of companies such as Illovo, Tate & Lyle, EID Parry and Tongaart Hullets have all expressed an interest in sugar cane production in Malawi.


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• In addition to sugar, a number of the products within the cluster, such as rum, sugar confectionary and ethanol, are already produced in Malawi, providing a base from which to further develop the cluster.

• There is a strong basis for stakeholder collaboration be-cause stakeholders generally understand that the ability of the cluster to reach its potential requires pro-active stakeholder dialogue and coordination. There is a large demand from stakeholders for a regulatory framework and dialogue body.

• There are existing schemes and approaches, such as the Phata Scheme in Malawi, the Kilombero Scheme in Tanzania, and the Swaziland and Indian approaches to smallholder sugar cane farming, to serve as role models for developing smallholder farming in a way that reduc-es the risk of land disputes and that allows for economic empowerment and community development. There is therefore scope and material for learning.

• Reductions in the cost of transportation to African markets and to sea ports represent an opportunity to enhance Malawi’s price competitiveness and to bridge the current gap between its favourable production costs and its less favourable end-market prices.

• Investing in value addition, fair trade branding and packaging, and taking advantage of Malawi’s LDC status to gain market access.

Weaknesses, Threats and Risks• The greatest risk to Malawi’s Sugar Cane Products Clus-

ter is if the EU allows quota free, duty free access to its market by non-LDC sugar producers. Realistically this is unlikely to be removed in the next five to ten years, but it is essential for Malawi to prioritise this in its trade policy. Similarly the liberalisation of the sugar beet market is a threat.

• The second greatest risk to the cluster is if government fails to provide adequate and appropriate support for the cluster. In turn this requires genuine prioritisation of the cluster by the government through a proper facilita-tion and regulatory framework and a proper institution-al structure on the lines of the tobacco sector. Adequate and appropriate government is fundamental to ensure that the cluster develops to its potential in a way that allows for smallholder farmer, community and MSME empowerment. A key part of this is developing a regu-latory framework—and supportive institutional capac-ity to ensure implementation—that allocates suffi-cient land to the cluster, ensures proper land management to avoid current disputes and en-courage smallholder investment in sugar cane,

a fair system for smallholder and community participation and empowerment, crop disease control and economic competitiveness.

• Malawi has been on the back foot in the cluster because of a lack of prioritisation by the government and has recently lost out to its neighbours and competitors: Mozambique is investing in a large mill and agriculture, Zambia has attracted Illovo investment originally target-ed for Malawi and Tanzania has adopted a stakeholder coordination mechanism to implement a strategy based on its Southern Agricultural Corridor of Tanzania pro-gramme. Other countries such as Sudan, Mali and Egypt are also investing in their sugar capacity; Brazil is also investing but does not have free access to the EU mar-ket. While Malawi does not have the same land availabil-ity as these countries, with proper planning and man-agement it may nonetheless increase land under sugar cane cultivation to meet the cluster’s potential in Malawi.

• Key challenges for government include ensuring that export proceeds are remitted into Malawi by sugar pro-ducers, managing existing land disputes due to poor land management for smallholder farmers in sugar cultivation and mitigating the risk of community dis-placement. These concerns act as major bottlenecks to construction, to effective stakeholder dialogue and to appropriate and adequate government support to the cluster.

• There is currently no regulatory framework for the cluster, including for cultivation. This is a major risk because pests, diseases and the cultivation of different varieties risk wiping out large amounts of crop.

• Quotas for beet sugar have been removed in the EU market, so prices will fall for raw sugar. Illovo’s response is to move to speciality sugar.

• Transportation costs are likely to remain a weakness for Malawi in the short to medium term, while preventing access to certain markets such as South Africa in the medium to long term because of the latter’s sea access to Brazil.

• Malawi is perceived as closed to investment. During a study by the EU in 2008 a number of sugar investor companies expressed this concern and that ther is little if any information available to support interest in invest-ment in the country. Tate & Lyle, EID Parry and Tongaart Hulett have all at some point expressed serious interest to invest in Malawi, yet there was no institutional capaci-ty or government interest for meeting with them.

• Similarly, Illovo was recently discouraged from investing in Malawi because of the lack of central government

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prioritisation and support, the imbalanced exchange rate in 2010/2011 and the lack of effort to build the economy’s productive base through addressing struc-tural weaknesses.

• Increasing demands by export markets on certification, exemplified by Southern Africa’s stance on Bonsucro.

• Irrigation and water usage costs are high, meaning that start up funding and farmer organisation to pool land is required, particularly for smallholder farmers. Develop-ment Partner support is therefore essential.

• Social displacement and lack of community develop-ment are factors that need to be properly taken into account and properly planned for by both smallholder and commercial cultivators. A key part of this is expe-diting the operationalisation of the Land Bill and the ap-plication of proper land guidelines for commercial and smallholder sugar cane cultivation. Land management and allocation to the cluster at the national level is fun-damental, together with appropriate extension, farmer organisation and community sensitization and develop-ment programmes.

• If vinasse enters the water system, it could present a significant environmental cost.

• Lack of milling capacity is a weakness. In Malawi, trans-port costs are such that sugar cane cultivation is only feasible within 55 kilometres of a mill. In South Africa this radius is roughly double. At present there are only two mills in Malawi (Dwangwa and Nchalo). This serves as a major constraint to agricultural expansion and hence to cluster development and farmer economic empowerment. There is a need for serious investment in milling capacity, which in turn requires a clear land allocation and management programme, supported by well planned and supported smallholder outgrower schemes.

• EU funding for sugar cane cultivation under current programmes (such as the development of Kasinthula Phase 4) is coming to an end in 2014 because this is tied to the trade deal under which Malawi is now grant-ed quota free, duty free access to the EU market. The cluster therefore needs to be organised to attract other sources of support.

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The strategy frameworkThe strategy framework is based on ensuring the provision of the ten enablers of private operators in the cluster by government or by enabling sectors. Private operators include smallholder farmers, commercial farmers, micro, small and medium enterprises, farmer organisations, women organisa-tions, youth entrepreneurs, cooperatives and large businesses.

If the sugar cane products cluster is to develop on the scale the National Export Strategy envisions, the strategy must account for all ten enablers of the cluster, in an appropriately prioritised manner. Success lies in comprehensiveness and coordination among stakeholders. The ten enablers are:


a. Investment facilitation in sugar and in the various downstream products

b. Promotion of sugar cane products in export markets, including downstream prod-ucts


d. Trade facilitation for sugar cane products, including customs clearance and trade licenses

e. Trade policy to ensure market access (tariffs and non-tariff measures) for sugar cane products

f. Transportation, including access to ports and intra-regional markets

g. Packaging



b. Addressing communication difficulties within the farmer organisations

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Annex 3

c. Availability of comprehensive industry information for interested parties

3. Access to inputs

a. Access to farm inputs, including seed cane

b. Access to land



e. Access to energy

4. Access to finance, technology and secure tenure of property for

a. Smallholder farmers, farmer organisations, wom-en’s groups and cooperatives



d. Processors


a. Smallholder Farmer Organisations


c. Micro, Small and Medium Enterprise service pro-viders

d. Youth Entrepreneur Support

e. Support by Non-Government Organisations

f. Information Technology and Professional Services

6. An efficient way for the sugar cane products clus-ter to contribute to Government revenues and meet its regulatory obligations


b. Taxation support


7. A stable and prudent macroeconomic environ-ment

a. Stable and favourable inflation rates, interest rates and public sector debt


8. Fair competition

a. At sugar market level

b. At MSME service provider level


a. Sugar Cane Products Technical Working Group as part of Trade, Industry and PSD SWAp

b. Linkages and Support for Cotton Development Trust, Legumes Development and Trade Associa-tion and Bio-fuels Association


d. Linkages to regional research and technology in-stitutions



b. Incorporation of sugarcane cultivation into the agricultural degree

c. Practical placements for students in agriculture, agronomy, agricultural engineering, mater and re-source management

These enablers cannot be provided immediately to the cluster and, since it is fundamental to provide sustainable solutions for the enablers, it is essential to:


• identify which stakeholder is best placed to provide the enabler, whether public sector or private sector—if public sector, which is the best placed institution to pro-vide it in the long-term;

• ensure external players such as development part-ners and international non-government organisations support the private sector or public sector’s long-term provision of these enablers in the long-term.

The next section sets out a road map for the provision of these enablers.

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The strategy to develop the clusterBased on this framework, the strategy to develop the sugar cane products cluster is:

• in the short-term, to develop the scale in the produc-tion and milling of sugar cane and to improve quality and ensure favourable pricing. This is fundamental for capital investment in processing.

• in the medium to long-term, on the back of investment in processing capacity, move toward scaled high value processing.

The strategy is divided into phases. Phases related to which factors should be prioritised first, and hence com-mence first. They do not imply that a phase has to be completed before another phase starts. Actions in later phases do not necessarily need to wait until a previous phase is complete, particularly if key actions in earlier phases are facing slow implementation and are not essential for the commencement of actions in a later phase. The phases are:

Phase 1: Establish an appropriate stakeholder and poli-cy maker representation and driving body and regulato-ry framework for sugar cane production

This will be the Sugar Cane Products TWG under the Trade, Indus-try and PSD Sector Wide Approach. Private operators in the clus-ter will register with the TWG. It will be based on the NES Sub-Com-mittee for Sugar Cane Products that operated in the development phase of the NES. The registry of members of the cluster will be used to help with access to finance, tax support etc. Resourcing and modalities for support for this body are discussed in Chapter 5. Included in this action is the top priority for the cluster: devel-oping a regulatory framework for sugar cane production in a way that supports rather than hinders the development of the cluster. See Matrix of Actions in Chapter 7, Action SC2.1.

Phase 2: Access to Land Programme, Sugar Cane Com-mission, Explicit Sugar Cane Prioritisation by Govern-ment agencies

The second top priority for the cluster, which is tied to the regula-tory framework, is conducting a land study based on land suitabil-ity and socio-economic data in order to know where sugar cane should be promoted and facilitated for both smallholder and com-mercial farmers. This will be in the form of an Access to Land

Programme for sugar cane agriculture which will include the operationalisation of land reforms and ensuring secure tenure for commercial farming. It will include options for the transformation of tobacco estates to sugar production. Land development is to be based on the guiding principles presented in the EU funded Land Study of September 2012. The land study will include short, medium and long term prospects and include land suitability map-ping to inform smallholder extension and commercial farming. The programme will be tied to an extension programme for sugar cane (see Phase 3, SC7.1) and to the development of farmer organi-sations. It also includes sugar cane irrigation programmes. Refer to Actions SC5.1 and SC5.2 in Chapter 7.

A critical action in Phase 2 will be the establishment of the Sugar Cane Commission. This body, modelled to a degree on the Tobacco Control Commission, will be responsible for the overall regulation and facilitation of the sugar cane products cluster. Its mandate will be to ensure that the cluster grows to meet its poten-tial as detailed this strategy, and that this strategy is implemented. Its form, governance, legal constitution, mandate and structure will emerge from the Sugar Cane Products TWG established under Phase 1. Refer to Action SC2.1.13 in Chapter 7.

In addition, in this phase it will set Sugar Cane as an explicit priority for stakeholders including key agencies such as:








• Ministry of Industry and Trade, inc Department of Co-operatives


• Ministry of Agriculture and Food Security inc ASWAp, De-partments of Research, Extension Services and Human Resources

• Ministry of Water Development and Irrigation





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• TEVETA

• MIRTDC

• Civil Society

• Bunda College (and similar institutes)

• Malawi Confederation of Chambers of Commerce and Industry


• Investor Facilitation Programme prioritising milling capacity in the short-term, linked to Access to Land Programme and Sugar Cane Extension Programme. Include pro-active targeting of new international sug-ar processors and of Associated British Food (owners of Illovo) for $300m Malawi expansion, which ensures proper smallholder inclusion. Refer to Action SC3.1 in Chapter 7

• Access to Irrigation and Cultivation Infrastructure Pro-gramme, following end of Access to Land Programme. Refer to Action SC5.2 in Chapter 7.

• National Sugar Cane Extension Programme, including smallholder business understanding and training to bet-ter understand the industry. Refer to Actions SC7.1 to SC7.3 in Chapter 7.

• Access to Energy Plan (including pricing strategy for processors to supply electricity grid). Refer to Actions SC5.3 in Chapter 7

• Plan for meeting standards in targeted markets, e.g. Vitamin A and increased demand for certification by or-ganisations such as Bonsucro. Refer to Action SC3.4 in Chapter 7

• Banks to offer favourable lending windows for Sugar Cane Products TWG registered members. Refer to Ac-tions SC6.1 to SC6.4 in Chapter 7

• Micro-finance agencies to prioritise sugar cane and of-fer saving schemes to sugar cane small holder farmers on large scale. Refer to Action SC6.5 in Chapter 7

• Export Development Fund guarantees for investors in sugar cane processors supported by Innovation Chal-lenge Funds/Matching Grant Programmes. Refer to Actions SC6.7 and SC6.8 in Chapter 7

• Transport Plan, including fair competition in domestic market, Transport Sector Implementation Plan prioriti-sation of sugar cane cultivation area rural feeder roads and linking to target African markets (Lake Tanganyika, Lusaka, Tete, Harare) and ports (Nacala). Refer to Ac-tion SC3.5 in Chapter 7


• MSME sugar cane support plan, including operationali-sation for SMEDI. Refer to Action SC7.4 in Chapter 7

• Sugar Cane Products Skills Plan. Refer to actions SC1.1 to SC1.4 in Chapter 7

• Access to research. Refer to action SC5.5 in Chapter 7

• Tax efficiency and support. Refer to action SC8.1 in Chapter 7

• Trade Policy. Refer to action SC3.8


• License and Customs fast-tracking through the Trade Logistics Technical Committee. Refer to Action SC3.3 in Chapter 7

• Fair competition reviews in transportation and sugar cane stakeholders. Refer to Action SC10.1 to SC10.6

• Branding and Marketing Programme. Refer to Action SC3.2

• Access to fertilizers and herbicides. Refer to Action SC5.4

• Outreach programme to regulators of sugar cane clus-ter members. Refer to Action SC8.2

• Use of mobile phone technology in extension services. Refer to Action SC4.1 and SC4.2

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Guiding timeline for cluster developmentThe guiding timeline is set in Table A3.5 below. These dates are guidelines and their purpose is to give a sense of the sequenced, gradual development of the cluster in a way that it can meet its potential of fifteen per cent of imports in 2027 (up from three per cent in 2010) through the transition from the export of raw or semi-raw commodities to higher value product exports.








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Product: SugarCurrent Markets: EU, Kenya, USA, Southern African Customs Union

New regional markets: Uganda, Tanzania, Rwanda, Zimbabwe, DRC, Mozambique, Burundi

Long run target international markets: EU

EU, Kenya and USA: The world sugar market is a large and growing market, with sugar exports totalling close to $18 trillion in 2011, exhibiting 25 per cent growth per annum since 2007. This size gives the sugar market a degree of resilience to shocks. The EU is Malawi’s primary export market importing over $40 million of raw sugar cane from Malawi in 2011. Malawi has this access granted through the ‘Everything But Arms’ (EBA) deal with the EU, which gives Malawi tariff free access to the EU for sugar, something that is not extended to major sugar exporters such as Brazil. Malawi’s key export constraint to this market is the level of output that can be produced – policy to increase production levels is discussed below. The USA is a large sugar importer, but imposes tariff rate quota’s (TRQ’s) on imports of sugar, Malawi trade policy should aim to either increase the quota allowed for sugar, or get the tariff removed completely under AGOA, thus gaining access to this market. Kenya is a large market which Malawi is increasingly exporting sugar to, improving exports of sugar to Kenya should be part of a general strategy to improve exports to the Great Lakes region, which is discussed below.

Uganda, Tanzania, Rwanda: Uganda, Tanzania and Rwanda together represent an import market for sugar cane of roughly $50 million, once Kenya is included the size of this market goes above $70 million, larger than Malawi’s total exports of sugar in 2011. This clearly represents the sig-nificance of the sugar market in the Great Lakes region of Africa. As this group of markets only currently represents less than 15 per cent of Malawi’s current sugar exports it offers a good opportunity to diversify. To penetrate these markets, Malawi should focus on reducing tariffs (Ugan-da and Tanzania, both impose high tariffs on Malawian sugar exports), increasing production by promoting investment in Malawi’s sugar production (this is a role for MITC) and on bringing down transport and border crossing costs by liberalising trade in transport services and by simplifying border management systems.

Zambia, Zimbabwe: Zambia and Zimbabwe are both large producers of sugar, policy should focus on encouraging competition with these neighbours as that will promote more efficient production in Malawi. A key non-tariff barrier which should aim to be removed is the requirement of Zambia

Chapter 5 – Trade Policy in Target Markets

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that all sugar imports are fortified with vitamin A, Malawi should similarly resist imposing similar restrictions to this.

EU (long run): The biggest threat to Malawi’s sugar exports is its over reliance on market access to the EU under EBA. Its objective must be to continually improve the efficiency of its production, while increasing its trading links with partners in the EU to the extent that it could competitively access the European market. It needs to account for the impact of beet sugar producers when this market is liberalised. Trade policy in this context should focus on the reliability of supply – Malawi must resist the urge to put in place export bans so that its reputation is not damaged and it can become known as a consistently reliable supplier.

Diversifying production into Fair Trade sugar would also create a branding advantage which should be able to increase profitability and be better at maintaining market share due to consumer loyal-ty and provide additional value at community level.

Product: EthanolCurrent Markets: Uganda

New regional markets: Tanzania, Zambia, Mozambique

Long run target international markets: EU

Uganda: Malawi has a consistent history of ethanol exports to Uganda dating back from at least 2006, with over $1.5 million of exports to Uganda per year. Malawi only represents around 5 per cent of Uganda’s import market of ethanol though, with Uganda’s total imports around $25 million. Malawi should aim at removing the 5 per cent tariff barrier that it faces into this market through the tripartite negotiations. Swaziland has double the exports into this market than Malawi, despite facing a 20 per cent tariff; Malawi should be able to take this market share.

Tanzania, Zambia and Mozambique: These three markets have a total size of $29 million combined and Malawi has an export histo-ry to all of these countries, however it has not managed to export more than $1 million to any of these markets individually in the past five years. Malawi should see these markets as immediate opportunities to export to and scale its production. No non-tariff barriers are in place, Tanzania has a large tariff barrier of 25 per cent which Malawi should negotiate the removal of. The key com-petitor in these markets is South Africa, suggesting that transport costs are not the key prohibitive factor – policy should focus on encouraging investment and working with current producers to scale up production.

EU: The EU represents a $3.8 trillion dollar market, which applies a 19 per cent external tariff. Malawi is exempt from this tariff un-

der EBA, as such once Malawi develops its production levels to a sufficient level, it should seek to export to the EU using this competitive advantage against other suppliers such as the US and Brazil. Malawi needs to focus on building up production through regional exports before it attempts to penetrate this market, en-couraging increased investment through improving the enabling environment (for example by investing in energy and infrastruc-ture in Malawi) would be the best way to facilitate this. In addition, it also needs to focus on quality and sustainable management systems and certification to meet EU criteria.

Product: Confectionary (Chew-ing gum, caramel, syrups etc.)Current Markets: None

New regional markets: Zimbabwe, Uganda, Mozambique, Tan-zania

Long run target international markets: United Kingdom

Zimbabwe, Uganda, Mozambique, Tanzania: All of these markets imported over $10 million of sugar confectionary in 2011 and Tanzania’s and Zimbabwe’s markets have been the fastest grow-ing in the region over the past five years growing at over 50 per cent per annum. Their close proximity to Malawi, relatively high demand for the region and membership of multilateral trade agreements to which Malawi is also signed on, mean that they represent ideal trading partners for Malawi in this market. Tariff barriers are the key constraint to trade which Malawian policy should aim to remove: Uganda (5 per cent), Mozambique (10 per cent) and Tanzania (25 per cent) all place tariffs on confectionary imports from Malawi. Zimbabwe places no barriers on imports from Malawi, this coupled with the fact that its second biggest supplier – South Africa – faces a 40 per cent tariff, means that the Zimbabwean market is most likely the easiest to penetrate.

United Kingdom: While the economics of sugar confectionary makes it more profitable to export raw commodities to a region-al processor to reduce transport costs in the finalised product, there is some opportunity to penetrate foreign markets as a niche product. Fairtrade branding can be sort for artificial honey, caramels and syrups which are all types of sugar confectionary. The United Kingdom, due to Malawi’s historical linkages with this country, is most likely the easiest market to penetrate with such goods. Policy should focus on linking processors with the Fair-trade association and with MITC helping processors link up with Fairtrade retailers in the UK.

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Product: Rums/SpiritsCurrent Markets: Mozambique

New regional markets: Tanzania, Zimbabwe, Zambia

Long run target international markets: All

Mozambique: Malawi has a stable market share of the Mozambi-can market of 50 per cent, a level that it has maintained for sev-eral years. There is little need for direct policy assistance on this market, except for general trade improving policies – harmonising transport regulations with Mozambique, constructing a one stop border post etc.

Tanzania, Zimbabwe, Zambia: Tanzania ($12 million), Zimbabwe ($5 million) and Zambia ($1.5 million) present reasonably sized markets for Malawi to extend its exports to. Tanzania has high levels of protection at 25 per cent and a large diversification of suppliers. Policy should focus on lowering this barrier. Zimbabwe

and Zambia both offer no barrier to trade in spirits with Malawi, however they both import significantly from countries that do face tariffs (South Africa 40 per cent in Zimbabwe, UAE 25 per cent in Zambia), and this presents a competitive advantage for Malawi. Policy should focus on making producers aware of this advantage and linking them with retailers in these countries, this should be the role of MITC.

International: To penetrate international spirit markets, Malawi must focus on building an international brand for its products; this will take a long time and must only be seen as a long run ob-jective. Processors will need to develop experience exporting to regional markets first, building their capacity. Policy focus should focus on improving the Malawi Bureau of Standards, supporting the packaging industry and easing immigration for those with skills in the spirit industry.

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Implementation MechanismAt the core of the National Export Strategy is the implementation mechanism that is necessary to ensure its successful implementation. This is centred on the Trade, Industry and PSD Sector Wide Approach (SWAp). This implementation mechanism is presented in Chapter 4 of the Main Document of the National Export Strategy and is presented in further detail in Annex 1 of the National Export Strategy.

The Sector Working Group (SWG) spearheads the SWAp and includes representatives of the key stakeholder groups such as government, civil society, private sector and development partners. The SWG will be supported by seven Technical Working Groups (TWGs) reporting back to it. One of these is the Sugar Cane Products TWG. This TWG will be formed through the transition of the Sugar Cane Products Sub-Committee that ran during the development phase of the NES into a TWG under the Trade, Industry and PSD SWAp.

The Sugar Cane Products TWG will act as the stakeholder-wide representation body that will ulti-mately own and drive the development of the cluster through this strategy. The TWG:

• Recognises that all stakeholders have a role to play in ensuring the cluster’s success and assisting those stakeholders to secure the capacity needed to play that role;

• Ensures the alignment and coordination of all key stakeholders such that they prioritise these clusters in their work plans and programmes. Such stakeholders include the private sector; Ministries (including the Ministry of Finance and Ministry of Economic Develop-ment and Planning); Government support agencies such as MBS, MITC and SMEDI; farmer organisations (e.g. trusts); smallholder farmer associations; enabler sectors (such as energy, finance and transport); civil society; and development partners;

• Manages stakeholder expectations so that sustainable market-led cluster development is not undermined by excessive expectations of short-term gains;

• Ensures implementation of the prioritised actions necessary to ensure the sequenced, sustainable development of the cluster;

• Provides resource mobilisation, resource allocation and the provision of adequate man-


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Annex 3

agement attention to implementation bottlenecks (which inevitably arise in any implementation process);


• Will be co-chaired by passionate, effective leaders from the public and private sectors, who will be elected by the members of the TWGs. It will be supported by the SWAp Dedicated Secretariat that is being established by the Ministry of Industry and Trade as detailed in Chapter 4 of the main document of the NES and in Annex 1. The TWGs will report through the co-chairs and the SWAp Dedicated Secretariat to the Sector Working Group.

Through the TWG, the Sugar Cane Products Strategy will be ex-plicitly prioritised for facilitation by critical public sector support agencies in their strategic plans, budgets and work programmes. Such agencies include:





















r. Universities


ResourcingResourcing for the development of the cluster will support the Sugar Cane Products TWG, recognising this as the driver of the cluster. Resourcing will be at two levels:

1. Resourcing for the Sugar Cane Products TWG.

a. This will occur through the Trade, Industry and PSD Sector Wide Approach. The SWAp dedicated secretariat will also serve as secre-tariat for the Sugar Cane Products TWG.

b. Dedicated support for the Sugar Cane Prod-ucts TWG may be through a lead development partner for each cluster or through a coordi-nated structure emerging through the respec-tive TWG. Partners would help oversee the ho-listic development of the cluster. They would fund a long-term Technical Assistant (TA) to be dedicated to the TWG and to the implemen-tation of this strategy. The TA will work with the dedicated secretariat and support the secretariat’s capacity development on cluster development technique as per this strategy.


a. Funding would come from all stakeholders depending on the nature of the action. The TWGs will determine the optimal owner of the action and the funder. Implementers will either be private sector or the local public sector. Development partners will support actions as required, either through pooled or individual-ly kept budgets allocated to the development of the cluster as required by the action plan and the TWG. Funding should be catalytic and unlocking (eg a key piece of research or analysis, a strategic piece of infrastructure), and dependence on funding should be min-imal. Flexibility of use of funds for the TWG and for development partners is important. Trusts for pooling of funds could be consid-

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ered. The ideal modality for funding of the cluster strategies and TWG actions will need to emerge through the TWG. Funding will be based on a holistic approach to develop the cluster. Typically a development partner sup-port package would equate to approximately $40 million for five years although this will need to be revised on a programme of works to emerge from the TWG. Of this, $30 million is the benchmark figure for irrigation infra-structure investment. See Annex 1 for the estimation of this value.

b. The allocation of sufficient government man-agement time and funding for the cluster is essential to develop permanent enablers for the cluster. Funding depends on the nature of the actions set out in Chapter 7 of below. Government management time and funding

will develop capacity for key institutions to ad-dress bottlenecks to the cluster. This will take the form of operationalising the land reform package, community and land development, MITC, SMEDI, the sugar cane extension pro-gramme, seed research etc, all geared to sugar cane. Government commitment to fund-ing such key actions is fundamental to secure additional funding by development partners and investment by the banks and the private sector.

c. Private sector investment will complete the resourcing arrangement, with support from the financial sector, though the degree of such investment will depend on government’s resourcing commitment to the Sugar Cane Products Strategy.

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This chapter presents the action matrix for Sugar Cane Products Strategy. It provides the priority level of the action, and informs of the phase of cluster development in which the actions fall. Priority is provided on a score from 1 to 6, with 6 being the highest priority. There are 5 phases: Phase 1 is the first phase. It is divided into ten sections, in keeping with the holistic framework to develop the cluster. These are:

1. SC1: Access to Skills

2. SC2: Conducive, Operationalised Framework & Support Institutions

3. SC3: Access to Markets

4. SC4: Access to Information

5. SC5: Access to Inputs

6. SC6: Access to Finance and Secure Tenure of Property

7. SC7: Access to Business Development Services

8. SC8: Ease of Meeting Tax and Regulatory Obligations

9. SC9: Stable, Prudent and Conducive Macroeconomy

10. SC10:Fair Competition

Actions in this strategy are coded with SC, which refers to sugar cane products.


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SugAr CAnE ProduCTS STrATEgy

1. ACCESS To SkILLSCode Category and

ActivitySub-Actions Priority

Level (highest is 6)

Phase Lead Im-plementing Agency

Critical to Sucessful Implementation


SC1.1 Apply the ILo’s Skills for Trade and Economic diversification tool to the cluster to develop a critical skills requirement list for the cluster (type of skills x realistic desirable volumes), including:

4 4 Sugar Cane Products TWG

TEVETA, MoEST, MoL, processors, smallholder asso-ciations, Dept of Immigration

SC1.1.1 Refined Sugar 4 4

SC1.1.2 Vinasse and fertilizers 4 4

SC1.1.3 Juice extraction 4 4

SC1.1.4 Milling and Sub-Milling 4 4

SC1.1.5 Syrup production and other sugar confectionary 4 4

SC1.1.6 Rum production 4 4

SC1.1.7 Biomass energy production 4 4

SC1.1.8 Ethanol production 4 4

SC1.1.9 Managerial, particularly of smallholder organisations 4 4

SC1.1.10 Marketing 4 4

SC1.1.11 Agronomy 4 4

SC1.1.12 Sugar infrastructure maintenance, eg irrigation 4 4

SC1.1.13 Management and implementation of sugar regulatory framework

4 4

SC1.1.14 Others as requested by stakeholders 4 4

SC1.2 Develop a Sugar Cane Products Skills Development Plan. This plan translate the skills requirement into the optimal supply-side response. Include in Plan:


TEVETA, MoEST, Illovo and other processors, smallholder asso-ciations, Dept of Immigration

MoF, MEPD

SC1.2.1 Review modalities and identify optimal institutionalised way how for this Skills Development Plan to permanently inform skills providers

4 4

SC1.2.2 Review whether to establish voucher/coupon scheme within cluster, similar to Farm Income Subsidy Pro-gramme

4 4

SC1.2.3 Review tax incentives for private training by companies 4 4

SC1.2.4 A scarce-skills list: key skills that cannot be provided locally, and hence need to be imported in the short-term

4 4

SC1.3 Establish a Sugar Cane Products Account at TEVETA, funded by Sugar Processors’ Levy

4 4 TEVETA OPC MoEST

SC1.4 use Sugar Cane Products Account at TEvETA to solely fund the Sugar Cane Products Skills Development Plan


SC1.5 TEVETA reports to Sugar Cane Products TWG on expenditures under Sugar Cane Products Account


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2. ConduCIvE, oPErATIonALISEd frAMEwork & SuPPorT InSTITuTIonSCode Organisa-

tion and Activity

Sub-Activity Priority Level




SC2.1 Institutional Framework to Drive Cluster DevelopmentSC2.1 Ensure permanency of Sugar Cane Products (SCP) Technical Working Committee (TWG)

as a dialogue platform because success of cluster is 100% dependent on constant stakeholder-wide dialogue and commitment.

6 1 MoIT MEDP, DPSM MoF

SC2.1.1 Ensure close link of SADC Sugar Committee to Sugar Cane Products TWG (SADC Sugar Committee focused on project implementation, not on cluster strategy)


MEDP, DPSM

SC2.1.2 Secretariat to Sugar Cane Products TWG to be SWAp Dedicated Secretariat 6 1 Sugar Cane Products TWG

MEDP, DPSM MoIT, MBS, MRA, MoAFS, MIWD and others

SC2.1.3 Secretariat to ensure comprehensive stakeholder membership, including Policy Makers and Resource Holders inc National Authorising Office


MEDP, DPSM MoIT, MBS, MRA, MoAFS MIWD and others

SC2.1.4 Public and private sector co-chairs to be elected by membership. May confirm or change co-chairs of Sugar Cane Products TWG in development phase of NES


MEDP, DPSM MoIT, MBS, MRA, MoAFS, MIWD and others

SC2.1.5 Adopt this Sugar Cane Products Strategy as base working document 6 1 Sugar Cane Products TWG

MEDP, DPSM MoIT, MBS, MRA, MoAIWD and others

SC2.1.6 Develop work plan to ensure timely implementation of this strategy 6 1 Sugar Cane Products TWG

MEDP, DPSM MoIT, MBS, MRA, MoAIWD and others

SC2.1.7 Responsibility of co-chairs and secretariat to ensure follow up of actions 6 1 Sugar Cane Products TWG

MEDP, SADC Sugar Committee

MoIT, MBS, MRA, MoAIWD and others

SC2.1.8 Establish policy within cluster that advocacy and lobbying will take place through the Sugar Cane Products TWG



SC2.1.9 Establish Sub-Working Groups as is necessary 6 1 Sugar Cane Products TWG

MEDP, MoF, OPC

MoIT, MBS, MRA, MoAFS, MIWD and others

SC2.1.10 Ensure active linkages to NES Implementation Framework under MGDS (see cross-cutting action plan section 2) and to other relavant dialogue groups such as Trade Logistics Working Group, Cotton Development Trust and Legumes Platform


MEDP, MoF, OPC

MoIT, MBS, MRA, MoAFS, MIWD and others

SC2.1.11 Identify and implement legal requirements to institutionalise platform, eg eventual registration as a trust to allow for cash generation in time


MEDP, MoF, OPC

MoIT, MBS, MRA, MoAFS, MIWD, MoJ and others

SC2.1.12 Conduct a review of different regulatory frameworks by analysing models in South Africa, Swaziland, Mauritius, Tanzania, Zambia and others. Particular attention should be given to the Tanzanian model as it is simplified and easier compared to the Mauritius model, for example. Include proposals on the optimal institutional framework to implement a regulatory framework, eg Tobacco Control Commission model?


SC2.1.13 Establish a Sugar Cane Commission in the Public Sector in line with Tobac-co Control Commission to ensure policy coherence and implementation of regulatory framework

6 1 OPC MEDP, OPC, Sugar Cane Products TWG

SC2.1.14 Develop a regulatory support framework for the cluster that is facilitative to the fair development of the cluster. Framework development must include fair representation of all stakeholders.


MoJ, OPC

SC2.1.15 Framework needs to account for transparent and market-based pricing; land allocation (see Section SC05 Inputs), self-regulation by the cluster, balancing growth with social and community-level impacts; relationships within industry (eg union) and policy coherence between MoIT, MoAIWD, Ministry of Lands, MoFDP (inc taxes), disease control, varieties of cane and pest risks, crop agronomy


MoJ, OPC

SC2.1.16 Framework needs to account for legal requirements to ensure Sugar Cane Products TWG and institutions necessary for implementation regulatory framework have authority to implement the strategy and the framework


MoJ, OPC

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2. ConduCIvE, oPErATIonALISEd frAMEwork & SuPPorT InSTITuTIonSCode Organisa-

tion and Activity

Sub-Activity Priority Level




SC2.1.17 Framework to incorporate finalised sugar cane supply agreement, for which there is currently a draft


SC2.1.18 Framework to incorporate parallel schemes (eg World Bank has its own scheme for land allocation) and ensure singular, comprehensive and adequate scheme

4 Sugar Cane Products TWG

SC2.1.19 Identify institutional framework that needs to be dedicated to the cluster, such as re-orientation of Agricultural Extension Services, MITC, TEVETA, SEDOM/MEDI/DEMAT, Dept of Cooperatives and others mentioned in this action plan, toward Sugar Cane products


MEDP, MoF, OPC

SC2.1.20 Prioritise this insitutional framework under MGDS and ensure adequate resourcing of key institutions

5 MEDP OPC, MoF, MEDP

SC2.1.21 Drive the establishment of this institutional framework so that it effectively addresses critical gaps to the development of the cluster


SC2.1.22 Implement legal requirements of the regulatory framework 5 Sugar Cane Products TWG

MoJ, OPC

SC2.1.23 Implement regulatory support framework for the cluster 5 Sugar Cane Products TWG

MoJ, OPC


3. AffordAbLE ACCESS To MArkETSCode Category and Activity Sub-Actions Priority

levelPhase Lead



Other Implementing Agencies

SC3.1 Investment FacilitationSC3.1.1 Include in MITC Strategic Plan the explicit focus on Sugar Cane Products as one of its top 3

Priorities (with Manufactures and Oil Seed Products)5 2 MITC OPC, DPSM,

MoF

SC3.1.2 Develop an investor profile for the Sugar Cane Products cluster 5 3 MITC OPC, DPSM, MoF

MoIT

SC3.1.3 Develop an investor facilitation programme for potential investors in the sector, to complement this NES Sugar Cane Strategy. Account for pricing policy implications on ability to attract future investors. Plan needs to account for various sugar cane value added products and different business sizes, including small scale juice milling. Prioritize facilitation of investors in milling ca-pacity. Tie to extension programme in section SC7.1 and expansion programme in section SC5.1

5 3 MITC OPC, DPSM, MoF, Sugar Cane Prod-ucts TWG

MoIT

SC3.1.4 Ensure MITC has capacity to develop and implement programme:

5 3 MITC OPC, DPSM, MoF

MoIT

SC3.1.4.1 MITC requires skilled staff who are familiar with the econom-ics and business aspects of the cluster


MoIT, DPSM

SC3.1.4.2 MITC has capacity to effectively engage with relavant Min-istries and agencies (eg. Greenbelt Initiative, Dept of Land, Dept of Irrigation, Dept of Energy, Dept of Extension Ser-vices, Dept of Environment, Dept of Trade, Dept of Industry, Registrar Directorate General etc). This is fundamental as an effective investor faciltiation programme requires providing an investor all it needs to start operating


MoIT

SC3.1.5 Ensure appropriate and adequatre resourcing of MITC investor facilitation programme 5 3 MoF, MEPD

SCP TWG, MoIT, DPSM

SC3.1.6 Ensure appropriate and adequate management and staff skill set to MITC investor facilitation programme

5 3 OPC DPSM

SC3.1.7 Develop an investor attraction programme targeting Associated British Foods HQ in London to reach an agreement on proposed $300m investment in Malawi by Illovo. This is the ‘quickest win’ Malawi has to start to address its structural trade deficit. Illovo to make commitments with respect to the Government’s top concerns. It could increase sugar exports by up to $300m per year. Illovo is currently at full milling capacity.

5 3 OPC MoF, MRA, MoAFS

MoIT, MITC, Illovo Malawi

SC3.1.8 Send a delegation to Associated British Foods in the UK to present the programme with the aim of securing the investment in SC3.1.6. in Malawi

5 3 OPC MoF, MRA, MoAFS

MoIT, MITC, Illovo Malawi

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levelPhase Lead




SC3.2 Target Markets and Export Promotion

SC3.2.1 Confirm Target Markets and Products identified in NES development phase 4 5 MITC Processors

SC3.2.2 Develop a branding and marketing programme, identifying modalities for penetration in new target markets in Africa as per SC3.2.1 and link to Investor Facilitation Programme

4 5 MITC Processors

SC3.2.3 Ensure programme is fully costed 4 5 MITC Processors

SC3.2.4 Secure resourcing to implement branding and marketing programme 4 5 MITC Processors

SC3.3 Licencing, Customs and bordersSC3.3.1 Establish MITC as lead-agency with responsibilities for licensing in the cluster and provide

over-arching powers for licensing over other agencies, but through legislation ensure MITC consults accordingly

3 5 SCP TWG OPC

SC3.3.2 Prioritise One-Stop Shop under Action Cross-Cutting Issue 3.2.5 - One Stop Shop for Trade Documentation - toward Sugar Cane Products Cluster

4 5 SCP TWG OPC

SC3.3.3 Provide and facilitate annual export license for all sugar exporters, with a guarantee to non suspension except under explicit faults discussed and determined between license bodies and exporters through Sugar Cane Products TWG

4 5 SCP TWG

SC3.3.4 Conduct a review of border formalities, through Trade Logistics Working Group, for the the cluster, and allow prioritised processing for cluster

3 5 SCP TWG

SC3.3.5 Engage with MRA to enquire if borders can operate for 24 hours for the cluster 1 5 SCP TWG

SC3.4 Standards and accreditationSC3.4.1 Compile a list of products that require standards for export 5 3 SCP TWG MBS

SC3.4.2 Compile importing country requirements list, eg Vitamin A 5 3 SCP TWG MBS

SC3.4.3 MBS to prioritise development of standards for products in list in SC3.4.1 and SC3.4.2, relative to regional target market requirement

5 3 MBS MoIT MoAFS

SC3.4.4 MBS to orient its organisational structure toward facilitation of sugar cane products cluster to meet regional target market standards

5 3 MBS MoIT MoAFS

SC3.4.5 MBS prioritise investment in infrastructure to meet standards developed in SC3.3.2 5 3 MBS MoIT MoAFS

SC3.4.6 MBS prioritise investment in staff development to meet standards developed in SC3.3.2 5 3 MBS MoIT MoAFS

SC3.4.7 Ensure appropriate resource allocations to MBS to meet mandate toward facilitating this cluster 5 3 MoF OPC MBS

SC3.4.8 Ensure SQAM will allow MBS accreditation in sugar cane products 5 3 MBS MoIT MoAFS

SC3.4.9 Review implications on securing value added of Vitamin A coating scheme: All sugar for the domestic market will soon have to go through this one processing plant but problems of this initiative include that it will reduce the shelf life of sugar from 5 years to around 6-8 months. Furthermore it will cause extra problems for Illovo when reprocessing is needed (if bags split etc) because it has to be done in this one location and therefore will increase transport costs for the company. There are only 2 other countries which process sugar with the vitamin A coating and international reception of the processed sugar is not particularly good.


MBS, MoIT, Processors

SC3.5 TransportSC3.5.1 Conduct a prefeasibility study on routes, considering the Beira corridor, the EU Nacala corridor

project and the corridor to the Great Lakes Region5 3 SCP TWG MoIT MITPW

SC3.5.2 Ensure EU prefeasibility study mentioned in SC3.5.1 includes Great Lakes access 5 3 SCP TWG MoIT MITPW

SC3.5.3 Engage Government of Tanzania regarding improving road access from Chitipa to Lake Tangan-yika. Currently the cost to transport sugar to the Great Lakes is 240$/ton. This is expensive.

5 3 MoFA OPC, MEPD MITPW

SC3.5.4 Remove/negotiate with neighbouring countries transit charges (including unexpected escort fees and scanning charges) which cut into export competitiveness.

3 3 MoFA OPC MITPW

SC3.5.5 Engage Government of Mozambique regarding improving road access to Nacala port 4 3 MoFA OPC MITPW

SC3.5.6 Rehabilitation of the approach to the Chiroma Bridge near Nchalo 3 3 MITPW OPC, MoF

SC3.5.7 Develop rail connection south of Nchalo 2 3 MITPW OPC, MoF

SC3.5.8 Rehabilitation of rail network to ensure access for the sugar cane cluster 4 3 MITPW OPC, MoF

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SC3.5.9 Ensure the fast-tracked construction of the coal rail route from Moatize coal mine through to the Nacala Port. Ensure access for the sugar cane cluster.

4 3 MITPW OPC, MoF

SC3.5.10 Enquire whether Moatize-Nacala rail line could be rerouted south of Blantyre to accommodate cluster around Blantyre/ Limbe area.

2 3 MITPW OPC, MoF

SC3.5.11 40-50% of the cost of production is harvesting and local haulage of sugar cane. Reduce transport costs by:

4 3 MITPW OPC, MoF

SC3.5.11.1 Prioritise investments in feeder road network in Dwangwa, Nchalo and other designated sugar cane growing areas

4 MITPW OPC, MoF

SC3.5.11.2 Commence a Lake Malawi cargo service, prioritising cane transportation

3 3 MITPW OPC, MoF

SC3.5.11.3 Conduct review into impact of transport costs from sugar growing areas to mills. Typically mills need to be within 55kms, which restricts the transport market. In South Africa this radius is 100kms. Investigate whether abnormal transport profits in transport contributing to the size of this radius

2 3 SCP TWG OPC, MoF

SC3.5.11.4 Investigate whethere there is collusion in transport services provided to the sugar cane products cluster, particularly for transport from rural areas to Blantyre and Lilongwe

2 3 CFTC OPC, MoF

SC3.5.11.5 Through review and investigation, make recommendations on how to ensure tha transport prices reflect transport costs for the cluster

2 3 CFTC OPC, MoF

SC3.5.11.6 Ensure the implementation of recommendations 2 3 SCP TWG OPC, MoF

SC3.5.11.7 Road Transporters and Operators Association to self-regulate through understanding and application of the Competition and Fair Trading Act

2 3 RTOA

SC3.5.11.8 In the interim to the application of fair competition, RTOA to negotiate prices with SCP TWG

2 3 RTOA

SC3.5.12 Formation & operation of Shippers Council with prioritisation on sugar cane products (and other 2 NES priorities)

4 3

SC3.6 PackagingSC3.6.1 Ensure Packaging Companies

are members of the SCP TWG4 3 SCP TWG

SC3.6.2 Ensure mechanism for constant dialogue between cluster and packaging sector, through Sugar Cane Products TWG

4 3 SCP TWG

SC3.6.3 Relay to the Manufacturing TWG the constraints that packaging sector faces in providing affort-able packaging to the Sugar Cane Products Cluster

4 3 SCP TWG

SC3.7 Trade Facilitation

SC3.7.1 Ensure all processors, 2 small millers and Chair of SCP TWG are members of the Trade Logistics Working Group

4 5 SCP TWG

SC3.7.2 Ensure Trade Logistics Working Group meets every 3 months 4 5 Compa-nies listed under SC3.7.1

SCP TWG

SC3.7.3 Ensure attendance of processors, 2 small millers and the chair of the SCP TWG attend every meeting of the the Trade Logistics Working Group

4 5 Compa-nies listed under SC3.7.2

SCP TWG

SC3.8 Trade PolicySC3.8.1 Ensure PS at MoIT has access to prioritised target market and products for the cluster 5 4 SCP TWG MoIT

SC3.8.2 Ensure PS at MoIT has access to a list of critical imported inputs for target products in the cluster

5 4 SCP TWG MoIT

SC3.8.3 Align trade policy toward ensuring duty free quota free market access to target regional markets 4 4 MoIT MRA, MoF

SC3.8.4 Align trade policy toward ensuring duty free acess to critical imported inputs required by the cluster

4 4 MoIT MRA, MoF

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SC3.8.5 Prioritise application in trade negotiations of the trade policy for the sugar cane products cluster developed in NES Development Phase

4 4 MoIT MRA, MoF

SC3.8.6 Develop trade negotiation capacity around the needs of the cluster: 2 trade officers to be specialists in all trade issues affecting the cluster

4 4 MoIT MRA, MoF

SC3.8.7 Ensure market access to Comesa, Tripartite and SADC. 4 4 MoIT MRA, MoF

SC3.8.8 Prioritise securing free trade area for all great lakes countries, including DRC, and also to South Sudan and lobby for duty harmonisation across these countries

4 4 MoIT MRA, MoF


4. ACCESS TO INFORMATIONCode Category and


LevelPhase Lead Im-

plementing Agency



SC4.1 Establish mobile phone based extension services targeting sugar cane agriculture. As part of action SC7.1

4 5 MoAFS Esoko MoIT

SC4.2 Establish mobile phone based market information services targeting sugar cane agriculture. As part of action SC7.1

4 5 MoAFS Esoko MoIT


5. AffordAbLE ACCESS To InPuTSCode Category and


LevelPhase Lead


Critical to Sucessful Im-plementation


SC5.1 Access to Land

SC5.1.1 Enactment of the Land Bill 6 2 OPC SCP TWG, MoIT, MoAFS, MoLH

SC5.1.2 Operationali-sation of the new Land Bill

6 2 OPC SCP TWG, MoIT, MoAFS, MoLH

SC5.1.3 Identify land for zoning to sugar cane based on land suitability, socio-economic factors etc through a land suitability study. Based on Land Use Maps developed under: See cross cutting action 6.2.4 in Annex 5.


SC5.1.4 Develop a sugar cane Access to Land Programme to set targets of expansion in hectarage un-der cultivation and to designate land for cultivation. 20,000 ha of land under sugar cultivation is far too low. Expansion Policy and Programme must be transparent, based on consensus, and give the actual land users priority to access the schemes. To include:


SC5.1.4.1 the setting of an official target of 50,000ha under sugar cultivation nationwide


SC5.1.4.2 the designatation of land for sugar cane cultivation based on Ministry of Agriculture’s land suitability analysis for sugar and in consultation with community and smallholder representatives. Consult with EU’s Rural Infra-structure Development Programme which has irrigation intervention areas


SC5.1.4.3 Determine if Ministry of Agriculture is enough or if need a comprehen-sive land suitability analysis that takes into account agronomy, economic aspects and social/community aspects


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SC5.1.4.4 the distribution between smallholder and large scale ownership 6 2 OPC SCP TWG, MoIT, MoAFS, MoLH

SC5.1.4.5 an infrastructure investment component tied in to Greenbelt Initiative. See SC5.2.1.


SC5.1.4.6 expansion of Illovo Nchalo estate from 12,500ha to 25,000ha, and expan-sion of smallholder hectarage from 1,000ha to 5,000ha, tied to action SC3.1.6. This will increase sugar production by above 65% in Nchalo


SC5.1.4.7 expansion of Illovo Dwangwa estate from xxxha to xxxha and expansion of smallholder hectarage from xxx ha to xxxha, tied to action SC3.1.6.


SC5.1.4.8 comprehensive community sensitization package through extension programme in section 7.1


SC5.1.4.9 proper preparation for smallholders through the extension programme in section 7.1. The Swaziland model is probably the best where an 18 month education program is used to help inform and advise smallholders


SC5.1.5 Sugar Cane Expansion Policy and Programme to be based on following principles (from EU Land Disputes Study):


SC5.1.5.1 a. Land allocation in sugar outgrower schemes cannot be considered in isolation, but is part of a comprehensive and holistic planning process involving all stakeholders in sugar outgrowing schemes


SC5.1.5.2 b. The planning process is comprehensive because it deals with all social, economic and technical/ agronomic aspects of sugar outgrowing


SC5.1.5.3 c. The planning process is holistic because it has to follow a path where the next step can only be made after the satisfactory conclusion of the preceding step


SC5.1.5.4 d. The process of land allocation starts with a (formal) request of a group of farmers for participation in an outgrower scheme, following a thorough information and sensitization campaign explaining objectives and procedures


SC5.1.5.5 e. Land allocation should be inclusive, meaning that the actual tenants (users) of the area planned for the scheme should have the first right to have access to the outgrower scheme


SC5.1.5.6 f. Land allocation should be primarily based on voluntary land contribu-tion and land-to-land compensation


SC5.1.5.7 g. The land allocation process needs to be completed prior to the development stage of the project


SC5.1.5.8 h. Access to the future scheme needs to be formalised through the issuance of a formal document (certificate, MOU) recognized by the TA and DC for each participating farmer


SC5.1.5.9 i. The planning process needs to be facilitated by professional staff skilled in communication, community development, land allocation and cane growing.


SC5.1.6 Sugar Cane Expansion Policy and Programme to follow these steps: (from EU Land Disputes Study):


SC5.1.6.1 Step 1: Information and Dissemination for land allocations 6 2

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SC5.1.6.2 Step 2: Farmers’ Requests for Land (applications) 6 2

SC5.1.6.3 Step 3: Evaluation of applications and acceptance 6 2

SC5.1.6.4 Step 4: Transparent and reliable land allocation registry 6 2

SC5.1.6.5 Step 5: Information and Dissemination for Preparatory Stage 6 2

SC5.1.6.6 Step 6: Establish Outgrower Development Committee (Trust) 6 2

SC5.1.6.7 Step 7: Agreement on Land Allocation Principles and Methods 6 2

SC5.1.6.8 Step 8: Land tenure and land use survey 6 2

SC5.1.6.9 Step 9: Agreement on outcome of the land tenure and use survey and agreement on rights of access to the scheme

6 2

SC5.1.6.10 Step 10: Voluntary Land Contribution and Right to Access to Outgrower Scheme

6 2

SC5.1.6.11 Step 11: Agreement (Contract) between farmers and Committee/Trust 6 2

SC5.1.6.12 Step 12: Arrange Lease Agreement (for development of land) 6 2

SC5.1.6.13 Step 13: Formalise land allocation in constitution and by-laws of Commit-tee/Trust

6 2

SC5.1.6.14 Step 14: Occupation and development may now commence 6 2

SC5.1.7 Development Partners assist the GOM in the implementation of the Land Bill and Sugar Exten-sion Programme and Policy in the sugar growing areas, which implies providing assistance in the establishment of the Customary Land Administration: establishment of land committees, training of customary land clerks, mapping and registration of lands, establishment of a cadastre.


SC5.1.8 Implement key findings and guidelines of EU Land Study on Land Dispute Prevention and Resolution

6 2 OPC SCP TWG, MoIT, MoAFS, MoLH, MoF, MEDP

SC5.1.8.1 To engage external mediators, who are accepted by all involved parties for the resolution of the current land disputes

6 2 SCP TWG

SC5.1.8.2 The current land disputes in Dwangwa have escalated to such an extent that these can only be solved through an external mediator (or mediators) that are accepted by all parties. Mediation would firstly involve making an inventory of the existing grievances, analysing these grievances and defining a road map of actions for solutions.

6 2 SCP TWG

SC5.1.8.3 In the absence of a clear land tenure situation in the cane growing areas at the short and medium term, it is recommended to adopt a land allo-cation procedure that is based on consensus, and giving the actual land users first priority to access the outgrower scheme.

6 2 SCP TWG

SC5.1.8.4 Re-do planning stages (SC5.1.4 and SC5.1.5) in Dwangwa 6 2 SCP TWG

SC5.2 Access to Irrigation and cultivation infrastructure

SC5.2.1 As part of Access to Land Programme in SC5.1. Allocate 50,000 ha of newly irrigated land under Greenbelt Initiative to sugar cane farming

6 2 MIWD OPC. GBI, MoF, MoAFS

SC5.2.2 Prioritse access to water for milling and sub-milling 6 2 MIWD OPC. GBI, MoF, MoAFS

SC5.2.3 Develop programme for the establishment of Water User Associations by sugar cane growers trust

6 2 MIWD OPC. GBI, MoF, MoAFS

SC5.2.4 Complete Kasinthula Phase 4 and Agri-Cane expansions through EU funding. This will add 580 ha of land under sugar cane cultivation.

6 2 NAO OPC. GBI, MoF, MoAFS

SC5.2.5 EU has additional resources of Euros 8m for infrastructure. Develop an infrastructure plan to invest these funds in sugar cultivation expansion

6 2 NAO OPC. GBI, MoF, MoAFS

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SC5.2.6 As part of Access to Land Programme in SC5.1, develop a post-EU funding sugar expansion programme to allow for additional 25,000ha of land allocated to sugar cane cultivation. EU funding for the cluster is coming to an end because funding was sourced as a compensation package for ACP countries for the liberalisation of the EU sugar market. EU will not fund any-more through the sugar trade agreements so funding from the EU has to be secured through the main National Indicative Programme.


OPC. GBI, MoF, MoAFS

SC5.3 Access to Energy

SC5.3.1 Ensure prioritized access to energy for registered Sugar Cane Product Processors registered under the SCP TWG

3 3 ESCOM

SC5.3.2 Develop pricing policy for sugar cane processors to supply energy to the national grid 3 3 Sugar Cane Products TWG

Dept of Energy ESCOM

SC5.3.3 Provision of rebate on tax for diesel for generators

4 3 MoF

SC5.4 Access to fertilizer and herbicides

SC5.4.1 Ensure Fertilizer and Herbicide companies are members of the SCP TWG 3 5 TIP SWAp Secre-tariat

SCP TWG

SC5.4.2 Ensure mechanism for constant dialogue between cluster and fertilizer sector, through Sugar Cane Products TWG

3 5 TIP SWAp Secre-tariat

SCP TWG

SC5.5 Access to Research

SC5.5.1 Establish a research insti-tute focused on sugar agronomy, on the lines of ARET


SCP TWG

SC5.5.2 Set sugar cane as second top priority for Dept of Agricultural Extension Services


SCP TWG

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6. AffordAbLE ACCESS To fInAnCE And SECurE TEnurE of ProPErTyCode Category and Activity Sub-Actions Priority

LevelPhase Lead Im-

plementing Agency



SC6.1 Ensure Bankers Association, Micro-finance Network and Export Development Fund are part of Sugar Cane Products TWG

5 3 SCP TWG Bankers Association

SC6.2 Develop an Investor Profile for the Cluster 4 3 SCP TWG SCP TWG, MITC

SC6.3 Banks to develop a lending window for investors in the cluster, with favourable rates and collateral requirements, with credit guaranteed by EDF. Prioritise lending for oil crushers and processing. This must address the fact that no bank will currentlty lend for more than 2 years, because the cane development process takes 18 months and it costs It costs 10,000 EURO to develop one hectare of sugar due to water and electricity requirements. You can alternatively develop rainfed sugar with supplementary irrigation for 1,000 EURO this is only possible in the north.


SCP TWG, MoIT, MITC, RBM

SC6.4 Develop information package for accessing finance for stakeholders in the Sugar Cane Products Cluster. To include financing pre-conditions


SCP TWG

SC6.5 Micro-finance agencies to develop a savings and micro-finance scheme focused on provid-ing sugar cane smallholder farmer access to micro-finance. Prioritise lending for smallholder farmers and small scale crushers

5 3 MAMN SCP TWG

SC6.6 Prioritization of Sugar Cane Product Stakeholders in Credit Reference Bureau 3 5 Credit Refer-ence Bureau

SCP TWG

SC6.7 Export Development Fund to actively prioritise credit guarantees for oil seed products cluster investors.

5 3 EDF SCP TWG

SC6.8 Establish Matching Grant/Challenge Fund schemes to complement EDF, and be run by it and provide productive grants to group farming.

4 3 EDF SCP TWG


7. AffordAbLE ACCESS To buSInESS dEvELoPMEnT SErvICESCode Category and Activity Sub-Actions Priority

LevelPhase Lead Im-

plementing Agency



SC7.1 Extension Services

SC7.1.1 Set sugar cane as No2 priority for Dept of Agricultural Extension Services, and allocate 20% of its resources to sugar cane products

6 3 MoAFS

SC7.1.2 Confirm yield targets and extension worker: farmer targets for cluster

6 3 MoAFS

SC7.1.3 Develop a nationwide smallholder sugar cane extension programme, that includes participation of NGOS, that adopts yield targets as objective. Link to Sugar Extension Policy and Programme in Section 5.1. To prioritise:

6 3 MoAFS OPC, MoF, MEPD, MoIT

SC7.1.3.1 Sensitization of communities on Government plans for the cluster, benefits of value added and growth, what is required from communities to benefit

SC7.1.3.2 Sensitization of villages chiefs about benefits of land grouping for economic feasibility and need for consultation in this exercise

SC7.1.3.3 Preparation of smallholders for implications and benefits of investment in sugar

SC7.1.3.4 Adequate preparation before commencement of development (around 12-18 months) See SC7.2.4

SC7.1.3.4 Proliferation of good farm management practices, including inter-cropping or adjacent land with foodcrops

SC7.1.3.6 Sensitization of potential new cane farmers to grow sugar cane on their land, in new extension areas

SC7.1.3.7 EID in India achieve better yields more cheaply by using organic farming. Fund agronomist with exper-tise in EID yields in India to inform the smallholder sugar cane extension programme

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SC7.1.4 Priortise extension to designated areas for sugar cane expansion under SC5.3 6 3 MoAFS OPC, MoF MEPD, MoIT

SC7.1.5 Link sugar cane products extension programme closely to access to finance (eg high cost of investment in land preparation & irrigation) & to access to farm inputs


SC7.1.6 Develop implementation and resource plan for sugar cane extension programme that is fully costed and backed by Ministry of Finance and MEPD


SC7.2 Smallholder Farmer Organ-isation

SC7.2.1 Review the current organizational setting of the Trusts and Companies to simplify and clarify roles and allow for a clear separation of functions of production, service provision and land development.

6 3 MoAFS OPC, MoF, MEPD

MoIT, MEPD, MoJ

SC7.2.2 Agree on final recommendations for farmer organisation structure amendments to strengthen governance, including appropriate membership of boards


SC7.2.3 Develop a framework for smallholder farmer organisation based on a separatio of functions of production, services and land development


SC7.2.4 Sugar Cane Extension Programme to strengthen capacity of farmer associations and their ability to effectively oversee management of trusts and companies:


SC7.2.4.1 Run an annual junior, middle and senior manage-ment course tailored to sugar cane smallholder agriculture and to the management of farmer associations, trusts and companies


SC7.2.4.2 Include sensitization of governance structures in smallholder organisations and to provide adequate information.


SC7.2.4.3 Ensure adequate information dissemination (trusts have typically communicated with Traditional Authority, and not down to farmers)


SC7.2.4.4 Ensure agreement on land ownership, validation and compensation BEFORE land development commences


SC7.2.4.5 Ensure adequate sensitizization of farmers 6 3 MoAFS MoF, MEPD

SC7.2.4.6 Ensure professional staff in associations for communication, community development, land allocation, cane growing


SC7.2.4.7 Formalise access to sugar cane schemes: issuance of certificates or MoUs

6 3 MoAFS OPC, MoF MEPD, MoIT

SC7.2.4.8 Establish a negotiation team to help farmers in negotiating for land (as economic viability is 2.5 hectares), to ensure fair land distribution relative to initial holding


SC7.2.5 Develop a development partner support package to support extension programme, strengthen finances of trusts and reduce debt through productivity improvements


SC7.2.6 Ensure that development partner interventions to do not distort playing field in the smallholder farmer organisation structure, so as to prevent infighting


SC7.3 Non-Government Organi-sations

SC7.3.1 As part of sugar cane extension programme, develop a segment that allows for incorporation of NGO and processor (eg Illovo support to train managers) services, on a voluntary basis, in the sugar cane extension programme. There are many sustainable livelihood components of NGO programmes that are working in numerous areas in a piecemeal fashion. This is a large opportunity cost given the high cost of extension that the MoAFS struggles to cover

5 3 MoAFS CISANET, CONGOMA, Concern Universal

SC7.4 Entrepreneur, Start-Up and Micro, Small and Medium Enterprise Support

SC7.4.1 Set sugar cane products as one of 3 priority assistance areas for SMEDI, with oil seed products & manufactures

4 4 SMEDI MoIT, MoF, OPC

MEPD

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plementing Agency



SC7.4.2 Develop an entrerpreneur, start-up and MSME training and business advisory support package geared toward sugar cane products, eg juice extraction and milling


MEPD

SC7.4.3 Package to include support for MSME services providers into sugar cane cluster eg transport services (RTOA), technical services, land services, cane cutting services, local community empowerment etc


MEPD

SC7.4.4 Include in package advistory on how to access training and skills, also through TEVETA institutions. If not available, offer management and other tailor made courses through SMEDI


MEPD

SC7.4.5 Include in package advistory on how to access finance from banks and micro-finance agencies and how to access markets, via a collaboration with MITC’s export promotion programme and its investment facilitation programme


MEPD


8. EASE of MEETIng TAx And rEguLATory obLIgATIonSCode Category and


LevelPhase Lead Im-

plementing Agency



SC8.1 Ease of Meeting Taxation Obligations

SC8.1.1 Develop a comprehensive list of types of companies that qualify as Sugar Cane Products Stakeholders

4 4 SCP TWG MoF MRA

SC8.1.2 Compile and keep up to date a register of Sugar Cane Products Cluster Companies 4 4 SCP TWG MoF MRA

SC8.1.3 Develop a tax incentive package that is geared soley to the sugar cane products cluster, through the Investment Facilitation Plan in Section SC3.1, including:

4 4 SCP TWG MoF MRA

SC8.1.3.1 Sizeable tax incentives for all forms of cane processing equipment 4 4 SCP TWG MoF MRA

SC8.1.3.2 No tax on purchasing of capital and processing equipment, and on investment in processing and pressing factories in the cluster

4 4 SCP TWG MoF MRA

SC8.1.3.3 Removal of turnover tax (2% if over 50m MK) for the cluster, given that cluster is based on low margins, high volumes

4 4 SCP TWG MoF MRA

SC8.1.3.4 Include tax incentives for sugar cane farmers in trusts 4 SCP TWG MoF

SC8.1.4 Tax incentive package for the cluster needs to: 4 4 SCP TWG MoF MRA

SC8.1.4.1 Be oriented toward exports, so incentives increase the greater the share of turnover that is covered by exports

4 4 SCP TWG MoF MRA

SC8.1.4.2 Set for the long-term to be transparent, predictable and consistent. 4 4 SCP TWG MoF MRA

OS8.1.4.3 Communicated through the MRA website 3 4 MRA MoF

SC8.2 Ease of Meeting Regulatory Obligations

SC8.2.1 Develop an outreach programme to all key regulatory agencies to faciltiate sugar cane products cluster

4 5 SCP TWG OPC, MITC, MoIT

SC8.2.2 Prioritisation of Sugar Cane Product registrations at Registrar General Directorate 3 5 RGD

SC8.2.3 Framework in Section SC 02 to include protectio against diseases eg from imported varieties, variety regulation

5 5 SCP TWG

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9. STAbLE, PrudEnT And ConduCIvE MACroEConoMIC EnvIronMEnTCode Category and


LevelPhase Lead Im-

plementing Agency



SC9.1 Ensure an exchange rate that reflects the market equilibrium in the demand and supply of Malawi Kwachas, and that does not disincentivise exports

5 5 RBM MoF

SC9.2 Ease exchange controls on Sugar Cane Products Cluster Companies, as per register developed under SC8.1.2

4 5 RBM MoF


10. FAIR COMPETITIONCode Category

and ActivitySub-Actions Priority

LevelPhase Lead Im-

plementing Agency



SC10.1 Undergo rapid, top level review of degree of fair competition in the cluster, with special attention to:

4 5 CFTC SCP TWG, MoIT, DPSM

SC10.1.1 Unfair business practices by traders with farmers (eg tweaking of scales) SCP TWG, MoIT, DPSM

SC10.1.2 Abuse of dominant positions SCP TWG, MoIT, DPSM

SC10.2 Review outcomes of review

3 5 SCP TWG, MoIT, DPSM

SC10.3 Conduct detailed reviews into fair competition in the cluster if deemed necessary by Sugar Cane Products Sub-Committee and CFTC


SC10.4 Make recommendations, via SCP Sub-Committe to key institutions to prioritise and incentiv-ise formalisation of businsses in the cluster


SC10.5 CFTC adopt a soft approach to applying the Competition and Fair Trade Act, not through strict enforcement but through working with players along value chain to become aware of their infringements under the Act, and the possibilities of penalties after a 6 month window


SC10.6 Ensure Sugar Regulatory Framework developed in Section SC2 is conductive to fair competition and control for abuses of dominant positions and accounts for international competition issues


136

137

138

Annex 4 – Manufactures Strategy

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Annex 4 - ContentsChApter 1 – IntroduCtIon 141

Why prioritise this cluster .................................................................................... 142Summary of cluster potential ............................................................................... 144Manufactures for economic empowerment and MSMEs, and strong link to agriculture ......................................................................................................... 145Summary of approach to develop cluster ............................................................. 145Critical factors for success .................................................................................. 146

ChApter 2 – Cluster profIle 147Summary ................................................................................................................ 147Products ................................................................................................................. 148Markets ................................................................................................................. 148Value Addition, Inputs and Import Substitution .................................................... 152


Strengths and Opportunities ................................................................................. 154Weaknesses and Threats ....................................................................................... 155

ChApter 4 – the mAnufACtures strAtegy 157The strategy framework ........................................................................................ 157The strategy to develop the cluster....................................................................... 159Guiding timeline for cluster development ............................................................. 161

ChApter 5 – trAde polICy for tArget mArkets 162Product: Beer .......................................................................................................... 162Product: Articles of Plastic .................................................................................... 162Product: Assembly ................................................................................................. 163Product: Dairy ........................................................................................................ 163Product: Sweet Biscuits ......................................................................................... 164

ChApter 6 – ImplementAtIon And resourCIng 165Implementation Mechanism .................................................................................. 165Resourcing ............................................................................................................. 166


140

Annex 4

This Annex to the National Export Strategy (NES) presents Malawi’s strategy to develop its Manufactures Cluster. This cluster has been identified by the NES’s Cluster Prioritization Method (described in Annex 9) as one of the top three clusters that can drive Malawi’s exports and thus its medium to long run growth.

The manufactures cluster is composed of four sub-clusters:

1. Beverages – beer, ales, juices and pulp, water

2. Agro-Processing – dairy, maize products, wheat products and others with private sector interest such as rice, horticulture, cassava products and toor dhal

3. Plastics and Packaging – all plastic and packaging products feasible in Malawi

4. Assembly – vehicle assembly, pre-fabrication and electrical assembly inc. wiring/cables

As described below, the cluster development strategy is based on a holistic, concerted approach that requires stakeholder collaboration and dialogue to determine policies, resources and the establishment of an enabling environment that is conducive to the development of the cluster. The Manufactures Strategy is presented in Chapter 4 below. This chapter also presents policy recommendations at different levels: trade, investment promotion, MSME, standards, industrial, land, agriculture and others. The strategy’s success depends on the alignment of various such policies and support toward the cluster.

This chapter discusses why the manufacturing cluster is among the top three clusters prioritised in the NES and summarises the cluster development approach. Chapter 2 profiles the cluster, including products, markets and inputs. Chapter 3 presents the strengths, weaknesses, opportunities and threats to the development of the cluster, as a prelude to the cluster strategy in Chapter 4. Chapter 5 presents the trade policy for target markets and Chapter 6 discusses the implementation mechanism and resourcing requirements of the strategy. The detailed action plan with prioritised and sequenced actions is presented in Chapter 7.

Chapter 1 – Introduction

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2. It can allow for enough value addition for the cluster to account for roughly seventeen per cent of imports in the medium to long-term;

3. It allows for economic spillovers through reducing the cost to businesses and private operators of investing in new, higher value products; and

4. Demand is favourable and growing.

The Steering Committee established to oversee the NES’s development selected the manufacturing cluster for prioritisation. The Principal Secretary of the Ministry of Industry and Trade chaired the committee. The Steering Committee included representatives of all stakeholder groups, including government, private sector, farmer organisations, civil society and development partners. The method through which the Steering Committee selected manufactures and its four sub-clusters as one of the top three clusters for prioritisation is called the Cluster Prioritisation Method and a detailed description of this methodology is presented in Annex 9 to the National Export Strategy.


1. Trade and Market Analysis, including an application of recent cutting-edge development economics on the relationship between exports and GDP growth;

2. Stakeholder/Expert Survey and supporting interviews;


4. A Competitiveness Analysis: comparing prices of Malawi’s exports in importing countries and production prices against those of competitor nations;

5. A Resource Analysis, taking into account factors such as land suitability for agricultural production; and

6. A risk assessment, including consideration of the impact on Malawi’s economic development of prioritising one cluster over another.

Component 1 of the Cluster Prioritisation Method served as the core of the methodology. It is based on the New Structural

Economics approach to development that is at the forefront of economic research into the role of industrial policy within developing nations8. This approach highlights the importance of thinking dynamically when selecting which products a state should support – the clusters supported should not only provide short-term benefits, but, by lowering investment costs in higher value added production processes and by easing expansion into other products, should naturally aid the country in evolving to a higher stable growth path.

There are two key criteria analysed for each cluster under this methodology – economic proximity (spillovers) and wealth creation (value addition). Economic proximity recognises that some products are similar in production systems and skills requirements. Investment in one of these products lowers subsequent investment costs in these economically close products. Clusters with a high number of economically close products are likely to offer higher returns on investment by encouraging diversification and future investment through spillover effects. Such spillovers come about through having a skill set easily applicable to a different product, or through having access to information that lowers the commercial risk of trying a new product.

Wealth creation is a historically determined value that looks at the economic makeup of the world’s economies and matches countries’ GDP per capita with their production base. The average income levels of countries that export certain products is determined in order to assess which production clusters lead to higher levels of average income within a country. Products and clusters with higher associated incomes per capita are typically those with higher value added processes associated with them.

In Table A4.1 below, the number of economic linkages and their associated income levels are displayed for the manufactures cluster and for a sample of key current Malawian exports, such as tea and tobacco by way of comparison.


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As can be seen, the manufactures cluster has very strong spillovers and high potential for wealth creation when compared with other clusters that Malawi has or has the potential to develop. The plastics and packaging sub-cluster has a high implied income level and a high level of economic spillovers because articles of plastics and packaging products are used in a wide range of higher value products. It therefore provides a major route into lowering the investment costs for businesses keen to expand into higher value products. The value of packaging – which in Malawi is mostly plastic packaging – alone cannot be underestimated when targeting export markets. For example, food snacks that Malawi produces may have a shelf life of three months with low quality packaging and six months or more with improved quality. A shelf life of three months is insufficient for exporting such products, including to neighbouring countries, because the risk of the snack going stale within that period is too high.

Within the agro-processing sub-cluster, dairy products have a very high associated level of income and a significant amount of spillovers and economic linkages to other products. Wheat products have more linkages—wheat makes more than 100 high value products possible. However wheat is an expensive crop to grow in Malawi given limited land availability and water supply at an altitude of above 1,000 metres. Maize products also register a fairly high level of income and because there are more than 50 high value products that can be produced using corn as the base

ingredient, such as corn starch, ethanol, bakery products, brewed beverages, adhesives, cornflakes, canned corn and corn oil.

The beverages sub-cluster also records a high level of implied income. Like agro-processing, plastics and packaging and assembly, it provides the basis for higher value products to be produced in an economy, thus raising the income levels in that economy. Beverages do not have as many economic spillovers as other products within the manufacturing cluster, but they nonetheless help develop the country’s productive base through developing capital, skills and knowledge within a high value cluster.

The assembly sub-cluster is another important group of products that will help build Malawi’s productive base and link it to higher value products in the medium to long-term.

Significantly, through all its sub-clusters, the manufactures cluster is integral to the development of the agriculture sector in Malawi. Agro-processing and beverages are dependent on agricultural inputs such as livestock, maize, wheat, sorghum and other grains, and therefore are key to securing value addition in the agricultural sector, as called for in the Agriculture Sector Wide Approach (ASWAp). They are central to the economic empowerment of rural farmers, women’s groups and agricultural cooperatives. Similarly plastics and packaging are essential for processing and value addition of agriculture based products produced in Malawi,


TAbLE 4.1 AnnEx 4: MAnufACTurESClusters and Products Level of income (measured as gdP per capita) associated to

clusterLevel of economic proximity with other products

ManufacturesArticles of plastic $18,529 104







Coffee $2,571 19






Rice $6,909 32


Tea $2,347 16

Tobacco $2,581 59



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while assembly of tractors and trucks in Malawi are important enablers of agricultural development. Malawi should not view agriculture and manufacturing as separate sectors, but see them as intricately intertwined and dependant on each other. This is key if Malawi is to move away from the export of raw or semi-raw commodities to the export of higher value, processed agricultural products.

The cluster is also vital for MSME development in the economy, which will help empower youth and women entrepreneurs. The manufacturing cluster is not only composed of medium or large businesses, but includes micro and small businesses. As with micro and small oil processing in the oil seed cluster, the beverages and agro-processing sub-clusters give scope for MSME production in areas such as snacks, juices, sweets and other products. The cluster views MSMEs as integral to it, so that the strategy ensures that youth and women entrepreneurs and MSMEs are economically empowered.

There are risks, as with every cluster. One of the greatest risks is energy supply. Reliable, affordable and consistent electricity supply is crucial for the cluster’s competitiveness in export markets. A second key risk is policy makers’ perceptions on how to develop the cluster: traditionally the manufacturing cluster has targeted the Malawian market rather than external markets and therefore the expertise of both industry and government policymakers has

been geared toward domestic supply. Targeting export markets requires a different perception, which is necessary for the survival and development of the cluster. The cluster needs to be competitive on regional markets in the short to medium term and this requires adequate exposure to external markets and enough ability for markets to operate rather than protectionist policies that damage the ability and willingness of private operators in the cluster to compete in international markets. The Malawian manufacturing cluster cannot supply enough manufactured goods to meet domestic demand. If Malawi is uncompetitive in certain products, it should not produce them. Rather, such products should be imported from countries that produce them more competitively, releasing resources to be applied in areas where Malawi can compete.

The Malawi Manufactures Strategy must take such risks and threats at the core of the strategy. This strategy includes a SWOT analysis for the cluster in Chapter 3 below.

Summary of cluster potential The cluster could potentially account for 18 per cent of imports (or 20 per cent of exports) by 2027, up from just 3.4 per cent in 2010, as presented in Table A4.2 below.




2001 2010 2011* 2017 2022 2027 2001 2010 2011* 2017 2022 2027 2001-2011**

2011-2017**

2017-2022

2022-2027

Total Imports $733 $2,299 $1,126* $3,248 $4,352 $7,679 100% 100% 100% 100% 100% 100% 13.5% 9.0% 6.0% 12.0%

Total Exports $475 $1,184 $1,192 $2,460 $4,067 $6,824 64.8% 51.5% 106%* 75.7% 93.4% 88.9% 9.3% 12.8% 10.6% 10.9%


Mining 0 114 123 246 369 493 0.0% 5.0% 10.9% 7.6% 8.5% 6.4% n/a 12.2% 8.4% 5.9%

Tea 35 81 81 135 206 314 4.7% 3.5% 7.2% 4.1% 4.7% 4.1% 8.8% 8.8% 8.8% 8.8%


9 61 71 169 348 716 1.2% 2.6% 6.3% 5.2% 8.0% 9.3% 23.3% 15.5% 15.5% 15.5%

Oil Seed Products

10 41 71 227 599 995 1.4% 1.8% 6.3% 7.0% 13.8% 13.0% 21.4% 21.4% 21.4% 10.7%

Sugar Cane Products

64 69 71 453 768 1136 8.7% 3.0% 6.3% 13.9% 17.6% 14.8% 1.1% 36.1% 11.1% 8.1%

Tourism (Travel)

25 70 70 147 272 503 3.5% 3.1% 6.2% 4.5% 6.2% 6.5% 10.7% 13.1% 13.1% 13.1%


17 77 26 197 502 1376 2.3% 3.4% 2.3% 6.1% 11.5% 17.9% 4.8% 39.8%*** 20.5% 22.3%

Beverages 0.2 2 0.1 11 28 64 0.0% 0.1% 0.0% 0.3% 0.6% 0.8% -3.9% 22.8% 20.8% 17.8%

Agro-Pro-cessing

6 39 12 100 295 874 0.8% 1.7% 1.1% 3.1% 6.8% 11.4% 8.2% 13.2% 24.2% 24.2%


2 22 4 39 74 169 0.3% 1.0% 0.3% 1.2% 1.7% 2.2% 6.9% 9.9% 13.9% 17.9%

Assembly 9 14 10 48 104 269 1.2% 0.6% 0.9% 1.5% 2.4% 3.5% 1.4% 12.9% 16.9% 20.9%

Other 53 85 122 186 304 520 7.3% 3.7% 10.8% 5.7% 7.0% 6.8% 8.6% 7.3% 10.3% 11.3%

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The cluster has the potential to attain this target, but will only do so if a long-term strategy is adopted, as opposed to year by year piecemeal support measures. A consistent and far-sighted strategy is essential to allow for the cluster to develop in a way that there are numerous manufacturers in each cluster, rather than just a few as at present. The strategy’s success therefore requires long-term buy in to the Manufacturing Technical Working Group by government, processors, smallholder farmers, civil society, MSMEs and development partners. It is also important for industrial policy to be based primarily on this strategy, and to ensure that industrial policy is export-oriented to expose local firms to competition, rather than excessively seeking to protect uncompetitive industries. This is how the sector’s potential, as set in the NES guiding target, may be achieved.

Manufactures for economic empowerment and MSMEs, and strong link to agricultureIt is essential for stakeholders not to view the manufacturing cluster as one small sector of the economy that only supports urban populations. Rather, it is the basis for job creation for Malawian youths, as well as the avenue for value addition and for increased and more stable rural smallholder incomes. The cluster includes agro-processing and beverages, which both have the potential to develop using Malawian agricultural produce as a major input. This requires narrowing the disconnect between farmers and processors, and this in turn requires changing perceptions in government about what the manufacturing cluster actually entails and its role in supporting agriculture and rural industrialisation.

The development of the manufacturing cluster, if genuinely prioritised, can also be a key vehicle for the growth of MSMEs through small scale manufacturing and also through the wide array of support services that the cluster needs to develop. Many of these support services will be provided by MSMEs.

Summary of approach to develop clusterThe approach to develop the manufactures cluster to attain its target in the medium to long-term is based on the following:

1. A comprehensive approach that sequentially develops the enablers necessary for market-led and sustainable growth in the manufactures cluster. To secure comprehensiveness, private operators in the cluster must have affordable access to the ten key enablers. The approach will deliver sustainable, long-term solutions, centred on the right balance of private and public sector roles. These ten enablers are:



c. Access to inputs





h. Fair competition


j. Access to skills

2. Balancing export competitiveness with economic empowerment of youths, women, the poor, farmers and micro, small and medium enterprises;




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3. The strategy has to be appropriate to the cluster’s current level of development. It has to focus on developing the capital base and skills base available, including Technology and R&D, to allow for gradual improvement in product quality. It cannot expect quality, skills and capital to be at a higher level that they are at — it must support gradual improvement in these areas through market-led solutions;

4. Balancing short-term exports with a medium to long-term strategy to allow value addition in exports. The strategy aims for the following drivers of export growth:

a. Short-term

• Beverages, Agro-Processing (snacks, biscuits, rice, toor dhal), plastics & packaging

b. Medium-term

• Increased beverages (including beer, spirits and juices), agro-processing (dairy, increased wheat and maize products), increased plastics and packaging

c. Long-term

• Increased Beverages, agro-processing (dairy, maize products, wheat products), plastics & packaging, assembly

5. Targeting regional exports, particularly in SADC, COMESA and EAC as opposed to focusing on extra-African markets, and benefiting from Malawi’s geographical access to fast growing neighbouring economies. This is critical for value addition given the high cost of transport to distant markets. Domestic markets should be seen as essentially equal to regional markets;


7. Ensuring the alignment of all key stakeholders to prioritise these clusters in their work plans and programmes. Such stakeholders include the private sector, Ministries, Government support agencies, farmer organisations, smallholder farmers, enabler sectors (such as energy, finance and transport), civil society and development partners; and

8. Managing stakeholder expectations so that sustainable market-led cluster development is not undermined by excessive expectations of short-term gains.


• Market-led development, with appropriate measures by the public sector to address market failures

• An effective stakeholder implementation and representation driving body

• Alignment and coordination between private operators, government and smallholder farmers

• Appropriate support by development partners that support the establishment of local enablers for the cluster

• Pooled resources to sequentially target obstacles to cluster development

• The development of an appropriate institutional framework, developing the cluster to meet its long-term potential

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SummaryThe Manufacturing Cluster of the National Export Strategy is composed of sub-clusters:

1. in which Malawi can be competitive;

2. in which has or can build a comparative advantage within SADC and COMESA;

3. that inherently allow for spillovers to higher value clusters in the long-term; and

4. that allow for job creation and the participation of smallholder farmers, youth entrepreneurs, women’s groups and the poor.

The four sub-clusters within the Manufacturing Cluster are beverages, agro-processing, plastics and packaging and assembly. Beverages include beer, spirits, fruit juice and pulp (based on horticulture), water and soft drinks. However soft drinks are not exportable because the markets are dominated by international franchises in each country. Agro-processing encompasses dairy, wheat products and maize products, while also including private sector-backed processing of rice, cassava and legumes. The latter three have fewer spillovers than the former three, and are also typically less conducive to value addition. The former three (dairy, wheat products and maize products) are therefore priorities within the agro-processing sub-cluster. The plastics and packaging sub-cluster is key not just by directly providing exportable goods such as household goods and packaging, but because it also enables value addition in the other clusters and sub-clusters of the NES through packaging. Assembly includes pre-fabrication, assembly of vehicles (such as trailors, trucks and agricultural machinery), and electronic and electrical equipment such as wiring.

The processing of base crops in the other two priority clusters of the NES: oil seed products and sugar cane products, can also be defined as manufacturing. These clusters are separate because of their potential for alternative cash crops in agriculture apart from their processing potential.

The key markets for the manufacturing cluster are primarily the domestic market and neighbouring countries, particularly the growth centres of Tete, Nacala, Lusaka, Harare and Mbeya. South Africa is also a major market and will continue to be one. Growth centres further afield, such as in Kenya, Rwanda and Botswana can also be targeted, while there are key markets that can be exploited for each product, as presented later in this chapter. A core part of the manufacturing strategy is exploiting Malawi’s landlocked geography by viewing Malawi as a hub for the supply of products


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within this cluster to these rapidly growing markets. By being forward looking, Malawi can be a major supplier of beverages, agro-processing goods, plastics and packaging and assembled goods to these growth centres. Proximity to these markets is a big advantage that needs to be backed by market access and production capacity. Within SADC and COMESA, tariffs are not a major obstacle to accessing these markets. On the other hand, non-tariff measures such as standards and transport linkages can serve to restrict market access. These factors therefore need to be worked in to a range of policies and government support services, including trade policy, industrial policy, transport policy, tax policy, investment facilitation, land policy, export promotion and standards facilitation. These factors, together with production enablers, such as access to energy and finance, form the manufactures strategy that is presented in Chapter 4 of this document.

The cluster is balanced between two types of products:

· those in the plastics and packaging sub-cluster and in the assembly sub-cluster whose major inputs will need to be imported but nonetheless have significant value addition potential in Malawi; and

· products in the beverages and agro-processing sub-clusters whose major inputs can be supplied domestically.

The latter has significant scope for import substitution of base crops, although this will require a concerted effort to overcome the existing disconnect between smallholder farmers and processors, and to ensure sufficient commercial farming through an adequate and effective land titling system. The former also has scope for import substitution, though at the end of the value chain by serving as goods that can be purchased by farmers, businesses and households.

ProductsThere are four priority sub-clusters within the manufactures cluster. These are:

1. Beverages

2. Agro-Processing

3. Plastics and Packaging

4. Assembly

Products and potential products in these sub-clusters are predominantly:

1. Beverages

• Beer

• Sprits

• Squashes/Juices

• Fruit Pulp

• Water

• Soft drinks

2. Agro-Processing

• Dairy

• Maize Products

• Wheat Products

• Others if backed by private sector: pulse products, rice, cassava products

3. Plastics and Packaging

• Plastic products (buckets, chairs, tubs etc)

• PVC Pipes

• Flexible Packaging

• Fixed Packaging

• Cartons, Boxes etc

• Liquid Packaging

• PET Forms

• Glass Packaging

• Other plastic items

4. Assembly

• Pre-fabrication

• Vehicle assembly

• Electrical and electronic equipment

Markets Table A4.3 below summarises the degree of potential for different products to be exported and indicates target markets.

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TAbLE A4.3 MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLybASIC Sub-CLuSTEr ProfILES

Products Potential in Long-Term

Potential in Short-Term

$10,000 < Current markets < $1,000,000

Current markets > $1,000,000

Target/Potential Markets (including cur-rent markets with growth potential)

1. BeveragesBeer Very High Very High none none Zambia, Mozambique, Zimbabwe, Tanzania,

DRC, Sudan, Uganda

Gin, Rum, Vodka Some High Tanzania, South Africa, Zimbabwe

Mozambique Zambia, Mozambique, Zimbabwe, Tanzania, DRC, Sudan, Uganda

Squashes/Juice High High Zambia - Zambia, Mozambique, Zimbabwe, Tanzania, DRC, Sudan, Uganda

Water Some Some none none Tete

Soft drinks None None none none Restricted by Coca-cola etc

Fruit Pulp Medium High none none UK, Kenya, UAE, South Africa, Scandinavia

2. Agro-ProcessingDairy (short-life milk) High High Zambia, Mozambique Zimbabwe Zambia, Mozambique inc Tete, Zimbabwe

Dairy (Long-life UHT milk, powdered, skimmed), yoghurt, cream, cheese, curd, butter etc)

High High Zambia, Mozambique, Zimbabwe, Kenya, Rwanda, Botswana, DRC, Tanzania

Maize Products (Snacks, Corn Syrup, Groats, Corn flour, corn meal, canned corn, cornflakes, cereals, starch, bread etc)

Medium High Zimbabwe, Mozambique, South Africa, Zambia

SADC, Comesa (Rwanda, Sudan, Zimbabwe, Mozambique, Tanzania etc)

Wheat Products (biscuits, cere-als, pasta, bread, gluten, starch, malt extract, bran)

Medium Medium Zimbabwe, Zambia Zimbabwe, Zambia, Mozambique, Sudan, DRC, Tanzania, Uganda

Rice Some Medium Zimbabwe, Zambia, Mozam-bique, UK, Kenya, South Africa

Zambia, Tanzania, Mozambique, Zimbabwe, South Africa

Legumes Products (eg Toor Dhal)

Medium Some Malaysia, Singapore UK India, South East Asia, UK, little to S. Africa

Cassava Products Uncertain Uncertain

3. Plastics and PackagingStandard plastics products: buckets, cups, crates, bottles, tubs, PET etc

High (Arkay potential for 50-60% of produc-tion exported)

High Zambia, South Africa Zambia, Zimbabwe Botswana, Mozambique, Tanzania, DRC

PVC Pipes High High Mozambique, Zambia Zambia, Mozambique (inc Tete)

Packaging Labels Medium Medium none none Zambia

Flexible Packaging Difficult to compete with Far East

None

Liquid Packaging (conical cartons)

Medium Medium Zimbabwe, Mozambique (do not have con-verting plants, Zambia does)

PET Pre-forms and closures High High Zimbabwe, Zambia, Mozam-bique

Mainly domestic, but possible Zambia, Zimba-bwe, Mozambique

Bottle Tops Some Some Zambia, Zimbabwe, Mozam-bique

none Mainly domestic, but possible Zimbabwe, Mozambique

HDP Bottles for juices Domestic Domestic Domestic

Plastic Bags None None Zimbabwe, Zambia, Mozam-bique

Cartons, Paper Sacks Some Some Zambia, Mozambique, Swaziland

Domestic eg tobacco cartons, but may be uncompetitive once in customs union as favoured by rebates. Moz, Zim, Tanzania and Zambia

Glass Packaging Some Some Zambia none Zambia

4. AssemblyPre-fabrication Medium High Zambia, DRC

Tractors Some Medium Mozambique, Tanzania, South Africa, Zambia

Zambia, DRC, Mozambique, Tanzania, Zimbabwe

Buses and Coaches Medium Medium Zimbabwe, Tanzania, Kenya, Mozambique


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Table A4.4 below presents data on Malawi’s current exports within the manufactures cluster. The table indicates existing markets, the largest markets and key competitors.

TAbLE A4.3 MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLybASIC Sub-CLuSTEr ProfILES

Products Potential in Long-Term

Potential in Short-Term

$10,000 < Current markets < $1,000,000

Current markets > $1,000,000

Target/Potential Markets (including cur-rent markets with growth potential)

Cars Some Medium Zambia, Zimbabwe, South Africa, Tanzania, Lesotho, Swaziland, Kenya


Trucks Medium Medium Mozambique, Tanzania, South Africa, Zambia, Swazi-land, Kenya

Japan Zambia, DRC, Mozambique, Tanzania, Zimbabwe

Special purpose motor vehicles Medium Medium Rwanda, Zimbabwe, South Africa, Mozambique


Vehicle parts and accessories Medium Medium Mozambique, S. Africa, Kenya Zambia, DRC, Mozambique, Tanzania, Zimbabwe

Trailers Medium Medium Mozambique, Zambia, South Africa, Tanzania


Electrical and electronic equipment (e.g. insulated wire cables, electric applications for telephony, electric transformers, static converters)

Medium Medium Zambia, Zimbabwe, Swazi-land, Mozambique, Tanzania

South Africa Zambia, Mozambique (inc Tete), Zimbabwe, South Africa, Tanzania, Swaziland

TAbLE A4.4 MALAwI’S ExPorTS of MAnufACTurIng In 2011Importers Exported

value 2010 (uSd thou-sand)

Exported value 2011 (uSd thou-sand)

Share in Malawi’s exports of each prod-uct, 2011

Exported growth in val-ue between 2007-2011 (p.a.)

Size of Mar-ket (million uSd, 2011 - data for 2010 if marked *)

Total import growth in value between 2007-2011 (p.a.)

Tariff (es-timated) faced by Malawi




Non-sugar cane based beveragesMinimal existing trade

Dairy

Total 2,230 No total data for 2011

5% EU, China EU, New Zealand

Zimbabwe 1,487 No data for 2011

2.0* No data for 2011

Zambia (30%), Botswana (20%)*

Zambia 2 1 7.0 -4% 0% Zimbabwe (36%), Tanzania (23%)

Milling Products, Malt, Gluten, Malt Starches etcTotal 2,820 No total

data for 2011

USA, Brazil

EU, Thailand


109* No data n/a South Africa (62%), Zambia (27%)*

Mozam-bique

28 No data for 2011

15* No data n/a South Africa (43%), Germany (28%)*

South Africa

112 n/a 93 n/a n/a Canada (28%), Belgium (20%)

Zambia 49 n/a 8 n/a n/a South Africa (42%), France (26%)

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Cereals, flours etcTotal 1,638 No total

data for 2011

EU, USA EU, USA, Canada


54 No data n/a South Africa (63%), Zambia (16%)

Mozam-bique

258 No data for 2011

9 No data n/a South Africa (64%), Portugal (12%)*

South Africa

125 148 155 n/a n/a Italy (11%), UK (10%)

Zambia 102 480 22 n/a n/a South Africa (83%), Zimbabwe (4%)

Sweet BiscuitsTotal 818 641 100% 12% 5% EU, USA EU,

Canada

Zambia 73 436 68% 36% 6 17% 0 South Africa (77%), Malawi (7%)

South Africa

138 22% -32% 16 4% 0 UK (16%), UAE (16%), India (10%)

Kenya 67 10% 6 34% 0 Pakistan (31%), India (22%)

Zimbabwe 745 No data for 2011

15* South Africa (57%), Zambia (36%) *

Articles of Plastic**Total 1,470 100% 49% 5% EU, China,

USAEU, USA, China

Zambia 2,372 1,129 77% 55% 228 15% n/a South Africa (62%), China (12%)

Côte d’Ivoire

0 121 8% 279 5% n/a Saudi Arabia (11%), USA (9%)

Botswana 159 95 6% 120 n/a South Africa (91%), China (4%)

South Africa

162 46 3% 14% 2,406 6% n/a China (16%), Germany (12%)

Moldova 0 40 3% 218 2% n/a China (14%), Romania (13%)

Tanzania 1 24 2% -30% 431 18% n/a Saudi Arabia (21%), Japan (17%)


154* No data n/a South Africa (73%), S. Korea (7%)

Mozam-bique

9,698 No data for 2011

63* No data n/a South Africa (47%), Portugal (8%)

Electronics and electrical equipmentTotal 2,211 100% 39% 4% China,

Hong Kong, USA, EU

China, Hong Kong, USA, EU

Cote D’Ivoire

1,208 55% 297 -1% n/a China (28%), France (27%)

Pakistan 182 8% 2,430 -8% n/a China (56%), USA (5%)

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Value Addition, Inputs and Im-port SubstitutionTable A4.5 below presents the typical value addition to Malawi that accrues from each key product in the cluster, while also presenting a list of key imported inputs and key domestically supplied inputs.

The most critical inputs for the cluster as a whole are electricity and a pool of labour with adequate competencies and skills that can add value to the production of these products.

There is scope for import substitution within the beverages and agro-processing supply chains, although this is dependent on efforts to address the farmer-processor disconnect that is discussed in Chapter 3 of the main NES document. Bridging this gap requires operationalising commercial farming, along with efforts to allow smallholder farmers to supply processors through commodity exchanges, warehouse receipts, lower rural transport costs, improved access to micro-finance, access to land titling and access to extension and skills, among others.

Source: www.trademap.org












South Africa

154 7% 23% 9,368 4% n/a China (32%), Germany (7%)

Zambia 115 5% 11% 468 2% n/a South Africa (32%), China (27%)

TAbLE A4.5 vALuE AddITIon, InPuTS And IMPorT SubSTITuTIonProducts Value

Addition (Estimate of % of prod-uct value accruing to Malawi)

% of value of product that electricity (at current rates) ac-counts for

Critical Imported Inputs Potential for Local Inputs

1. BeveragesBeer 42% 8% Glass bottles, metal crowns, labels (not

local yet)/packaging, maltSorghum, maize, packaging, electricity

Gin, Rum, Vodka 60% 3% Laminate, flavours, glass bottles, concen-trates, metal seals

Cane sugar

Squashes/Juice 67% 8% Juice concentrates, food colour, Juice concentrate

Water 100%

Soft drinks

Fruit Pulp 76% Conical drums, acids, asceptic bags, diesel Mangoes, bananas, oranges, pineapples

2. Agro-ProcessingDairy (short-life milk) Cartons, packaging, cultures, flavours,

stabilisers, machinery consumablesCartons, milk, electricity, skills

Dairy (Long-life UHT milk, powdered, skimmed), yoghurt, cream, cheese, curd, butter etc)

Cartons, packaging, cultures, flavours, stabilisers, machinery consumables

Cartons, milk, electricity, skills

Maize Products (Snacks, Corn Syrup, Groats, Corn flour, corn meal, canned corn, corn-flakes, cereals, starch, bread etc)

65% 4% lamination and aluminium foil, machinery consumables, flavours

specific maize varieties, skills

Wheat Products (biscuits, cereals, pasta, bread, gluten, starch, malt extract, bran)

5% 3% lamination and aluminium foil, wheatgrain, socfat, enzymes

Wheat grain, skills

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Source: NES Technical Team through companies that produce these products

TAbLE A4.5 vALuE AddITIon, InPuTS And IMPorT SubSTITuTIonProducts Value

Addition (Estimate of % of prod-uct value accruing to Malawi)

% of value of product that electricity (at current rates) ac-counts for

Critical Imported Inputs Potential for Local Inputs

Rice 95% 3% laminated packaging, machinery spares / consumables

rice paddy, high quality packaging

Legumes Products (eg Toor Dhal)

Cassava Products 80% 2% lamination and aluminium foil

3. Plastics and PackagingStandard plastics products: buckets, cups, crates, bottles, tubs, PET etc

Polypropethene, Pigment and all parts of production for plastics.

Electricity, skills

PVC Pipes Polypropethene, Pigment and all parts of production for plastics

Electricity, skills

Packaging Labels Electricity, skills, inks

Flexible Packaging Electricity, skills

Liquid Packaging (conical cartons) 32% 0.30% PE Board and inks Electricity, inks

PET Pre-forms and closures Polypropethene, Pigment and all parts of production for plastics

Electricity, skills

Bottle Tops Polypropethene, Pigment and all parts of production for plastics

Electricity, skills

HDP Bottles for juices Electricity, skills

Plastic Bags Polypropethene, Pigment and all parts of production for plastics

Electricity, skills

Cartons, Paper Sacks 26% 0.58% Sackkraft, kraftliner, fluting, starch and inks Electricity, starch

Glass Packaging Electricity, starch

4. AssemblyPre-fabrication Skills

Tractors Steel, parts Electricity, water, skills, paint

Buses and Coaches Steel, parts Electricity, water, skills, paint

Cars Steel, parts Electricity, water, skills, paint

Trucks Steel, parts Electricity, water, skills, paint

Special purpose motor vehicles Steel, parts Electricity, water, skills, paint

Vehicle parts and accessories Steel, parts Electricity, water, skills, paint

Trailers Steel, parts Electricity, water, skills, paint

Electrical and electronic equipment (e.g. insulated wire cables, electric applications for telephony, electric transformers, static converters)

Copper, parts Electricity, water, skills, paint

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Strengths and Opportunities• A key strength is Malawi’s landlocked geography, which is good for the development of

high value products as it grants access to a higher number of close markets. Clearly this depends on transport costs, trade logistics, standards and other factors—but these are all addressable in the medium to long term if local stakeholders make a concerted effort to address them. This is the purpose of this strategy.

• The Government has the opportunity to adopt this strategy as the basis for its industrial policy. Industrial policy should not seek to protect industries but to empower them to compete in regional markets.

• A key strength and opportunity is the rapid growth in neighbouring countries, particularly in fast growing urban areas such as Lusaka, Tete, Nacala, Harare and Mbeya. These city and sub-country economies are growing rapidly as more people move to the cities, thereby raising their demand for consumables such as beverages, agro-processing products, plastics, packaging and assembly. This growth is likely to continue for a number of years and Malawi is very well placed to exploit this growth if it can re-orient its manufacturing sector away from a domestic focus toward exporting to these growth centres.

• Other strengths are existing expertise in the sub-clusters. There are a few companies that have expertise in a range of products. Malawi has the opportunity to properly harness that expertise to penetrate and exploit new and growth markets.

• A further strength is Malawi’s ability to develop an integrated supply chain for the beverage and agro-processing sub-clusters because a number of key inputs such as maize, horticulture, oil seeds, sugar cane and livestock for smallholder dairy grow well in Malawi.


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Weaknesses and Threats• A key threat is the lack of an affordable and reliable

energy supply for the industry.

• A second key threat is a failure by policy makers and resource holders’ failure to view manufacturing and agriculture as intricately related. Each is key for the development of the other in Malawi. For the agro-processing and beverages sub-clusters to be developed to their potential will require strong market linkages between processors and farmers. In turn this requires strong coordination by key agencies such as the Ministry of Industry and Trade and the Ministry of Agriculture and Food Security. It is important for the two to clearly understand their roles in enabling this link and not to be caught up in securing resources for the sake of securing resources. For example, coordination is essential in securing land reform to allow much more commercial farming and in expanding warehouse receipts and commodity exchanges to allow smallholder farmers to supply agro-processors.

• A further threat is that of protectionism and the use of the infant industry argument in a way that leads to distortions in the market that will prevent the cluster from reaching its potential. For the cluster to reach its potential, only those products in which Malawi has or can have a comparative advantage within Malawi’s trade partners in SADC, Comesa and the Tripartite should be produced in Malawi. Otherwise Malawi risks protecting products and industries that cannot compete, thus preventing competitive products and industries from developing. Trade must be seen as core to industrial development, rather than as a threat.

• A weakness is the orientation of the manufacturing sector in Malawi, which, as with agriculture, has been focused on the domestic market with little external market awareness.

• Potentially, another weakness could arise if development partners’ influence causes an excessive focus on distant markets rather than on neighbouring markets. The opportunity cost of continually aiming to target markets such as the USA, EU and Asia for value addition products is huge given the low manufacturing base that Malawi has. If this base is to develop on the scale required by Malawi’s import bill, then the core target markets have to be regional and neighbouring markets, particularly growth centres such as Tete, Lusaka, Harare, Nacala and Mbeya.

• A further weakness is the lack of a clear and internalised framework for commercial farming tied in to manufacturing. This is a key gap that needs to be given urgent attention to allow Malawi to build its manufacturing base and hence add value in agriculture.

• Another threat would be inconsistent policies that could dissipate the momentum required to develop the cluster. These may arise from a non-alignment in tax policy, trade policy, industrial policy, land policy and agricultural policy.

• Malawi’s low skills base and the inaccessibility of finance to MSMEs are further issues. These two factors act as key constraints to the development of the manufacturing cluster. A risk here is if Malawi were to try to develop its skills and finance sectors in a way that does not provide long-term, permanent solutions to the problems that MSMEs face. Both require holistic concerted strategies to develop these enabling sectors.

• An inability to ensure fair competition because of strong lobby power by a few major companies could prevent new players, such as foreign investors, youth entrepreneurs, women entrepreneurs or MSMEs from entering the market, thus constraining the size of the cluster unnaturally.

• Individual firm lobbying is a further threat because when companies lobby Ministers and others they not always serve the interest of the cluster as a whole. For example lobbying for export bans on input commodities (such as soya, cassava, rice and others) because foreign prices are cheaper than domestic prices may be beneficial in the short-run but in the long-run distorts the market, disincentivising farmers from building up production levels and hence weakening the long-term growth in the capital base of the manufacturing cluster. This capital base is critical for the cluster to meet its export potential.

• A further key weakness that is key to this cluster is the relatively high degree of non-tariff impediments to trade, such as standards and trade licenses, both on exports and on imported inputs – which are critical for exports. Table A4.6 below shows the outcome of surveys on Non-Tariff Measures by the International Trade Centre.

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TAbLE A4.6: CroSS-CounTry CoMPArISon of ITC SurvEy rESuLTS, ShArE of AffECTEd ExPorTErS Survey country Share of exporting companies affected by trade impedimentsMalawi 81.5%

Kenya 74.8%

Rwanda 71.0%

Sri Lanka 69.7%

Paraguay 68.9%

Madagascar 67.3%

Burkina Faso 63.2%

Uruguay 56.0%

Jamaica 42.0%

Peru 41.9%

Egypt 36.7%

Morocco 34.6%

Mauritius 30.5%

Hong Kong 23.1%

Source: International Trade Centre (ITC). Malawi: Company Perspectives – An ITC Series on Non-Tariff Measures. Geneva, ITC, 2012. Forthcoming at: http://www.intracen.org/publications

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The strategy frameworkThe strategy framework is based on ensuring that government or enabling sectors provide the ten enablers of private operators. Private operators include smallholder farmers, commercial farmers, micro, small and medium enterprises, farmer organisations, women organisations, youth entrepreneurs, cooperatives and large businesses.

If the manufactures cluster is to develop on the scale that the National Export Strategy envisions, the strategy must account for all ten enablers of the cluster, in an appropriately prioritised manner. Success lies in comprehensiveness and coordination among stakeholders. The ten enablers are:


a. Investment facilitation

b. Export promotion


d. Trade facilitation, including customs clearance and trade licenses

e. Trade policy

f. Transportation

g. Packaging



3. Access to inputs

a. Access to farm inputs

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b. Access to land



e. Access to energy

4. Access to finance and secure tenure of property for

a. Smallholder farmers, farmer organisations, women’s groups and cooperatives



d. Processors


a. Smallholder Farmer Organisation


c. Micro, Small and Medium Enterprise and Youth Entrepreneur Support

d. Support by Non-Government Organisations

e. Information Technology and Professional Services

6. An efficient way of contributing to government revenues and of meeting regulatory obligations


b. Taxation support


7. A stable and prudent macroeconomic environment

a. Stable and favourable inflation, interest rates and public sector debt


8. Fair competition


a. Manufactures Technical Working Group as part of Trade, Industry and PSD SWAp

b. Linkages and Support for Cotton Development Trust, Legumes Development and Trade Association and Bio-fuels Association



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These enablers cannot be provided immediately to the cluster. It is fundamental to provide sustainable solutions for the enablers and to:


• identify the stakeholder (whether private or public sector) best placed to provide the enabler. If public sector, which institution is best placed to provide it in the long-term?

• ensure external players such as development partners and international non-government organisations support the long-term provision of these enablers by the private sector or by the Malawian public sector.

The next section prioritises these enablers by setting out a road map for their provision.

The strategy to develop the clusterBased on this framework, the strategy to develop the manufactures cluster is divided into phases. Phases related to which factors should be prioritised first, and hence commence first. They do not imply that a phase has to be completed before another phase starts. Actions in later phases do not necessarily need to wait until a previous phase is complete, particularly if key actions in earlier phases are facing slow implementation and are not essential for the commencement of actions in a later phase. The phases are:

Phase 1: Establish an appropriate stakeholder and policy maker representation and driving body and Industrial Policy

This will be the Manufactures TWG under the Trade, Industry and PSD Sector Wide Approach. Private operators in the cluster will register with the TWG. This registry of members will be used to help with access to finance, tax support etc. Discuss whether to adopt this strategy as the major building block for Malawi’s Industrial Policy. The latter should include a clear, consistent and transparent tax incentive mechanism that is tied to the clusters, products and target markets in the NES. Refer to Action M2.1 in Chapter 7

Phase 2: Access to Reliable Energy and Access to Local Inputs and Land for Commercial Farming linked to Manufacturing

• Access to Energy Plan: primarily ensure prioritized access to energy for registered Manufacturing Companies registered under the Manufactures TWG, through access to Day-Ahead Market on SADC Power Pool. Refer to Action M5.1 in Chapter 7

• Access to Local Inputs and Land for Commercial Farming. Include allocation of 1 million hectares of land for commercial farming based on land suitability and availability study (Cross Cutting Actions 5.5). Apply Responsible Agricultural Investment Principles. Refer to Action M5.2.2 and M7.2 in Chapter 7.

In this phase, the strategy will set Manufactures as an explicit priority for stakeholders including key agencies such as:








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• Ministry of Industry and Trade, including Department of Cooperatives


• Ministry of Agriculture and Food Security including ASWAp, Departments of Research, Extension Services and Human Resources

• Department of Irrigation







• TEVETA

• MIRTDC


• Investor Facilitation Programme including Export Processing Zones/Industrial Parks and Access to Land for Commercial Farming; and operationalisation of MITC. Refer to Action M3.1 in Chapter 7

• Plan for meeting standards and accreditation in targeted markets, including expediting inspections under the Integrated Quality Management System. Refer to Action M3.4 in Chapter 7

• Transport Support Plan: Transport Sector Implementation Plan to focus on link to growth centres: Tete, Lusaka, Harare and Mbeya; and prioritisation of dairy and wheat cultivation area rural feeder roads. Refer to Action M3.5 in Chapter 7

• Warehouse receipts and commodity exchanges. Refer to Actions M4.1 and M4.2 in Chapter 7

• Banks to offer favourable lending windows with long-term credit for Manufactures TWG registered members. Refer to Actions M6.1 to M6.4 in Chapter 7

• Micro-finance and banks to target smallholders supply the cluster, to offer long-term savings and lending plans, and to be intricately involved in Extension Services & Sub-Committee, prioritisation for smallholders. Refer to Actions M6.5 in Chapter 7

• Export Development Fund guarantees for investors in manufactures cluster complemented by Challenge Funds/Matching Grant Funds. Refer to Actions M6.7 to M6.8 in Chapter 7

• Tax efficiency and support. Refer to Action M8.1 in Chapter 7

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• MSME manufactures support plan, including operationalisation for SMEDI. Refer to Action M7.1 in Chapter 7

• License and Customs fast-tracking: through Trade Logistics Technical Committee. Refer to Actions M3.3 in Chapter 7.

• Branding and Marketing Programme. Refer to Action M3.2 in Chapter 7.

• Access to Local Inputs. Refer to Action M5.2 in Chapter 7. Applies to Beverages and Agro-Processing Sub-Clusters.

• Manufactures Skills Plan. Refer to Actions M1.1 to M1.5


• Fair competition reviews of clusters. Refer to Actions M10.1 to M10.5 in Chapter 7

• National Industrial Extension Programme. Refer to Action M5.3 in Chapter 7

• Trade Policy. Refer to Action 3.6 in Chapter 7

Guiding timeline for cluster developmentThe guiding timeline is set in Table A4.7 below. These dates are guidelines and their purpose is to give a sense of the sequenced, gradual development of the cluster in a way that it can meet its potential of eighteen per cent of imports in 2027 (up from three per cent in 2010) through the transition from the export of raw or semi-raw commodities to higher value product exports.








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Product: BeerCurrent Markets: None

New regional markets: Zambia, DRC, Uganda

Long run target international markets: none

Zambia, DRC and Uganda: All of these markets are over $10 million. Zambia imposes no tariff barriers on any of the countries it imports from (South Africa, Namibia, Botswana and Swaziland), but Malawi’s close proximity means it should face lower transport costs allowing it to compete and gain a share of the market. Policy should focus on infrastructure to allow ease of transport between Malawi and Zambia – specifically one stop border posts. DRC and Uganda both have tariff barriers which Malawi faces if it wished to export beer to these locations – policy should focus on bringing these barriers down and allowing Malawi better access to the markets.

Long run markets: The economics of beer production in Malawi are such that it will be hard to penetrate markets outside those which are easily accessible in the region. Transport costs for beer are high as bottles are an inefficient storage mechanism. As such it is much simpler to set up a beer production franchise in a country and import the inputs than it is to import the beer itself. It will only become viable to export beers further afield if international branding is achieved – an unlikely goal for the next ten years given that Malawi currently exports no beer. Focus should be kept on the regional markets mentioned above.

Product: Articles of PlasticCurrent Markets: Zambia, Zimbabwe, Mozambique

New regional markets: South Africa

Long run target international markets: SADC and COMESA

Zambia, Zimbabwe, Mozambique: Malawi currently exports a significant level of plastics to these three markets – over $1 million worth to each. Malawi’s plastics are primarily in three areas – packaging, tableware & utensils and plastic tubing. These are simple value addition products which do not require a high level of skills or capital resources to make relative to other plastic products.

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This production structure puts Malawi at a significant advantage in gaining market share in these markets.

All three markets are large and growing with average imports of $30 million for each market in the particular product areas that Malawi specialises in. Malawi however represents less than 10 per cent of these imports indicating large opportunities for market expansion. Malawi’s chief competitor to these markets is South Africa – due to the low skill requirements in the production of these goods, Malawi should be able to achieve a competitive advantage due to lower wage costs. Policy should focus on building the plastics industry in Malawi to increase production – making sure that inputs into production are not taxed for exports and that there is secure access to water and electricity for producers.

South Africa: South Africa is a huge export market - $320 million in the plastic markets in which Malawi produces. This is primarily supplied by Europe, China and the US. Malawi should be able to gain a degree of market share by focusing on low quality. China faces variable tariffs (from 5 – 20 per cent depending on the product) going into South Africa, so this combined with Malawi’s proximity should help Malawi to compete for China’s current market share. Policy should focus on improving transport links with South Africa and on simplifying border crossing processes within SADC to encourage regional trade.

COMESA and SADC: In the long run COMESA and SADC both provide huge markets for Malawi to export into and therefore Malawi should not need to export into markets further away than this. In the product areas that Malawi specialises in COMESA imports $675 million worth, while SADC imports $900 million worth. Transport issues will remain the primary constraint on Malawian trade – the two policies Malawi can pursue to improve this situation is liberalisation of transport services and investment in infrastructure such as railways.

Product: AssemblyCurrent Markets: Mozambique

New regional markets: Zambia, Rwanda, Tanzania, Zimbabwe, South Africa

Long run target international markets: Japan

The economics of the assembly process is highly weighted in Malawi’s favour. Malawi has a high quantity of surplus low skilled labour, perfectly suited to the assembly industry. Furthermore like most value addition processes, it is simpler to ship components to a location and have them assembled locally to save on storage space – Malawi’s positioning at the heart of both SADC and COMESA, makes it a suitable assembly hub for distribution prior to export. Malawi already exports assembled vehicles to all of the markets listed as targets – policy must focus on improving this

level of production. Railways must be constructed/improved to link Malawi to ports so that component parts can easily be transported to Malawi for assembly. Export processing zones should be developed with secure access to electricity so that production can be of the consistency required for export. Machinery required for assembly and all component parts must be tax exempt. One stop border posts should be constructed where possible to smooth border crossings and encourage regional trade.

Product: DairyCurrent Markets: Zimbabwe

New regional markets: Zambia, Mozambique

Long run target international markets: Higher value products

Zimbabwe: Malawi exported over $1 million of dairy products to Zimbabwe in 2010, three per cent of a market which is $37 million in size. Malawi’s main competition comes from South Africa who provides 82.4 per cent of Zimbabwe’s dairy imports, however South Africa faces a tariff in excess of 30 per cent to export to Zimbabwe and this creates a clear competitive advantage for Malawi to exploit. To increase exports to Zimbabwe Malawi must increase dairy production, speed transport times and invest in appropriate packaging machinery. Many policies can help achieve these three goals but the simplest are: help smallholder dairy farmers acquire the access to finance required to purchase the appropriate dairy cows, introduce one stop border posts to lower border crossing delays and remove taxes on the importation of processing machinery such as tetra packing machines.

Zambia, Mozambique: Both of these markets also offer significant export opportunities to Malawi, the same policies noted above for Zimbabwe are appropriate for penetrating these markets as well.

It should be noted that dairy is a highly sensitive industry, with a history of trade bans issued in the region, most famously between Zimbabwe and Zambia in the early 2000’s. As Malawi moves into exporting dairy and not just producing it as an import substitute, it must negotiate carefully with its regional partners so as not to provoke trade wars – for example Malawi must resist any urge to pan imports of dairy as a form of industrial policy.

Long run target international markets: Difficulty in storing and transporting dairy products – especially in sub-Saharan Africa means that Malawi will unlikely be able to penetrate any markets other than those that are in close proximity to itself. Instead of trying to enter more markets, Malawi’s long run expansion should be based around producing higher value dairy goods such as cheese’s and yoghurts. If Malawi successfully supports its dairy industry as noted above, then this move to higher end value addition will be a natural by-product.

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Product: Sweet BiscuitsCurrent Markets: none

New regional markets: Zambia, South Africa, Zimbabwe, Mozambique

Long run target international markets: EU (under fairtrade)

Zambia, South Africa, Zimbabwe, Mozambique: Combined these markets are a total of $442 million. Zambia, Zimbabwe and Mozambique are primarily supplied by South Africa who faces a zero per cent tariff (the same rate that Malawi faces), as such giving Malawi little advantage. These markets are most likely to be penetrated through aiming at either producing lower cost products through lower wages in Malawi, or through brand differentiation (on products such as sweet biscuits consumers prefer a range of products to choose from – price and quality are not the only factors involved). Policy which can support this includes linking farming to processing better through promotion of the anchor farm model – this allows processors a more reliable supply of inputs so they can invest in the production process. As well as

this packaging is a significant constraint on agro-processing exports such as biscuits. Packaging industries lack the necessary equipment and skills to produce export quality packaging – Malawi needs to focus on improving its skills base (providing more engineers) and on easing access to capital by increasing access to finance for MSME’s.

South Africa itself imports over $1 million from each of the UAE, India and Turkey, all of whom face a 21 per cent tariff, while Malawi itself faces no tariff into this market. This provides an opportunity for Malawi to gain market share in one of the largest markets in Africa.

EU: Malawi will struggle to penetrate the EU market with mass production due to prohibitive transport costs and standard restrictions, however it is conceivable that some companies will be able to create speciality fairtrade products which would be marketable in the EU. Policy should focus on MITC working in conjunction with fairtrade network to work with processors to inform them of the standards they are required to meet and helping them link up with fairtrade retailers in the EU.

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Implementation MechanismAt the core of the National Export Strategy is the implementation mechanism that is necessary to ensure its successful implementation. This is centred around the Trade, Industry and PSD Sector Wide Approach (SWAp). This implementation mechanism is presented in Chapter 4 of the Main Document of the National Export Strategy and is presented in further detail in Annex 1 of the National Export Strategy.

The Approach is spearheaded by the Sector Working Group (SWG), which includes representatives of the key stakeholder groups such as government, civil society, the private sector and development partners. The SWG will be supported by seven Technical Working Groups (TWGs) reporting back to it. One of these is the Manufactures TWG. This TWG will be formed through the transition of the Manufactures Sub-Committee that ran during the development phase of the NES into a TWG under the Trade, Industry and PSD SWAp.

The Manufactures TWG will act as the stakeholder-wide representation body that will ultimately own and drive the cluster’s development through this strategy. The TWG:

• Re---, resource allocation and the provision of adequate management attention to bottlenecks (which inevitably arise in any implementation process);


• Will be co-chaired by passionate, effective leaders from both the public and private sectors, who will be elected by the members of the TWGs. It will be supported by the SWAp Dedicated Secretariat that is being established by the Ministry of Industry and Trade as detailed in Chapter 4 of the main document of the NES and in Annex 1. The TWGs will report through the co-chairs and the SWAp Dedicated Secretariat to the Sector Working Group.

Through the TWG, the Manufactures Strategy will be explicitly prioritised for facilitation by critical public sector support agencies in their strategic plans, budgets and work programmes. Such agencies include:


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r. Universities


ResourcingResourcing for the development of the cluster will recognise the Manufactures TWG as the driver of the cluster and support it. Resourcing will be at two levels:

1. Resourcing for the Manufactures TWG.

a. This will occur through the Trade, Industry and PSD Sector Wide Approach. The dedicated secretariat for the SWAp will also serve as secretariat for the Manufactures TWG.

b. Dedicated support for the Manufactures TWG may be through a lead development partner for each cluster or through a coordinated structure emerging through the respective TWG. Partners would help oversee the holistic development of the cluster. They would fund a long-term Technical Assistant (TA) to be dedicated to the TWG and

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to the implementation of this strategy. The TA will work with the dedicated secretariat and support the secretariat’s capacity development on cluster development technique as per this strategy.


a. Funding would come from all stakeholders depending on the nature of the action. The TWGs will determine the optimal owner of the action and the funder. Implementers will either be private sector or the local public sector. Development partners will support actions as required, either through pooled or individually kept budgets allocated to the development of the cluster as required by the action plan and the TWG. Funding should be catalytic and unlocking (e.g. a key piece of research or analysis, a strategic piece of infrastructure), and dependence on funding should be minimal. Flexibility of use of funds for the TWG and for development partners is important. Trusts for pooling of funds could be considered. The ideal modality for funding of the cluster strategies and TWG actions will need to emerge through the TWG. Funding will be based on a holistic approach to develop the cluster. Typically a development partner support package would equate to approximately $15 million for five years, although this will need to be revised on a programme of works to emerge from the TWG. See Annex 1 for the estimation of this value.

b. The allocation of sufficient government management time and funding for the cluster is essential to develop permanent cluster enablers. Funding will depend on the nature of the actions set out in Chapter 7 below. Government management time and funding will develop capacity for key institutions to address bottlenecks to the cluster. This will take the form of operationalising MITC and SMEDI, establishing Special Economic Zones/Industrial Parks, enabling commercial farming and providing reliable energy supply, among other initiatives. Government commitment to funding such key actions is fundamental to securing additional funding by development partners and investment by the banks and the private sector.

c. Private sector investment will complete the resourcing arrangement, with the support of the financial sector, though the degree of such investment will depend on government’s resourcing commitment to the Manufactures Strategy.

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This chapter presents the action matrix for the Manufacturing Strategy. It provides the priority level of each action, and informs of the phase of cluster development in which the actions fall. Priority is provided on a score from 1 to 6, with 6 being the highest priority. There are 5 phases, with Phase 1 being the first. It is divided into ten sections, in keeping with the holistic cluster development framework. These are:

1. M1: Access to Skills

2. M2: Conducive, Operationalised Framework & Support Institutions

3. M3: Access to Markets

4. M4: Access to Information

5. M5: Access to Inputs

6. M6: Access to Finance and Secure Tenure of Property

7. M7: Access to Business Development Services

8. M8: Ease of Meeting Tax and Regulatory Obligations

9. M9: Stable, Prudent and Conducive Macroeconomy

10. M10:Fair Competition

Actions in this strategy are coded with M, which refers to manufacturing.

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MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLy1. ACCESS To SkILLS

Code Category and Activity

Action Priority Lev-el (highest is 6)




M1.1 Apply the ILo’s Skills for Trade and Economic diversification tool to the cluster to develop a critical skills requirement list for the cluster (type of skills x realistic desirable volumes), including:

5 4 Manufactures TWG

TEVETA, MoEST, Manufac-turers, MoAFS

universities Working Committee, MIRTDC, Farmer Organisations/Cooperatives

M1.1.1 Beverages

M1.1.2 Plastic Products

M1.1.3 Packaging

M1.1.4 Agro-Processing

M1.1.5 Dairy

M1.1.6 Middle and junior management

M1.1.7 Marketing

M1.1.8 Agronomy

M1.1.9 Farmer Organisations, inc cooperatives

M1.1.10 Management and implementation of Manufactures Export Strategy

M1.1.11 Others as requested by stakeholders

M1.2 Develop a Manufactures Skills Development Plan. This plan will translate the skills requirement into the optimal supply-side response. Include in Plan:

5 4 NES Manu-factures TWG/MITA

TEVETA, MoEST, manu-facturers, smallholder associations, universities Working Committee, Dept of Immigration

MoF, MEPD

M1.2.1 Review modalities and identify optimal institutionalised way how for this Skills Development Plan to permanently inform skills providers

M1.2.2 Review whether to establish voucher/cou-pon scheme within cluster, similar to Farm Income Subsidy Programme

M1.2.3 Review tax incentives for private training by companies

M1.2.4 A scarce-skills list: key skills that cannot be provided locally, and hence need to be imported in the short-term

M1.3 Establish 4 Manufactures Accounts at TEVETA, funded by Processors in each sub-cluster:

5 4 TEVETA OPC MoEST, univer-sities Working Committee, MIRTDC

M1.3.1 Plastics

M1.3.2 Packaging

M1.3.3 Beverages and Dairy

M1.3.4 Agro-Processing

M1.4 use Manufactures Accounts at TEvETA to solely fund the Manufactures Skills Development Plan


M1.5 TEVETA reports to Manufactures Sub-Committee on expenditures under Manufactures Accotunt


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MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLy2. ConduCIvE, oPErATIonALISEd frAMEwork And SuPPorTIng InSTITuTIonS

Code Catego-ry and Activity

Action Priority Level Phase Lead Im-plementing Agency



M2.1 Institutional Framework to Drive Cluster DevelopmentM2.1 Ensure permanency of Manufacturing Technical Working Group (TWG) as

a dialogue platform because success of cluster is 100% dependent on constant stakeholder-wide dialogue and commitment.

6 1 MoIT OPC, MoIT, Manufac-turing TWG SADC Sugar Committee

MoF

M2.1.1 Either broaden mandate/TOR/membership of existing Manufactures Working Group/Association to incorporate adequate public sector representation to allow for imple-mentation of this strategy

6 1 Manufacturing TWG

MoIT MCCCI

M2.1.2 Secretariat to be SWAp Dedicated Secretariat or an effec-tive arrangement supported by cluster stakeholders


MEDP, MCCCI MoIT, MBS, MRA, MoAFS and others

M2.1.3 Secretariat to ensure comprehensive stakeholder mem-bership, including Policy Makers and Resource Holders



M2.1.4 Public and private sector co-chairs to be elected by mem-bership. May confirm or change co-chairs of Manufactur-ing TWG in development phase of NES



M2.1.5 Adopt this Manufacturing Strategy as base working document


MCCCI, MEDP MoIT, MBS, MRA, MoAFS and others

M2.1.6 Develop work plan to ensure timely implementation of this strategy




M2.1.7 Responsibility of co-chairs and secretariat to ensure follow up of actions




M2.1.8 Establish policy within cluster that advocacy and lobbying will take place through the Manufacturing TWG



M2.1.9 Establish Technical Committees as is necessary: for beverages, plastics and packaging, agro-processing and assembly


MEDP, MoF, OPC


M2.1.10 Ensure active linkages to NES Implementation Framework under MGDS (see cross-cutting action plan section 2) and to other relavant dialogue groups such as Trade Logistics Working Group and Trade Policy Working Group


MEDP, MoF, OPC


M2.1.16 Discuss if need an institutional framework so that it effec-tively addresses critical gaps to the development of the cluster. Discuss in Manufacturing TWG if this manufacturign strategy can serve as major building block for Malawi’s industrial policy, including Export Processing Zones


M2.1.17 Add elements to this strategy as needed to form Industrial Policy


M2.1.18 Implement legal requirements of the regulatory frame-work


MoJ, OPC

M2.1.19 Implement regulatory support framework for the cluster 6 1 Manufacturing TWG

MoJ, OPC

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Annex 4

MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLy


ActivityAction Priority

levelPhase Lead Im-

plementing Agency



M3.1 Investment Facilitation OPC, MoF MoIT, MEDPM3.1.1 Include in MITC Strategic Plan the explicit focus on Manufac-

tures (Beverages, Agro-Processing, Packaging and Plastics, Assembly) as one of its top 3 Priorities (with Manufactures and Sugar Cane Products)

6 2 MITC OPC, MoF MoIT, MEDP

M3.1.2 Develop comprehensive investor profiles for all 4 sub-clusters, accounting for faciltiation in access to land, inputs, standards taxes and market access.


M3.1.3 Use investor profiles as a basis for developing an investor facilitation programme for potential investors in the sector, to complement this NES Manufactures Strategy.


M3.1.4 Develop an Investor Facilitation Programme for potential inves-tors in the sector. Identify key parameters for Manufactures TWG and work in to programme. Determine degree of risk that needs to be covered for private sector to invest, without assuming too much risk.


M3.1.5 Ensure prioritisation in implementation of Export Processing Zones Act, prioritising the 4 sub-clusters of the manufacturing clusters. Link to Special Economic Zones/Industrial Parks in Cross-Cutting Action 5.5 and Commercial Farming in M5.2.2. Ensure EPZ Act is part of Investor Facilitation Programme for Manufacturing

6 3 MoIT MoIT, MEDP

M3.1.6 Ensure MITC has capacity to develop and implement programme: 6 3 MoF MoF MoIT, MEDP

M3.1.6.1 MITC requires skilled staff who are familiar with the economics and business aspects of the cluster

6 3 OPC MoF MoIT, MEDP

M3.1.5.2 MITC has capacity to effectively engage with relavant Ministries and agencies (eg. Greenbelt Initiative, Dept of Land, Dept of Irrigation, Dept of Energy, Dept of Extension Services, Dept of Environment, Dept of Trade, Dept of Industry, Registrar Directorate General etc). This is fundamental as an effective investor faciltiation programme requires providing an investor all it needs to start operating

6 3 OPC OPC MoIT, MEDP

M3.1.6 Ensure appropriate and adequate resourcing of MITC investor facilitation programme

6 3 MoF MoF MoIT, MEDP

M3.1.7 Ensure appropriate and adequate management and staff skill set to MITC investor facilitation programme

6 3 OPC MoF MoIT, MEDP

M3.1.8 Approach companies such as Bokomo, car assembly, pre-fabri-cation and others through investor facilitation programme

6 3 MITC MoIT, MEDP

M3.2 Target Markets and Export PromotionM3.2.1 Confirm Target Markets and Products identified in NES develop-

ment phase4 4 MITC MoIT, DPSM,

MEPD, MoF

M3.2.2 Develop a branding and marketing programme for all 4 sub-clusters, identifying modalities for penetration in new target markets in Africa as per SC3.2.1 and link to Investor Facilitation Programme

4 4 MITC MoIT, DPSM, MEPD, MoF

M3.2.3 Ensure programme is fully costed 4 4 MITC MoIT, DPSM, MEPD, MoF

M3.2.4 Secure resourcing to implement branding and marketing programme


M3.2.5 Develop and keep up to date a market information system for that includes a contacts database for clients and suppliers for the 4 Sub-Clusters of the NES Manfuactures Cluster, with a focus on target regional markets identified in the NES


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levelPhase Lead Im-

plementing Agency



M3.2.6 Develop a resource plan for how to keep market information system up to date


M3.3 Customs and licensesM3.3.1 Establish MITC as lead-agency with responsibilities for licensing

in the cluster and provide over-arching powers for licensing over other agencies, but through legislation ensure MITC consults accordingly

4 4 OPC MEPD

M3.3.2 Prioritise One-Stop Shop under Action Cross-Cutting Issue 3.2.5 - One Stop Shop for Trade Documentation - toward Manufactur-ing Cluster

4 4 MoIT MITC

M3.3.3 Ensure permits for companies registered with NES Manufactures Sub-Committee receive license within 5 working days, unless there is a fault in the application. Provide feedback on fault within 5 days

4 4 MoIT Manufactures TWG

M3.3.4 Harmonisation of documentation requirements between SADC and Comesa for products in cluster

4 4 MRA MoIT

M3.3.5 Harmonisation of rules of origin requirements between SADC and Comesa for products in cluster

4 4 MRA MoIT

M3.3.6 Ensure processing of customs clearance for products within cluster is fast-tracked and not take longer than working 2 days.

4 4 MRA MoIT

M3.4 Facilitation in meeting Standards RequirementsM3.4.1 Identify products in the cluster that require standards for export

to target markets6 3 MBS MoIT, MoF, MEPD MoAFS

M3.4.2 Identify processes to expedite Inspections under the Integrated Quality Management System

6 3 MBS MoIT, MoF, MEPD MoAFS

M3.4.3 MBS to prioritise development of standards for products in list in M3.2.1, relative to regional target market requirement


M3.4.4 MBS to orient its organisational structure toward facilitation of manufacturing cluster to meet regional target market standards


M3.4.5 MBS prioritise investment in infrastructure to meet standards developed in M3.4.1


M3.4.6 MBS prioritise investment in staff development to meet stan-dards developed in M3.4.1


M3.4.7 Ensure appropriate resource allocations to MBS to meet mandate toward facilitating this cluster, including expediting of Integrated Quality Management System to reduce delays and business costs


M3.5 TransportM3.5.1 Prioritisation of rail network development, as per Cross Cutting

Issues 3.7.9, 3.7.10 and 3.7.115 3 MoTPW MEPD, MoF

M3.5.2 Ensure international infrastructure is prioritised to regional growth centres (Tete, Harare, Lusaka, Mbeya, Nacala)

5 3 MoTPW MEPD, MoF

M3.5.3 Prioritisation of rural road feeder network development in areas of dairy production, wheat production, sorghum and horticulture (but secondary prioritisation compared to oil seed products and sugar cane)

4 3 MoTPW MEPD, MoF

M3.5.4 Expansion of transport rebate to 100% (as in Kenya) or 50% (as in Zambia) for NES Manufactures Sub-Committee members.

5 3 MoTPW MEPD, MoF

M3.6 Trade PolicyM3.6.1 Ensure PS at MoIT has access to prioritised target market and

products for the cluster5 5 Manufactures

TWGMoIT

M3.6.2 Ensure PS at MoIT has access to a list of critical imported inputs for target products in the cluster

5 3 Manufactures TWG

MoIT

M3.6.3 Align trade policy toward ensuring duty free quota free market access to target regional markets

5 5 MoIT MoF

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Annex 4




levelPhase Lead Im-

plementing Agency



M3.6.4 Align trade policy toward ensuring duty free acess to critical imported inputs required by the cluster

4 5 MoIT MoF

M3.6.5 Develop trade negotiation capacity around the needs of the cluster: 2 trade officers to be specialists in all trade issues affecting the cluster

4 5 MoIT MoF

M3.6.6 Prioritise application in trade negotiations of the trade policy for the manufactures cluster developed in NES Development Phase

4 5 MoIT MoF

M3.6.7 Ensure market access to both Comesa (Zambia, Zimbabwe) and SADC (for Mozambique, Tanzania)

4 5 MoIT MoF

M3.6.8 Ensure duties to Comesa and SADC remain low at not higher than 5%

4 5 MoIT MoF


4. ACCESS TO INFORMATIONCode Category and Activity Priority

LevelPhase Lead Im-

plementing Agency


Other Imple-menting Agencies

Refer to Access to Markets - MITC, MBS, SMEDIM4.1 Ensure members of Manufactures TWG are informed of warehouse receipts

services and commodity exchange/warehouse receipt service providers are part of Manufacturing TWG

5 3 MITC OPC, MoF MoIT

M4.2 Establish a service of farmer organisations and cooperatives, oriented toward agro-processors and beverage manufacturers

5 3 MITC OPC, MoF MoIT


5. AffordAbLE ACCESS To InPuTSCode Category and Activity Action Priority

LevelPhase Lead Im-

plementing Agency



M5.1 Access to EnergyM5.1.1 Refer to cross-cutting Actions 5.1 in Annex

5 of NES6 2

M5.1.2 Ensure prioritized access to energy for reg-istered Manufacturing Companies registered under the Manufactures TWG, through access to Day-Ahead Market on SADC Power Pool.

6 2 Department of Energy

MoF, OPC

M5.1.3 Establish mechanism for provision of refund by ESCOM equivalent to 50% the value of machinery acquisition, such as a bigger transformer and its accessories


MoF, OPC

M5.1.4 Repeal requirement for licences for generator sets bought by manufacturers meant to address power outages


MoF, OPC

M5.1.5 Provision of rebate on tax for diesel for generators 4 2 Department of Energy

MoF, OPC

M5.1.6 Review options to tint certain amount of fuel so that it is only suitable for industrial generators and consider lower fuel price on such fuel in times of grid shortages


MoF, OPC

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5. AffordAbLE ACCESS To InPuTSCode Category and Activity Action Priority

LevelPhase Lead Im-

plementing Agency



M5.1.6 Review options to tint certain amount of fuel so that it is only suitable for industrial generators and consider lower fuel price on such fuel in times of grid shortages


M5.2 Access to Local Inputs and Land for Commercial farmingM5.2.1 Beverages: Manufactur-

ing TWG

Pre-formed plastic for water bottles from plastics cluster

5 4 Manufactur-ing TWG

Crowns of beer bottles. Kenya imports steel sheets and processes these into crowns. Malawi can do the same.


Methane and CO2 from sugar cane ethanol 5 4 Manufactur-ing TWG

M5.2.2 Agro-Processing:

Allocation of 1,000,000 ha of land for com-mercial farming linked to key agro-processing clusters. Set as Special Economic Zones. Refer to Cross-Cutting Action Plan Section 5.5 and 6.2.4. Apply Responsible Agricultural Investment Principles.


Promotion of agricultural division of compa-nies (as applied by Malawi Mangoes, Illovo, Eastern Produce and others)


Allocation of land only on condition of mini-mum 20% of total input sourced from small-holder farmers through outgrower schemes


Plastics and Packaging

N/A

Assembly

N/A

M5.3 Research and TechnologyM5.3.1 Tied to M7.1, run Industrial Extension Programme targeting access to technology and R&D by

MSME. Collaborate with SMEDI. Develop capacity of MIRTDC around this focus4 5 MIRTDC

M5.3.2 The Industrial Upgrading and Modernisation Programme, which is a SADC programme has just commenced, by reviewing skills and equipment capacities. There is agreement that these are generally outdated. Once completed funding from UNIDO to help address this issue will be sought.

3 5 MoIT


6. AffordAbLE ACCESS To fInAnCE And SECurE TEnurE of ProPErTyCode Category and Activity Priority

LevelPhase Lead Implement-

ing AgencyCritical to Sucessful Implemen-tation


M6.1 Ensure Bankers Association, Micro-finance Network and Export Development Fund are part of Manufacturing TWG


Bankers Association

M6.2 Develop an Investor Profile for the Cluster 4 3 Manufacturing TWG

MITC

M6.3 Banks to develop a lending window for investors in the cluster, with favourable rates and collateral requirements, and long-term windows with credit guaran-teed by EDF. Prioritise lending for MSMEs. This must address the fact that no bank will currentlty lend for more than 2 years

5 3 Bankers Asso-ciation

M6.4 Develop information package for accessing finance for stakeholders in the Manufactures Cluster. To include financing pre-conditions

4 3 Bankers Asso-ciation

M6.5 Micro-finance agencies and banks to develop a savings and micro-finance scheme focused on access to micro-finance for suppliers to agro-processors in Manufactures Cluster. Include long-term lending/saving schemes. Include link to extension programme

5 3 MAMN

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Annex 4

MAnufACTurES STrATEgy - bEvErAgES, PLASTICS & PACkAgIng, Agro-ProCESSIng, ASSEMbLy7. AffordAbLE ACCESS To buSInESS dEvELoPMEnT SErvICES

Code Category and Activity Priority Level




M7.1 Start-up, Entrepreneur and MSME SupportM7.1.1 Set manufactures 4 sub-clusters as one of priority assistance areas for SMEDI 5 4 SMEDI OPC, DPSM,

MoF, MoIT

M7.1.2 Establish an MSME advisory and support centre in SMEDI to reduce entrepreneurial risk, improve ability to access finance, inputs and markets. Ensure sufficient scale to account with 100 customers a month

5 4 SMEDI OPC, DPSM, MoF, MoIT

M7.1.3 Develop an entrerpreneur, start-up and MSME training and business advisory support package geared toward manufactures sub-clusters


M7.1.4 Include in package advistory on how to access training and skills, also through TEVETA institutions. If not available, offer management and other tailor made courses through SMEDI


M7.1.5 Include in package advistory on how to access finance from banks and micro-finance agencies and how to access markets, via a collaboration with MITC’s export promoition programme and its investment facilitation programme


M7.1.6 Include in M7.1.1. support of Dept of Cooperatives for requests for manufacturing cooperatives


M7.2 Link to farmers for Agro-Processing and beverage ClusterM7.2.1 Prioritisation of Capacity of Dept of Cooperatives to facilitate farmer/producer coopera-

tives. Refer to Cross Cutting Action Plan 7.1.65 3 MoIT DPSM, MoF

M7.2.2 Prioritisation of work of Agricultural Extension Department Work Plan on NES priority sectors, including farmers linked to agro-processors and beverages who are members of the NES Manfuactures TWG. Refer to Cross Cutting Action Plan 7.1.14

5 3 MoAFS MoF, MEPD

M7.2.3 Inclusion in NES Dept of Cooperatives programme to ensure provision of information to cooperatives on manfuacturers demands

5 3 MoIT MoF, MEPD

M7.2.4 Inclusion on Manufactures Sub-Committee of Dept of Cooperatives and Cooperatives Representatives



6. AffordAbLE ACCESS To fInAnCE And SECurE TEnurE of ProPErTyCode Category and Activity Priority


ing AgencyCritical to Sucessful Implemen-tation


M6.6 Prioritization of Manufactures Stakeholders in Credit Reference Bureau 3 4 Credit Reference Bureau

M6.7 Export Development Fund to actively prioritise credit guarantees for Manufac-tures Cluster investors with export focus

5 3 EDF

M6.8v Establish Matching Grant/Challenge Fund schemes to complement EDF, and be run by it and provide productive grants to group farming.

4 3 EDF

M6.9 Prioritize focus of movable collateral registry on Manufacture Sub-Clusters. 4 4 Registrar Direc-torate General

M6.10 Since banks are reluctant to use commodities as collateral, see link to ware-house receipts, M4.1

3 3

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9. STAbLE, PrudEnT And ConduCIvE MACroEConoMIC EnvIronMEnT

Code Category and Activity Action Priority Level Phase Lead Implement-ing Agency



M9.1 Ensure an exchange rate that reflects the market equilibrium in the demand and supply of Malawi Kwachas, and that does not disincentivise exports

3 RBM MoF

M9.2 Ease exchange controls on Manufactures Cluster Companies, as per register developed under M8.1.2

3 RBM MoF

M9.3 Ensure expedited process to give CD1 form to Manufactures Cluster Companies 3 RBM

M9.4 Review requirement to obtain RBM approval for transactions above $50,000 3 RBM


8. EASE of MEETIng TAx And rEguLATory obLIgATIonSCode Category and Activity Action Priority


ing AgencyCritical to Sucessful Imple-mentation


M8.1 Ease of Meeting Taxation ObligationsM8.1.1 Through the Manufactures TWG, secure an agreement between the Govt and members on how

to address the issue of transfer pricing5 Manufacturing TWG MoF

M8.1.2 Develop a tax incentive package that is geared soley to the manufactures cluster, through the Investment Facilitation Plan in Section M3.1, including:

4 Ministry of Finance MRA, MoIT

M8.1.2.1 Ensure most efficient way of raising taxes from cluster, through growing tax base

4

M8.1.2.2 More efficient taxation of imports 4

M8.1.2.3 Works toward tax consistency 4

M8.1.2.4 Ensure MoF list of critical imported inputs aligned to key prioritised export products

4

M8.1.2.5 Discussion forum for remittances of export proceeds

4

M8.1.2.6 Export Conversion rule not applicable to manu-facturers under Export Retention Scheme

4

M8.1.2.7 Conduct a Review on whether export tax allow-ance should be on turnover or profit?

4

M8.1.2.8 Introduce incentives for new exports under the profile of this cluster (no revenue loss) for period of time

4

M8.1.3 Develop list of critical imported inputs for each sub-cluster (beverages, agro-processing, plastics and packaging, assembly), and ensure 5% maximum tariffs on all items in the lists

5 Manufacturing TWG

M8.1.4 Apply customs rebate to list of critical imported inputs for each sub-cluster developed in 8.1.3 5 Manufacturing TWG

M8.1.5 Ensure clear direction on rebate system in terms of SADC, COMESA customs unions 4 Manufacturing TWG

M8.1.6 Ensure that VAT refunds for Manufacturing TWG members are returned within 3 months so as not to negatively affect working capital of businesses. Currently takign 15 months: This is current problem. Refunds used to take 6-7 month. As exporter, VAT paid on imports. Export VAT free, so most exporters will have claims. Claims from non-exporters clog system, so need to focus on exporters.

3 MRA

M8.1.7 Refer to Cross-Cutting Issues Section 8.1 for tax actions

M8.2 Ease of Meeting Regulatory ObligationsM8.2.1 Establish and implement Government policy to prevent minimum prices for crops that feed in

to beverages sub-cluster and agro-processing sub-cluster5 Manufacturing TWG

M8.2.2 Expedite enactment of amendments to Companies Act following recent review 4 Manufacturing TWG

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Annex 4


10. FAIR COMPETITIONCode Category and Activity Action Priority

LevelPhase Lead Imple-

menting AgencyCritical to Sucessful Implemen-tation


M10.1 Undergo rapid, top level review of degree of fair competition in the cluster, with special attention to:

3 5 CFTC Manufac-tures TWG

M10.1.1 Unfair business practices by dominant platers, relative to Fair Trading and Competition Act

M10.1.2 making market-based recommendations on increasing formal-ity and capacity of informal, low quality crushing sector

M10.2 Review outcomes of review 3 5

M10.3 Conduct detailed reviews into fair competition in the cluster if deemed necessary by Manufactures TWG and CFTC


M10.4 Make recommendations, via Manuafactures TWG to key institutions to prioritise and incentivise formalisation of businsses in the cluster


M10.5 CFTC adopt a soft approach to applying the Competition and Fair Trade Act, not through strict enforcement but through working with players along value chain to become aware of their infringements under the Act, and the possibilities of penalties after a 6 month window


177

178

Annex 5 – Action Matrix for NES Priority Area 2:

Conducive Environment for Production Base and Exports

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Annex 5 - Contents1. ....Access to Competencies, Skills and Knowledge .......................................... 1822. ....Access to Supportive Economic Institutions ................................................ 1823. ....Access to Markets .......................................................................................... 1824. ....Access to Information .................................................................................... 1915. ....Access to Inputs ............................................................................................. 1936. ....Access to Finance and Secure Tenure of Property ....................................... 1977. ....Access to Business Development Services .................................................. 2038. ....Ease of Meeting Tax and Regulatory Obligations.......................................... 2079. ....Macroeconomic Prudence and Stability ....................................................... 20910. ..Fair Competition ............................................................................................. 210

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Annex 5

Introduction

The development of a conducive environment for the emergence of the productive base of the economy, and hence of exports, hinges on an economy providing private operators (farmers, women’s groups, youths entrepreneurs, cooperatives, MSMEs, large businesses etc) with affordable access to the factors need factors they need to improve their income, grow, add value and create jobs. Providing affordable access to these factors for all stakeholders of the Malawian economy, is key for economic empowerment and for Malawi’s ability to meet the goals set out in the Malawi Growth and Development Strategy (MGDS II). These factors are set out in the diagram below.

What is important is affordable access to these factors. Therefore stakeholders in the Malawian economy need to identify how to best provide these factors in a sustainable manner. In some cases, the private sector is the supplier while in others the public sector is the key supplier. In all cases, the private sector and the public sector have a role to play. The key is identifying optimal roles and sustainable capacity to deliver on those roles.

Diagram A5.1: The ten enablers of value addition and job creation

Source: NES Technical Team, Imani Development. Note the arrows given an indication of which factors are typically dependent on other factors.

The action matrix for the conductive environment is structured around these ten factors. It indicates how Malawi can move toward sustainable provision of these factors to private operators.

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1. Access to Competencies, Skills and Knowledge Refer to Annex 7

2. Access to Supportive Economic Institutions Refer to Annex 6

3. Access to Markets3.AffordAbLE ACCESS To MArkETS

Code Category and Activity

Actions Priority Level (highest is 6)

Lead Im-plementing Agency



Adequately Re-sourced? (Y or N)

If Y, Re-sourcers

If No, De-sired Re-sourcers

Indicative Cost, uS$

Desired End of Implementation

3.1 Export Promotion and Investment Facilitation3.1.1 Expedite

process to give MITC required legal powers

6 OPC MoF, MEPD MoIT No Public Finances, PSD DG

2014

3.1.1.1 Ensure MITC Act to include provisions to empower MITC to to issue all required approvals, certificates, work permits, and land allocation and that any decision reached by MIPA shall be final and binding.


2014

3.1.1.2 Investment Certificate to automatically entitle bearer to in-centives, subject to the fulfilment of a number of conditions.


2014

3.1.1.3 Review of Act relative to requirements of NES. Include review of Rwanda, Tanzania, Zambia and Zimbabwe counter part legislation


2014

3.1.1.4 MITC to report directly to the President


2014

3.1.1.5 Expedite enactment of MITC Bill 6 OPC MoF, MEPD MoIT No Public Finances, PSD DG

2014

3.1.2 Fast-track operationalisation of MITC through dynamic leadership, capacity & adequate funding:


2014

3.1.2.1 Set a vision for MITC, centred around implementation of the NES and productivity aspects of MGDS


2014

3.1.2.2 Secure highest level champions for vision of MITC

6 OPC MoIT MEPD No Public Finances, PSD DG

2014

3.1.2.3 Develop a Realistic, Phased and Adequately Resourced Strategic Plan


2014

3.1.2.4 Ensure a strong management team and leadership


2014

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Annex 5

3.AffordAbLE ACCESS To MArkETSCode Category and

ActivityActions Priority






If Y, Re-sourcers




3.1.2.5 Identify what is required staff establishment and skills set necessary in MITC to effectively meet its mandate


2014

3.1.2.6 Identify optimal (but not exces-sive) budget required for MITC to effectively meet its mandate


2014

3.1.2.7 Raise Public Finances budget to MITC from MK160m to optimal level in phased approach over 3 years


2014

3.1.2.8 Identify legislative requirements necessary to allow MITC to effectively meet its mandate. MITC’s work is cross-cutting and it requires teeth to effectively facilitate investment and promote exports


2014

3.1.2.9 Standardisation of staff remu-neration at MITC


2014

3.1.3 Implementation of Investor Road Map: MITC’s work is cross-agency

4 MITC MoIT MEPD No Public Finances, PSD DG

2014

3.1.3.1 MITC to be involved in zoning and investment in factory, storage and other similar infrastructure

4 MoIT MoIT MEPD No Public Finances, PSD DG

2014

3.1.3.3 Develop a Service Charter, as in Tanzania Investment Centre


2014

3.1.4 Establish an Investor Tracking System that can be kept up to date and is internatlised in MITC day to day work


2014

3.1.5 Use of Malawi’s embassies to promote key growth clusters under the NES. Focus on NES priority markets and products.

4 MITC MoFA, MoF No Public Finances, PSD DG

2014

3.1.5.1 Develop an implementable embassy trade promotion programme. Prioritise embassies in target markets as per NES Cluster Strategies


2014

3.1.5.2 Develop a resourcing plan for the embassy trade promotion programme


2014

3.2 Trade Facilitation3.2.1 Strengthen and institutionalise Trade Logistics

Working Group (TLWG) under SWAp Framework and ensure buy in through effective membership, co-chairs and secretariat

4 TIPSD Swap MoIT No Public Finances, PSD DG

2013

3.2.1.1 Review membership to ensure all key stakeholders are included, including agents, transporters, MCCCI, GTPA, Food Proces-sers Association, Exporters Association and a minimum of 5 actively-engaged importers and exporters

4 TIPSD Swap MoIT No 2013

3.2.1.2 From the Government side, ensure attendance of: OPC, MoF, MEPD, RBM, MoIT, MRA, MITC, Ministry of Transport & Public Works, Bvumbwe Research Sta-tion, Chitedze Research Station, Dept of Forestry, Dept of Animal Health, MBS, Fair Trading and Competition Commission


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If Y, Re-sourcers




3.2.1.3 Secure dedicated secretariat (ie full time, efficient secretary, secretary must be technical, not administrative)


3.2.1.4 TLWG to elect public and private co-chairs


3.2.1.5 Secure funding arrangements for secretariat. If secretariat is effective, key stakeholders will be happy to fund attendance


3.2.1.6 TLWG to assess, in due course, whether it should be legally institutionalised to ensure sus-tainability


3.2.1.7 Synchronise the following action plans: Trade Logistics Working Group Action Plan, Mwanza Joint Border Post Action Plan, DTIS through TLWG


3.2.1.8 Secure resourcing requirements for implementation of single trade facilitation action plan


3.2.1.9 TWLG TOR must ensure its mandate includes ensuring that the cost of standards (health, safety, environmental) applied to exports and imported inputs is not excessive and is not an unrequired cost on exports


3.2.1.10 TWLG TOR must ensure its man-date includes ensuring that the MBS does not apply an excessive cost of standardisation in the name of ensuring Malawian prod-ucts need to meet international standards, prior to exporting. If the standards requirement is from the importing country, this is fine. But standards should not be imposed on exports in the name of international standards when there are no such interna-tional standards that will prevent Malawian exports entering the destination country.


3.2.1.11 TWLG TOR to include ownership and implementation of actions 3.2.2 to 3.2.11


3.2.2 Establish Mwanza Joint Border Committee that will report to the Trade Logistics Working Group

4 TIPSD Swap MoIT, MRA No Public Finances, PSD DG

2014

3.2.3 Implementation of the Mwanza Joint Border Com-mittee Action Plan, when finalised


2014

3.2.4 Ensure ongoing application of Single Administrative Document, as per SADC and Comesa requirements (Form 12)


2014

3.2.4.1 Review need for products on the list (i.e. fertilizer) that are primar-ily monitored for data collection purposes where data is available to government through other channels i.e. SAD or Customs declaration

2 TIPSD Swap MoIT, MRA No 2013

3.2.4.2 Discuss with MRA/Customs mechanisms for data sharing


3.2.4.3 Review Relevant Notification/Law if applicable


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If Y, Re-sourcers




3.2.1.3 Secure dedicated secretariat (ie full time, efficient secretary, secretary must be technical, not administrative)


3.2.1.4 TLWG to elect public and private co-chairs


3.2.1.5 Secure funding arrangements for secretariat. If secretariat is effective, key stakeholders will be happy to fund attendance


3.2.1.6 TLWG to assess, in due course, whether it should be legally institutionalised to ensure sus-tainability


3.2.1.7 Synchronise the following action plans: Trade Logistics Working Group Action Plan, Mwanza Joint Border Post Action Plan, DTIS through TLWG


3.2.1.8 Secure resourcing requirements for implementation of single trade facilitation action plan


3.2.1.9 TWLG TOR must ensure its mandate includes ensuring that the cost of standards (health, safety, environmental) applied to exports and imported inputs is not excessive and is not an unrequired cost on exports


3.2.1.10 TWLG TOR must ensure its man-date includes ensuring that the MBS does not apply an excessive cost of standardisation in the name of ensuring Malawian prod-ucts need to meet international standards, prior to exporting. If the standards requirement is from the importing country, this is fine. But standards should not be imposed on exports in the name of international standards when there are no such interna-tional standards that will prevent Malawian exports entering the destination country.


3.2.1.11 TWLG TOR to include ownership and implementation of actions 3.2.2 to 3.2.11


3.2.2 Establish Mwanza Joint Border Committee that will report to the Trade Logistics Working Group


2014

3.2.3 Implementation of the Mwanza Joint Border Com-mittee Action Plan, when finalised


2014

3.2.4 Ensure ongoing application of Single Administrative Document, as per SADC and Comesa requirements (Form 12)


2014

3.2.4.1 Review need for products on the list (i.e. fertilizer) that are primar-ily monitored for data collection purposes where data is available to government through other channels i.e. SAD or Customs declaration


3.2.4.2 Discuss with MRA/Customs mechanisms for data sharing


3.2.4.3 Review Relevant Notification/Law if applicable









If Y, Re-sourcers




3.2.5 Establish a One-Stop Shop for Trade Documentation (Single Window)


2017

3.2.5.1 Agree on the opening of a OSS by all stakeholders

4 No 2017

3.2.5.2 Agree for TLWG to serve as owner of OSS

4 No 2017

3.2.5.3 Secure Cabinet approval for the concept and link to NES and MGDS II

4 No 2017

3.2.5.4 Decide whether to develop a single physical window, or a single electronic window as in Mozambique, Ghana

4 No 2017

3.2.5.5 Agree on mandate, phased objectives and scope of OSS. Draft TOR

4 No 2017

3.2.5.6 Investigate optimal modalities: invite expressions of interest from companies such as SGS, Crown Agents and others

4 No 2017

3.2.5.7 Discuss effective modalities to suit Malawi’s circumstances

4 No 2017

3.2.5.8 Discuss and agree whether to outsource OSS, using ‘Build Own Operate and Transfer mecha-nism, as applied in Mozambique and Ghana

4 No 2017

3.2.5.9 Analyse approaches in different countries, such as Mozambique, Ghana, Philippines and others

4 No 2017

3.2.5.10 Review IT systems and infra-structure across all agencies involved in trade documentation to identify synergies and best practice solutions in coordination with the OSS/Single Window

4 No 2017

3.2.5.11 Review legal requirements and procedures across all agencies involved in trade documentation to identify synergies and best practice solutions in coordination with the OSS/Single Window. Link to Revised Kyoto Convention.

4 No 2017

3.2.6 Rationalise border transit 3 MRA, MoIT No Public Finances, PSD DG

2017

3.2.6.1 GoM to sign and implement border cooperation agreements esp. with Mozambique

4 No 2017

3.2.6.2 Discuss a regional bond guarantee scheme (possibly under SADC)

3 No 2017

3.2.6.3 Harmonize documentation for transit

3 No 2017

3.2.6.4 Develop a mechanism for dealing with transit related issues with neighbouring states

3 No 2017

3.2.7 Fast-track adoption of laws for electronic commerce 2 MRA, MoIT, MoJ

No Public Finances, PSD DG

2017

3.2.8 Develop and introduce a simultaneous inspection system

2 MRA, MoIT No Public Finances, PSD DG

2017

3.2.9 Conduct a legal review, gap analysis for electronic commerce and introduce a legal framework for electronic commerce

3 MRA, MoIT, MoJ


$100,000 2017

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If Y, Re-sourcers




3.2.10 Extend the availability of ‘direct trader input’; elim-inate the mandatory requirement to use a customs clearance agent to clear goods, together with the regulation of their fees.


$0 2017

3.2.11 Conduct an analysis and suggest where addition use of technology can enhance the trade facilitation process, in line with Action 3.3.21


$100,000 2017

3.2.12 Secure effective transit arrangements with neigh-bouring countries

2 MRA, MoIT, MoJ, MoFA


2017

3.3 Customs3.3.1 Conduct detailed process mapping of all border

clearance procedures to identify bottlenecks3 MRA No Public

Finances, PSD DG

2014

3.3.2 Extend payment avenues for duty and tax collection to commercial banks including those outside MRA premises

2 MRA No Public Finances, PSD DG

2014

3.3.3 Fast-track introduction of electronic payments 2 MRA No Public Finances, PSD DG

2014

3.3.4 Initiate a training program for officers that ensure that a standardized process is followed for docu-mentation procedures.


2014

3.3.5 A single point of declaration is being introduced to standardise procedures.


2016

3.3.6 MRA reported that they are in a process of acquir-ing scanners to fast-track border clearance.


2016

3.3.7 Implementation of DTIS: A lack of infrastructure is the main problem.


2016

3.3.8 Confirm complete computerisation of processes at border posts: 95% of trade transactions automat-ed in March 2011


2016

3.3.9 Ensure continuous operationalisation of Risk Man-agement Section. There was a plan to categorise importers into 3 risk profiles. However some times the profiles become outdated as there may be limited capacity to keep it updated. Training may not be forthcoming and people who are trained may move on.


2016

3.3.9.1 A team has been established to develop a risk management strategy and this will be finalised by July 2011.


2016

3.3.9.2 Create detailed risk management strategy including PCA - with implementation timeline. Incorpo-rate international best practice including on preclearance, chan-nels, and post clearance audit


2016

3.3.9.3 Identify resources, training needs, legal amendments to customs code, and other issues that need to be addressed


2016

3.3.9.4 Review and amend law to incorporate changes in line with international best practice (Kyoto Convention).


2016

3.3.10 Apply risk based controls at border posts MRA No Public Finances, PSD DG

$400,000 2016

3.3.11 MRA’s valuation section is developing a strategy to enhance valuation and make best use of interna-tional best practise.


2016

3.3.12 Upgrade from Asycuda ++ to Asycuda World. The former is too slow, and is not user friendly as it pro-vides raw data and needs constant amendments.


2014

186

Annex 5








If Y, Re-sourcers




3.3.13 Ensure MRA stops using a DOS-based IT system 3 MRA No Public Finances, PSD DG

2014

Customs (continued)

3.3.14 Specialised training at relevant agencies (to define) in:


2014

3.3.14.1 tariff classification, international trade agreements

2 MRA No

3.3.14.2 valuation 2 MRA No

3.3.14.3 rules of origin 2 MRA No

3.3.14.4 IT custom procedures: Asycuda World

2 MRA No

3.3.14.5 Risk Management 2 MRA No

3.3.14.6 Post Clearance Audit MRA No

3.3.15 Supplement training with WCO E-learning program available on the WTO website


2015

3.3.16 Review of Customs and Excise Act to (from Time Release Study)


2014

3.3.16.1 incorporate time limit between lodgement and payment for declarations to two working days

1 MRA No

3.3.16.2 accredit clearing agents in order to implement risk management

1 MRA No

3.3.16.3 limit the number of temporary stores for easy management

1 MRA No

3.3.16.4 introduce penalties for delays in payment for importations and late clearance

1 MRA No

3.3.16.5 introduce penalties for recurring errors on declarations made by agents

MRA No

3.3.17 Remove the cargo release document. Instead endorse a copy of the declaration.


2014

3.3.18 In medium term, provide cargo release document within Electronic Customs clearance process


2014

3.3.19 Equip each border post to a standard which enables it to function effectively. (Equipment and facilities audit and preparation of procurement documentation)


$150,000 2014

3.3.20 Deploy appropriate non-intrusive inspection equip-ment at busy border posts (Technical Assistance for the acquisition and integration of non-intrusive inspection technologies)


$150,000 2014

3.3.21 Align Customs policy, law and practice with the WCO’s Revised Kyoto Convention (RKC).


$250,000 2014

3.4 Import and Export Licenses3.4.1 Ensure expedited licensing for both commodities

and for value addition goods, see activity 9.13 MoIT n/a $0 2014

3.4.2 Delegate ‘authority to approve’ for trade related permissions, to operational management level.

3 MoIT n/a $0 2014

3.4.3 Amend license laws to require export licenses authorisation by MoIT in 2 days, unless there is reason for delay because of infringement of a law by the company

3 MoIT MoJ 2014

3.4.4 Review Control of Goods Act to 3 MoIT MoJ Public Finances

2014

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3.4.4.1 ensure export licenses are not required for prioritised export products under the NES

3 MoIT MoJ Public Finances

3.4.4.2 ensure that the export licensing list is minimised to those prod-ucts that have environmental, health and safety implications

3 MoIT MoJ Public Finances

3.4.5 Develop a list of critical imported inputs for export-oriented growth clusters, under the NES

3 MoIT MRA n/a

3.4.6 Develop a list fees for all import and export license, permit and certificates

3 MoIT MRA n/a

3.4.7 Review certificate requirements for animal health/animal products

2 MoAIWD

3.4.7.1 Evaluate delegation authority on a pilot basis to select districts/border points to reduce the need for traders to travel to Lilongwe

2 MoAIWD

3.4.7.2 Include under ASWAP the recruitment and training of suf-ficient vets to allow for increase delegation to border regions

2 MoAIWD

3.4.7.3 Formalise delegation of approval powers to local districts, where this already takes place

2 MoAIWD

3.4.8 Forestry export license and export permit 1 Dept of Forestry

3.4.8.1 Evaluate need for both annual export license and annual export permit ensuring sustainability and financial objectives and control requirements

1 Dept of Forestry

3.4.8.2 Allow for payments to be made at commercial banks

1 Dept of Forestry

3.5 Trade Negotiation Capacity3.5.1 Institutionalise National Working Group on Trade

Policy under MGDS, SWAp and NES Framework and ensure buy in through effective membership, co-chairs and secretariat

4 MoIT No PSD DG 2013

3.5.2 Develop a Trade Negotiation Strategy through NWGTP that links Malawi’s trade negotiation approach to NES Prioritized Clusters, in preparation for Tripartite, Comesa Customs Union, SADC, and as a basis for bilateral negotiations, EU negotiations and WTO engagement

4 MoIT MoF, MRA, MBS

No Public finances, PSD DG

2013

3.5.3 Develop an Organisational Resource Requirement Plan to allow for the successful execution of the Trade Negotiation Strategy. What skills and special-ist base is required, how many staff per skills base, consistency of staff and secure required funding under public finances

4 MoIT DPSM, MoF, MEPD


2013

3.5.4 Include in Organisational Resource Plan for Trade Negotiation Strategy the existence of permanent and capable private sector negotiators per key cluster. It is essential to build up a consistent, strong team over time that includes adequate private sector participation with a strong, cross-agency public sector team

4 MoIT DPSM, MoF, MEPD


2013

3.5.5 Design a support project to help MoIT in effectively delivering its Trade Negotiation Strategy that is tied to the NES

3 MoIT No 2013

3.6 Standards and Accreditation3.6.1 Establish a multi-agency standards coordination

platform, chaired by the private sector, under the SWAp framework. Mandate is coordination, including of SPS (Ministry of Agriculture & Food Security), and also an investigation of private sector outsourcing of some MBS services

5 TIPSD SWAp MBS No PSD DG 2013

188

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If Y, Re-sourcers




3.6.2 Examine options for PPP testing services for standards

5 TIPSD SWAp MBS No PSD DG 2014

3.6.3 Amend MBS Strategic Plan to be in line with Priori-tized NES Clusters and their target markets

5 MBS MoIT No Public finances

2013

3.6.4 Secure resourcing for implementation of MBS Strate-gic Plan

4 MBS MoIT MoF, MEPD

No PSD DG 2013

3.6.5 Develop a human resource development plan to allow for implementation of MBS Strategic Plan, including a long-term training scheme based on trade facilitation, not over-regulation

4 MBS MoIT MoF, MEPD, DPSM

No PSD DG 2013

3.6.6 Review fee structure relative to willingness and ability of pay

4 MBS MoIT No PSD DG 2013

3.6.7 Prioritise investments in MBS Strategic Plan to NES Prioritized Clusters

4 MBS MoIT No Public finances, PSD DG

2013

3.6.8 Establish a programme to facilitate MSMEs in meet-ing standards for priority products and markets in NES, through SMEDI

5 MBS SME DI No PSD DG $500,000 & $100,000 pa govt

2013

3.6.9 Ensure effectiveness EU funded SQAM: must be linked to prioritised implementation of MBS stra-tegic plan and to the NES Prioritized Clusters and Markets to ensure international accreditation

6 MBS MoIT n/a 2013

3.6.10 Timely Implementation of SQAM/Infrastructure Development Project, based on its 6 components;

6 MBS MoIT Yes EU SQAM EU 2016

3.6.10.1 Review National Quality Infra-structure

6 $260,000

3.6.10.2 Support to review/development of technical regulations

6 $520,000

3.6.10.3 Enhancement of MBS’ capacity 6 $2,795,000

3.6.10.4 Enhance Capacity of National Enquiry Points

6 $130,000

3.6.10.5 Strengthening SPS infrastructure 6 $325,000

3.6.10.6 Support to SMEs to meet Quality Standards

6 $585,000

3.6.11 Enactment of amended MBS Act

6 MoIT No PSD DG 2014

3.6.12 Implementation of outcomes of MCDA: link stan-dards infrastructure and capacity to NES

4 MoIT Partial USAID PSD DG unknown 2014

3.6.13 Ensure National Quality Policy is appropriately balanced between domestic consumer protection and export limitation. In exports, its role is not to protect consumers, but to help Malawian firms meet importing country requirements

6 MBS No PSD DG $0 2014

3.6.14 Review totality of the NQI legislative framework and promulgate required legislation. Ensure clear roles and consistency with NES

6 MBS No PSD DG $20,000 2013

3.7 Transport3.7.1 Review findings of 2007 Report on Competition

Issues in the Transport Sector and evaluate impact of current market structure on the NES Priority Clusters, both for international trade and for domestic integrated supply chains in sugar cane products, oil seed products and the beverages and agro-processing sub-clusters of the manufacturing cluster. Link to Transport sections in Annexes 2, 3 and 4

6 CFTC MoIT, MoF, MEPD, OPC

No $100,000 2013

3.7.2 Conduct a market & regulatory analysis, resulting in proposals for revisions to move toward effective operation of the road haulage market.


No PSD DG 2014

189

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If Y, Re-sourcers




3.7.3 Support emergence of market structure that en-sures relatively fair competition, through application of Competition Policy. Investing in infrastructure by itself does not necessarily lead to lower transport costs.



2014

3.7.4 The role of the RTOA in price setting should be closely scrutinised to ensure that the practice does not violate section 33 (3) (b) and (c) of the Competition and Fair Trading Act.



2014

3.7.5 Efforts at the regional level to do away with cabo-tage agreements should be speeded up with a view of exposing inefficient local operators to foreign competition with the view to improve general service delivery.



2014

3.7.6 Implement fair competition in Government procure-ment of transport services

3 MoTPW No Public Finances

2014

3.7.7 Review 3rd country truck-ing regulations

2 MoTPW MoIT No 2014

3.7.8 Develop capac-ity of CFTC to implement findings of 3.7.1

5 MoIT OPC CFTC No Public finances, PSD DG

$1,000,000 + $100,000 by Govt pa

2017

3.7.9 Provide support for fuel costs for the transport sector in priority NES clusters, but only proceed with this action if this is matched with genuine efforts to ensure fair competition to facilitate farmer to processor linkage

4 MoF No Public finances

2014

3.7.10 Prioritise programmes to build capacity of contrac-tors and policy implementators, as per Transport Sector Investment Programme, tied to feeder road development for NES priority crops and their designated geographic areas

3 MoTPW MoF, MEPD No Transport Donors, PSD DG

2015

3.7.11 Ensure Implementation of Transport Sector Invest-ment Programme, priortised through NES priority clusters, both for rural feeder roads and corridors to growth centres (Tete, Lusaka, Mbeya, Harare)

4 MoTPW MoF, MEPD No Transport Donors, PSD DG

2013

3.7.12 Strengthen implementation capacity for developing the rail network, through the use of public-private partnerships.

5 PPPC MoF, MEPD No Transport Donors

2015

3.7.13 Establish an effective railway regulatory body will capacity and legal power to enforce operator contracts

6 OPC MoF, MEPD No PSD DG 2016

3.7.14 Connection of rail network to Zambian network at Chipata

5 MoTPW MoF, MEPD No Transport Donors

2016

3.7.15 Develop and implement rail development and main-tenance plan, linked to priority export clusters


2014

3.7.16 Rail development and maintenance plan must include pricing policy to prevent abnormal profits


2014

3.7.17 Implement harmonised policies, legislations, standards and procedures as called for in the SADC Protocol on Transport, Communication and Meteorology.


2017

3.7.18 Lower tax structure on transport equipment and services

2 MoF No 2017

190

Annex 5

4. Access to Information




Lead Imple-menting Agency




If Y, Re-sourcers


Desired End of Imple-mentation

4.1 Commodity Exchanges, Storage & Mobile Information4.1.1 Establish RBM as designated regulator to ensure financial

security of warehouse receipts system in Malawi. 6 MoF RBM No RBM $0

4.1.2 Fast-track regulatory support (i.e. facilitation) to efforts to establish and commercialise commodity exchanges such as ACE

6 RBM No RBM $0

4.1.3 Complete ACE pilot of warehouse receipts (with NASFAM, Farmers World, OIBM and NFRA): Complete documentation for warehouse receipts system to protect banks. Then take to Credit Committee to kick start the system.

5 ACE Yes USAID - MLI

$0

4.1.4 Fast-track development of regulatory framework for facilitation support for private investment in commodity storage capacity and warehouse. Link to bulking centres. Harmonise system for different commodity exchanges and approaches (e.g. ACE and Auction Holdings). Ensure trust in the system through enforced mechanism to account for defaults on contracts

6 MoF RBM No RBM, MoF $100,000

4.1.5 RBM establish a unit dedicated to the regulation of ware-house receipts. Allocated 4 staff

6 RBM No RBM $40,000 pa

4.1.6 Implement a unit and staff development package for the warehouse receipts unit in RBM

6 RBM No RBM $200,000

4.1.7 Policy to prevent export bans for key cash crops in the NES 5 OPC No OPC n/a

4.1.8 Develop a development partner support programme to extend ACE pilot of warehouse receipts to non-maize crops

5 Devel-opment Partners

No $1,000,000

4.1.9 EDF to deliver support services for commodity exchanges, storage capacity in rural areas and warehouse receipt investors

5 EDF Yes RBM

4.1.10 Banks develop a lending window for investors in storage capacity and non-maize silos, tied to priority clusters of NES

5 Bankers Association

No Banks

4.1.11 Conduct review of prices in SMSs for market information texts to farmers

5 No TIP SWAp

4.1.12 A key bottleneck is attracting depositors (farmers) so ensure inclusion of warehosue receipts and commodity exchanges in oil seeds extension programme. See Oil Seed Products Strategy in Annex 2

5

4.1.13 Develop modelling tools to help explain warehouse receipts to traders and cooperatives.

4 Yes USAID - MLI

4.1.14 Fast-track regulatory support to improve farmer access to information through mobile phones and other similar technologies, including Esoko. Explore methods to identify how to commercialise Market Information Systems (now subsidized by donor projects), eg support of risk through EDF and financial sector

5

4.1.15 Fast-track private investment in crop and weather insurance products

5

4.2 Development of the ICT sector4.2.1 Review excise, VAT and MACRA levy on mobile telephony to

keep cost of communication to minimum5 MoF MACRA No MACRA

4.2.3 Conduct a review of competition in the sector to ensure application of Fair Trading and Competition Act/Commu-nications Act. Conduct review of various communciation sub-sectors (postal, courier, telecoms, package/data trans-mission) to understand degree of liberalisation required to allow for efficient services, innovation and affordability for consumers

5 CFTC No CFTC

191

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If Y, Re-sourcers



4.2.4 Increased Mobile phone competition to drive innovation, better service, pricing. Consider removal of restriction eg requirements on joint venture investment, eg 49% foreign, 51% local. This is currently a requirement.

5 OPC CFTC No CFTC

4.2.5 Liberalisation of the internet gateway

5 OPC No OPC

4.2.6 Develop a trade in services offer on restrictions, use of local shareholders, skills.

MoIT No MoIT

4.2.7 Establish broadband networks for TEVET, tertiary education and research institutions

4 MACRA TEVET In MGDS

4.2.8 Connect Malawi to the undersea fiber optic cable through Tanzania

4 OPC In MGDS

4.2.9 Expand and enhance GWAN 3 OPC In MGDS

4.2.10 Establish local assembly networks 3 MACRA In MGDS

4.2.11 Establish fiber links connecting local assemblies 3 MACRA In MGDS

4.2.12 Review Dept of ISTMS strategic plan 3 MACRA In MGDS

4.2.13 Conduct a review of ICT policy and amend accordingly 4 OPC MEPD In MGDS

4.2.14 Review Communication Act 1998 to ensure facilitation of growth of sector, and fair competition. Ensure consistent with international commitments

4 MACRA MoJ In MGDS

4.2.15 Conduct Institutional Review of MACRA 4 MACRA In MGDS

4.3 Stakeholder Platforms4.3.1 Recognise that such platforms are most effective tool in the

short-term to build Malawi’s ability to produce and export. They are also inexpensive method.

Not an activity, prioritised in main text of NES

In MDGS

4.3.2 Invest much more management & administrative time in supporting effective stakeholder dialogue platforms, both in key export & domestic oriented clusters, & also in cross-cluster export enablers. Tool to improve coordination & effective implementation of policies.


In MDGS

4.3.3 Learn from lessons: ensure ‘true’ comprehensive local stakeholder buy-in through pro-active, passionate chair-person, through effective secretariat & through appropriate membership (e.g. Exporters Association)


In MDGS

4.3.4 Institutionalisation of stakeholder dialogue platforms under NES and MGDS

See Sec-tion 2.1 in Annex 6

In MDGS

4.4 Corporate Governance4.4.1 Promoting the adoption of good corporate governance

code of best practices. 2 Inputs and

Information TWG

In MDGS

4.4.2 Strengthen the role of the Institute of Directors to facilitate the adoption of good corporate governance code of best practices.

2 IoD MCCCI In MDGS

4.4.3 Mobilizing the support of the private sector to facilitate the sustainable operations of the new Institute of Directors.

2 IoD MCCCI In MDGS

4.4.4 Training specialised personnel in the field of corruption and fraud to improve human capacity in the Anti Corruption Bureau (ACB), Auditor General Office and Accountant General Office.

5 OPC In MDGS

4.5 Trade Statistics4.5.1 Implementation of EU Financing Agreement on Trade

Statistics:3 NSO MRA, MoIT EU

4.5.1.1 Trade Statistics Capacity Building 3 NSO MRA, MoIT EU $390,000

192

Annex 5

5. Access to Inputs








If Y, Re-sourcers



4.5.1.2 Development and Configuration of Trade Information Infrastructure

3 NSO MRA, MoIT EU $1,690,000

4.5.1.3 Installation of Proprietary Trade Information Services

3 NSO MRA, MoIT EU $390,000

4.5.1.4 Survey of SMEs and production of business information register

3 NSO MRA, MoIT EU $520,000

4.5.1.5 Support to Sector Working Group Trade, Industry and PSD

3 MoIT MoFDP EU $910,000

5. AffordAbLE ACCESS To InPuTSCode Category and Activity Priority





Adequate-lyResourced? (Y or N)

If Y, Re-sourcers

If No, Desired Resourcers


Desired End of Implemen-tation

5.1 Energy5.1.1 Build energy grid connection to

Mozambique: Matambo, Tete province to Pombeya, Balaka

6 Dept of Energy OPC MoF, MEPD No World Bank/IDA, PSD Donor Group, PSIP

$87,000,000 2014

5.1.2 Ensure allocation of resources to develop new National Energy Policy

6 MoF OPC No PSD Donor Group

$150,000 2014

5.1.3 Prioritise implementation of new National Energy Policy, based on IAEA reviews of supply and demand. Cur-rently national demand is supressed to 350 Mega Watts at peak times, while national supply is 287 Mega Watts. If demand were to not be supressed, it will increase to 750 Mega Watts in 2015. For example Kayelekera Mine is not on the national grid.

6 Dept of Energy OPC MoF, MEPD, MERA

No USAID, World Bank, PSD Donor Group

2018

5.1.4 New Energy Policy to include a frame-work for private sector investment in generation and input into the grid. Include framework for incentives, mo-dalities for connection to the national grid, competition issues. Include link to sugar cane products cluster.

5 Dept of Energy MERA No USAID, World Bank, PSD Donor Group

2018

5.1.5 New Energy Policy to include explicit link to provide power, through SADC Power Pool when necessary, to priority NES clusters

6 Dept of Energy MERA No USAID, World Bank, PSD Donor Group

2014

5.1.6 New Energy Policy to include a review of restrictions for the importation of electricity to ensure that importation of electricity in sufficient volumes as required by the productive economy is allowed

6 Dept of Energy MERA No 2014

5.1.7 New Energy Policy to include tax incen-tives for investments by companies in power generation

3 MERA No 2014

5.1.8 Include resources to participate in the SAP Day-Ahead Market for electricity

5 Dept of Energy MoF ESCOM No 2014

5.1.9 Develop Implementation Plan for new National Energy Policy to ensure advance-planning for resources for energy sector.

5 Dept of Energy MEPD, MoF

ESCOM No 2014

193

2013

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If Y, Re-sourcers




5.1.10 Include in Implementation Plan an investment plan for future investments based on IAEA suppy side study and inform Ministry of Finance, develop-ment partners of outcome

5 Dept of Energy MEPD, MoF

ESCOM No 2014

5.1.11 Allocation of resources to develop new National Energy Policy, via Implemen-tation Plan

5 OPC MEPD, MoF

Dept of Energy

No 2014

5.1.12 Conduct an institutional capacity needs assessment and prioritise investment in institutional capacity to implement the new National Energy policy. Have a lack of specialised skills in power management and maintenance. There is a need to build capacity in Escom and in Department of Energy Affairs on power issues, planning, feasibility studies etc (rely on foreign consultan-cies). Include application of ILO's Skills for Trade and Economic Diversification tool kit to energy sector, See Cross Cutting Action 1.1

5 Dept of Energy OPC MoF, MEPD No USAID, World Bank, PSD Donor Group

$100,000 2014

5.1.13 Based on action 5.1.12, develop a programme for development of enough energy policy experts, power engineer/technicians etc. DPSM give 3 scholarships but more capacity is needed to match IAEA supply side study plans. Link to skills cross-cutting action 1.1.

4 Dept of Energy MoEST TEVETA Dependent on 5.1.12

2014

5.1.14 Ensure synchronisation (via new energy policy) with water demand for energy, domestic use and irrigation

3 Dept of Energy OPC MoF, MEPD No USAID, World Bank, PSD Donor Group

2014

5.1.15 Engage with SADC Power Pool and Mozambique to import energy during peak periods and sell energy when have excess

5 Dept of Energy OPC MoF, MEPD No USAID, MCC, World Bank, PSD Donor Group

2014

5.1.16 Ensure constant access to energy via SADC Power Pool (SAP) for NES priority clusters and enabling sectors

5 2014

5.1.17 Launch Millennium Challenge Account Energy Compact: Rehabilitation of Transmission and distribition substa-tions to major cities; Rehabiliation of Nkula A Hydro Power Station; Upgrad-ing of Nkhata Bay to Mzuzu line; Build new line from Lilongwe via Kasungu to Bwengu in Mzimba District and then ensure link to Wovwe Hydro Station

4 Dept of Energy OPC MoF, MEPD Yes $350m 2018

5.1.18 Implementation of World Bank support project, including Completing feasbility study for Lower Fufu Hydro Station on the Rukuru River.

3 Dept of Energy Yes World Bank $84,700,000 2015

5.1.19 Implement findings of feasibility study for Lower Fufu Hydro Station

3 Dept of Energy 2015

5.1.20 Long-term resourcing based on gaps identified in 5.1.11 (ie areas not covered by MCC or World Bank). Feed into central government long-term planning structures

6 Dept of Energy OPC MoF, MEPD No TIPSD SWAp 2013

5.1.21 Complete work on Kapichira Power Station to add 64 Mega Watts to the grid

4 Dept of Energy Yes Dept of Energy

2014

5.1.22 Operationalisation of recent liberali-sation of the regulatory structure for private energy generation.

4 Dept of Energy No 2014

5.1.23 Conduct a market structure review and move toward commercialisation of Escom. Consider private sector management

5 CFTC No 2013

5.1.24 Develop regulatory framework for transformer titling and others


194

Annex 5







If Y, Re-sourcers




5.1.25 Revised Connection Policy to be more favourable


5.1.26 Expedite Feed-in-Tariff Policy for energy needs


5.1.27 Completion of electrification of 24 out-standing trading centres under Malawi Rural Electrification Programme

3 Dept of Energy Yes 2013

5.1.28 Build energy connector to Zambia 2 Dept of Energy OPC MoF, MEPD No World Bank, PSD Donor Group

2018

5.1.29 Build energy grid connection to Tanzania

1 Dept of Energy OPC MoF, MEPD No World Bank, PSD Donor Group

2018

5.2 Irrigation/Water5.2.1 Ensure coordination & coherence

between Greenbelt Initiative, ASWAP, National Irrigation Policy & NES/Trade, Industry PSD Joint Sector Strategy, to ensure that investment in irrigation is timely & reaps greatest economic returns

5 MIWD OPC MoF, MEPD n/a 2013

5.2.2 This requires secure market linkages that will ensure crops can be sold & value addition maximised. Link irrigation efforts to NES priority clusters to ensure highest returns, based on market demand and value added potential

5 OPC MoF, MEPD

MoIT, MIWD n/a 2013

5.2.3 Increase staff of Department of Irrigation from 83 to 183 by 2015

5 DPSM MoF, MEPD

MIWD No Public Finances

2017

5.2.4 Increase budgetary allocation to Department of Irrigation from MK2.4billion ($9m) to MK5 billion ($18.5m) per year by 2015/16, and ensure 100% disbursement rate

5 MIWD MoF, MEPD

No Public Finances

2015/16

5.2.5 Encourage water conservation agricul-ture in highlands

3 MIWD Dept of Energy

n/a 2016

5.2.6 Ensure synchronisation (via new national irrigation policy policy) with water demand for energy, domestic use and irrigation

3 MIWD Dept of Energy

n/a 2013

5.3 Fertilizer5.3.1 Conduct a review to investigate wheth-

er may tweak FISP to not crowd out private sector from non-maize crops to ensure affordable & well-distrib-uted access for prioritised export & domestic sectors. Link to incentives for rganic fertilizers

4 OPC MoF, MEPD

MoAFS No 2014

5.3.2 Liberalise distribution of fertilizers under FISP

4 OPC MoJ MoAFS n/a 2018

5.4 Seed5.4.1 Build on liberalisation efforts to

improve remote access by fast-tracking implementation of the MoUs on the Harmonisation of Seed Policy in SADC. Ensure proper application of rule that says that if a variety is released in 2 SADC countries, it can be automatically released in Malawi.

6 MoAFS Partially ASWAp, TIPSD SWAp

2014

5.4.2 Build on liberalisation efforts by fast-tracking implementation of the MoUs on the Harmonisation of Seed Policy in Comesa


2014

5.4.3 Completion of pest list harmonisation and harmonisation of laws

6 MoAFS Yes FANOPAN, SIDA

2013

195

2013

- 2

018








If Y, Re-sourcers




5.4.4 Review pest list and laws for har-monisation under Comesa MoU, such that it is synchronised with the SADC requirements

6 MoAFS No Public finances 2013

5.4.5 Push SADC for rapid operationalisation of the SADC seed centre in Lusaka


2013

5.4.6 Through liberalisation efforts, ensure maximisation of competition among seed companies as a measure to keep seed prices down and stimulate innovation

6 MoAFS No ASWAp, TIPSD SWAp

2016

5.4.7 Conduct a review of the incentive structure for seed companies and for smallholder farmers to invest in NES priority cash crops (groundnut, sunflower, soya, cotton, sugar cane) and make recommendations for how to incentivise, in a sustainable manner, seed company and smallholder investment

5 Input and Infor-mation TWG


No ASWAp, TIPSD SWAp

$100,000 2016

5.4.8 Based on Action 5.4.7, evaluate whether need a mechanism to incentiv-ise private sector to ensure affordable & well-distributed access to good quality seed for prioritised NES crops (groundnuts, soya, sunflower, cotton, sugar cane). If needed, develop and implement.

5 OPC MoF, MoAFS, TIPSD SWAp

No ASWAp, TIPSD SWAp, MoF

2014

5.4.9 Based on Action 5.4.7, develop a mechanism to ensure smallholder farmers are not disincentivised from in-vesting in groundnuts, soya, sunflower, cotton and sugar cane. Review whether follow similar approach as with cotton in 2011. Use Oil Seed Products TWG as the control mechanism.

5 OPC MoF, MoAFS, TIPSD SWAp


2013

5.4.10 Introduce and implement a policy to allow increased research on new varieties, particularly in growth cash crops, to take into account demands in international markets for varieties

4 No ASWAp, TIPSD SWAp, MoF

2013

5.4.11 Introduce tax incentive scheme to help attract priority seeds by reducing taxes on imported inputs - seed needs to be imported in the short-term

4 No ASWAp, TIPSD SWAp, MoF

2013

5.4.12 Establish standards for multiplication of priority NES seeds: sunflower, groundnut, soya, cotton, sugar cane at Bunda College and the Dept of Agricultural Research. MBS to then ensure standards for domestic market, ensuring it does not add to cost for smallholder farmers

4 MoAFS MBS Bunda College, ICRISAT


2014

5.4.13 See Extension Services (section 7.2) for sensitization of farmers on using good quality seed

5 2014

5.4.14 Facilitation of trade licenses for seed 3 2013

5.5 Special Economic Zones/Industrial Parks and Commercial Agriculture5.5.1 Conduct review of feasibility of

establishing Special Economic Zones (proper Export Processing Zones) and/or Industrial Parks for Priority NES Clusters for shared infrastructure, shared pool of labour, shared Govt services, knowledge hub, long term tax holidays etc. Tie to Action 6.2.4 and to Manufactures Strategy in Annex 4, Chapter 7 Action M3.1.5

5 Manufactures TWG

OPC, MoF, MEPD

, MoIT, MITC, MoLH, MoAFS

No EIF 2014

196

Annex 5

6. Access to Finance and Secure Tenure of Property







If Y, Re-sourcers




5.5.2 Develop a framework for allocation of suitable land for commercial farming, linked to cluster strategies: sugar cane products, oil seed products and agro-processing of wheat, maize, dairy and horticulture). Applied Responsible Agricultural Investment Principles. Tied to Action 6.2.4 and relevant sections in Annexes 2,3 and 4

5 MoLH No ASWAp 2015

6. AffordAbLE ACCESS To fInAnCECode Organisa-

tion and Activity

Sub-Activity Priority Level (highest is 6)




Adequately Resourced? (Yes or No)

If y, Re-sourcers

If No, Desired Re-sourcers


Desired End of Imple-menta-tion

6.1 Financial Sector Development6.1.1 Set Financial Sector Development as

explicity priority under MGDSII and establish stakeholder working group

6 MoF MEPD No FSTAP 2015

6.1.2 Develop capacity of Reserve Bank of Malawi to balance its regulatory function between providing adequate risk-based supervision and supporting development of the financial sector

6 RBM Input from MAMN, MUSACCO, Banks

- y FSTAP Compo-nents 1 and 2

$18,533,000 2016

6.1.3 Develop capacity of the Ministry of Finance in coordinating the effective formulation & implementation of financial policies & regulations.

6 FSPU of MoF RBM - y FSTAP Compo-nent 4

$3,393,000 2017

6.1.4 Develop market structure that encourages greater competition between financial insti-tutions in lending & non-lending businesses to encourage innovation in lending markets & greater targeting of MSMEs.

6 RBM MoF - Partial WB via FSTAP; AfDB via CJCSP

FSDT, PSD Donor Group

with above 2016

6.1.5 Increase MSME attractiveness as clients by improving contract law. In particular:

5 2018

6.1.5.1 Implementation of a mod-ern Secured Transactions law

4 MoIT MoJ - Partial DfID - $500,000 ($300,000 by DFID)

6.1.5.2 Strengthen Movable Col-lateral Registry operations and staff capacity (**See also ensuring secure tenure of land)

4 DRG MoIT - Y - USAID (See comment), FSTAP, PSD Do-nor Group, ASWAP, ASWAP-SP

$200,000 dev partner support & $100,000 operational costs by Govt for staff & expenses

6.1.5.3 Strengthen Land Registry operations and staff capac-ity (**See also ensuring secure tenure of land). See Action 6.2.3

5 MoL (Lands Registry)

MoIT - N - ASWAP. ASWAP-SP

197

2013

- 2

018



tion and Activity






If y, Re-sourcers




6.1.5.4 Reform of insolvency regulatory framework

4 MoIT MoJ - y WB - $0

6.1.5.5 Improve access to commer-cial justice for creditors

4 RBM via FSTAP; High Court Commercial Division

MoIT y DfID - $1,000,000 + $100,000 pa op costs and salaries

6.1.5.6 Develop the Registrar Gen-eral’s Department to ease the time and cost involved in registering businesses;

4 DRG y DFID $500,000 + $100,000 pa Govt salaries, operational costs

6.1.5.7 Improve the amount and quality of information available on entrepreneurs through development of credit reference bureaus

4 RBM; CRBs - y WB via FSTAP (support-ing public awareness); USAID providing advice; Licensed CRBs

6.1.5.8 Improve the amount and quality of information available on entrepreneurs through development of a National Registration and Identification System

4 National Registration Bureau (OPC)

- - No Public Finances

6.1.5.9 Improving the amount and quality of information available on entrepreneurs through development of bookkeeping skills and financial management;

4 SMEDI RBM via National Taskforce on Consumer Financial Education (NTCFE)

SMEDI, MCCCI, MoIT via Coop-eratives and SME division, OVOP

Partial [Public financ-es?]; AfDB VCD Component

UNDP, UNCDF via FIMA 2, ASWAP, ASWAP-SP

6.1.5.10 Improving the amount and quality of information available on entrepreneurs through development of financial literacy

4 RBM, MoF - SMEDI y FSTAP Compo-nent 3

UNDP, UNCDF via FIMA 2

$3,027,000

6.1.5.11 Improving the amount and quality of information available on entrepreneurs through development of Increasing formality of the MSME sector by lowering cost of formalisation through improved business registry operations, and in particular, continuation of reforms started under BESTAP

4 MoIT, RGD - - No PSD Donor Group

6.1.5.12 Improving the amount and quality of information available to entrepreneurs, startups and MSMEs through developing, maintaining and distributing an information package on financial products available in the market

4 SMEDI MoF, MEPD No Refer to Section 2

6.1.5.13 Improving the amount and quality of information available to banks on MS-MEs through encouraging BDS services centred around improving access to information on MSMEs’ accounts, history, business plans etc. This is effectively BDS services that out-source the administrative burden that banks face when lending to numerous MSMEs

4 RBM MoF No EDF

198

Annex 5


tion and Activity






If y, Re-sourcers




6.1.5.14 Implementation of amend-ments to the Companies Act, ensuring they are friendly to MSMEs

4 RBM; FSPU of MoF

6.1.6 Develop and implement an ownership policy for state investment in the financial sector to strengthen the oversight of state-owned Fis (SOFIs) and government programmes, and address fragmentation of ownership responsibilities among various bodies.

3 MoF via PERMU and FSPU

Dept of Statutory Corpora-tions, SOFIs

- Y for development; N for imple-mentation

IDA via FSTAP for development of ownership policy

For imple-mentation: Public finances

2015

6.1.7 Increase the independence and technical capacity of boards of directors of SOFIs and define clear policy mandates for them.

3 MoF via PERMU, Dept of Statutory Corps.

IoD, SOCAM, SOFIs

- Partial 2015

6.1.7.1 Review of corporate governance guidelines, dissemination workshops for new guidelines, training of staff in corporate governance

y IDA via FSTAP

6.1.7.2 Implementation of findings of review

No Public Finances

6.1.8 Provide adequate government management attention to ensure timely implementation of the following reforms:

5 2015

6.1.8.1 Operationalisation of SME-DI following merger into SEDOM, DEMAT & MEDI into Small and Medium Enterprise Board;

5 SEDOM, DEMAT, MEDI

MoIT - Uncertain Public resources -

6.1.8.2 Merger of MARDEF with youth Enterprise Develop-ment Fund to form Malawi Rural and youth Enterprise Development Fund; and

4 MARDEF, yEDF

MoF (Appoints Board), MSB (Banker and Manager),

- Uncertain Public resources -

6.1.9 Increase availability of long term finance through development of domestic bond and equity capital markets:

3 2018

6.1.9.1 Assess and improve capacity of capital markets to support the issuance of equities and bonds. Include examination of impedi-ments to capital market development and capacity building for Capital Market Supervision Department of RBM

3 FSPU of MoU; RBM

- - y WB (via FSTAP)

6.1.9.2 Implementation of findings of assessment (eg regula-tory framework, clearance and settlement structure)

3 No PSD Do-nor Group, FSDT

6.1.9.3 Investment in regulatory capacity & provision of incentives to ensure MSE has an inherent incentive in its governance structure to attract businesses to raise finance through the MSE.

3 RBM; FSPU of MoF

MSE (Oper-ating under RBM);

- Partial WB (via FSTAP) funding assess-ment of options for restructuring MSE

PSD Do-nor Group, FSDT for restruc-turing

6.1.10 Support financial sector reforms and inno-vation with a Financial Sector Deepening Trust as part of FSTAP geared toward financial sector innovation

4 MoF y DFID/USAID included in FSTAP

2015

6.2 Access to Land and Secure Tenure of Land

199

2013

- 2

018



tion and Activity






If y, Re-sourcers




6.2.1 Enactment of the package of laws required to allow land reform, including the Lands Bill

6 MoLH $0 2013

6.2.2 Operationalisation of the Lands Bill and related laws in the land reform packaging through implementation of the legal framework

6 MoLH MoJ Uncertain $50,000 2016

6.2.3 Implement preparatory project under Aswap for action 6.2.4:

6 MoLH MoAFS, MoIT Yes World Bank $3,000,000 2014

6.2.3.1 Strengthen existing land administration structures at district, regional and national level through training, provision of equipment, cleaning of land records, modernization of land and deeds registries, and reorganizing lands registries.

6 MoLH Yes

6.2.3.2 Procure aerial photography and maps, including the vectorization and or-tho-rectification of maps.

6 MoLH Yes

6.2.3.3 Conduct supporting studies, including: (i) needs assessment for the strengthening of capacity in the delivery of land administration services in terms of skills gaps and equipment; (ii) land availability study to update the land records obtained in the mid-1990s; (iii) a study on the provision of credit for farm development as basis for a scaled-up land reform program; and (iv) an environmental and social impact assessment (ESIA)

6 MoLH Yes

6.2.4 Develop and implement a large scale Land Development Support Programme to :

6 MoLH No PSD DG $25,000,000 for project, $250,000 per year recurrent expenditure for Govt

2018

6.2.4.1 survey all arable land and determine its suitability for crops, particularly the priority crops in the NES: sunflower, groundnuts, soya, cotton, sugar cane, dairy (livestock), maize, wheat. Develop an inventory.

6 MoLH MoAFS, MoIT No PSD DG

6.2.4.2 survey all arable land and determine its ownership. Develop an inventory.


6.2.4.3 expedite completion of Land Information Manage-ment System Project

6 MoLH MoAFS, MoIT y PSD DG

6.2.4.4 from above to sub-actions develop land use maps for sugar cane, groundnuts, sunflower, soya, cotton, dairy and wheat


6.2.4.5 feed this information into the land programmes for the priority cluster strate-gies (sugar cane products, oil seed products, manu-facturing). See Annexes 2, 3 and 4

6 MoLH TIPSD SWAp No PSD DG $0

200

Annex 5


tion and Activity






If y, Re-sourcers




6.2.4.6 complete procurement and installation of computerised land registration system: Automated Lands Registry System

6 MoLH MoIT Partial Design & instal-lation EU funded under BESTAP & ASWAP

6.2.4.7 build into the registration platform and a system for collection of land fee payments/revenue

5 MoLH No PSD DG

6.2.4.8 register all customary land with the Land Registry through land titling

6 MoLH No PSD DG

6.2.4.9 conduct a capacity needs assessment of the Depart-ments of Lands, Policy and Planning, Physical Planning and Surveys and in Land Registry and determine requirements for staff numbers, skills and IT and equipment capacity

6 MoLH No PSD DG

6.2.4.10 recruit staff in each of the Departments of Lands, Physical Planning, Surveys, Policy and Planning and Land Registry to levels call for in capacity needs assessment

6 MoLH No PSD DG

6.2.4.11 provide staff development support as called for in the capacity needs assessment to all 4 departments

6 MoLH No PSD DG

6.2.4.12 ensure appropriate land titling for commercial and industrial land, and for acquisition of land for new commercial farming projects

6 MoLH No PSD DG

6.2.4.13 develop and implement a framework to put unused arable land to economic use for priority crops under the NES. Link to extension programmes

6 MoLH No PSD DG

6.2.4.14 Follow up on 2-year clause for undeveloped land. Include compensation fund.

3 MoLH No PSD DG

6.3 Access to Micro-Finance6.3.1 Implement Micro-Finance Policy of 2002 6 RBM, MoF MFIs MAMN - No - Public

Financessee below 2014

6.3.2 Develop and operationalise a legal and regulatory environment for micro-finance whose objective is increased access to micro-finance and micro-savings schemes by smallholder farmers and rural and urban micro businesses, adequately accounting for youths and women

6 RBM, MoF MFIs MAMN $100,000 2014

6.3.3 Conduct a review of the ownership struc-ture of the micro-finance sector, particularly the efficiency of public sector organisations involved in micro-finance. As part of review, assess opportunities for independence of public-sector agencies such as MRFC, MARDEF and SEDOM/DEMAT and MEDI, supported by an Apex public fund.

5 MoF, RBM State owned MFIs, MAMN

- No - Public Finances, PSD Donor Group

$25,000 2014

6.3.4 Based on 6.3.3, develop a plan to move toward roles of public & private agencies as defined in the Micro-Finance Policy

5 with above 2014

6.3.5 Operationalise Micro-finance Act & Financial Cooperatives Act through gazetting of directives.

6 MoF MoJ RBM, MFIs, MAMN

n/a $0 2014

201

2013

- 2

018



tion and Activity






If y, Re-sourcers




6.3.6 Recruit or assign 5 staff to RBM Micro-fi-nance directorate

6 RBM MoF $100,000 per year

2013

6.3.7 Develop a staff and unit development and training programme for RBM’s directorate for micro-finance. This is key for the RBM to be a facilitator of the sector while also being an effective regulator.

6 RBM MAMN - Yes WB via FSTAP - $200,000 one off and $40,000 per year

2013

6.3.8 Establish a competitive, transparent supply window for MFIs through an Apex fund

5 MoF RBM MFIs, MAMN

$1,000,000 2013

6.3.9 Operationalisation of Financial Inclusion Strategy

4 MoF RBM Uncertain 2013

6.3.10 Support Cooperatives Division of MoIT to be more interactive with the micro-finance sector and to create and develop coop-eratives with access to finance as a key objective. Same as 7.1.7.

4 Cooperative Division, MoIT

- - No - ASWAP, PSD Do-nor Group, Public Finances

2015

6.3.11 Ensure MAMN has sufficient capacity to fulfill its regulatory roles as agreed with the RBM and as per the Micro-finance Act

4 MAMNs MFIs, MoF 2015

6.4 Credit Guarantee Scheme6.4.1 Launch a Credit Guarantee Scheme through

the Export Development Fund to guarantee investment risks by the private sector, with a prioritization of key NES clusters. Ensure sufficient scale to allow scaled impact. It is not enough to have a scheme if it is too small or not designed in such a manner that will ensure take up

6 RBM MoF Bankers Association of Malawi

Yes $3.7m capital of Fund + $93.6m lines of credit by banks + $200,000 start up costs

2013

6.4.2 Support the EDF with a Malawi Innovation Challenge Fund geared to MSMEs. Tie to NES priority clusters

4 RBM/EDF MoF Bankers Association of Malawi

Partial (US$7m is unfunded)

UNDP, DFID and others

$17,590,000 2013

6.4.3 Explore options for export guarantee schemes through the EDF and with the banks, using export contracts as collateral to access lower rates and better terms

4 EDF Bankers Association of Malawi

2013

6.5 Secure Tenure of non-Land Property6.5.1 improved business registry operations,

and in particular, continuation of reforms started under BESTAP

4 RGD MoIT - No - ASWAP-SP, PSD Donor Group

2015

6.5.2 Strengthen Intellectual Property Rights 3 2015

6.5.3 Strengthen Movable Collateral Registry operations and staff capacity (**See also 614.b.)

4 RGD MoIT - Yes USAID (See comment), WB via FSTAP, PSD Donor Group, ASWAP, ASWAP-SP

- $200,000 2015

202

Annex 5

7. AffordAbLE ACCESS To buSInESS dEvELoPMEnT SErvICESCode Category

and Activity

Priority Level (highest is 6)


Critical to Sucessful Imple-menta-tion


Adequate-lyRe-sourced? (Y or N)

If Y or if part Re-sourced, Re-sourcers




7.1 Farmer organisation, cooperatives & extension7.1.1 Undertake an expert assessment of the human

resource capacity required at Dept of Agri. Exten-sion Services and the Department of Cooperatives relative to enable them to provide appropriate and effective extension and cooperative support services on the scale required by the NES prioriy crops, for the priority NES crops (sugar cane, groundnuts, soya, sunflower, cotton, dairy). Tie ca-pacity required to measures of yield performance and target for optimal and attainable extension worker to farmer ratio in priority crops. Include staff, expertise and budget requirements for these departments.

6 MoAFS OPC, MoF, MEPD

No ASWAP, Public finances

$200,000 2013

7.1.2 Develop and implement an NES Extension and Cooperatives Support Programme that focuses on the development of capacity in extension services and cooperative support services by tieing these services to the prioritized NES cluster crops


MoIT No ASWAP, Public finances

$20,000,000 by devel-opment partners, $1,000,000 per year by Govt

2015

7.1.2.1 Ensure that 75% of work plan of Department of Agricultural Extension Services (Agri-Business Section) are soley on oil seed farmer organisations, sugar cane farmer organisations and farmers who can input into the local agro-processing and beverages players who are members of the Manufactures TWG

4 MoAFS 2018

7.1.2.4 Increase budgetary allocation to Dept. of Agricultural Extension Services from $744,000 in 2012/13 (MK201,000,000) by 50% to $1,500,000 (MK405,000,000) by 2017/18



$744,000 in 2017/18. Less in pre-vious years through gradual scaling

2017

7.1.2.5 Recruit staff to ensure staff num-bers in line with outcome of expert assessment of Dept. of Agricultural Extension Services (Action 7.1.1) to attain the scale necessary to meet farmer requirements by increasing farmer:extension worker ratio from 1,500:1 to 500:1. Focus services on priority NES cluster crops



2017

7.1.2.6 Move toward 100% filled positions in Agri-Business Section by 2017 (3,100 staff, up from 1,849 in 2012). Prioritise expertise improve-ments in NES priority crops.



2017

7.1.2.7 Include a human resource development component for Dept of Agricultural Research Extension that is focused on priority NES crops. Include training and staff development. Include market-related extension services in addition to agronomic extension, i.e. micro finance, contract farming, land management, farmer organisation benefits, market awareness, value addition awareness etc.



2014

7. Access to Business Development Services

203

2013

- 2

018



and Activity










7.1.2.8 Deliver market and agronomic extension and cooperative support services to groundnut, soya, cotton, sunflower, sugar cane and dairy smallholder farmers as per Section 7 of the oil seed products strategy (Annex 2), the sugar cane products strategy (Annex 3), and manufac-turing strategy (Annex 4). Include support on micro-finance, land management, contract farming, mar-ket understanding, value addition understand, farmer organisation benefits etc.



2015

7.1.2.9 Include in the NES Extension and Cooperatives Support Programme a coordination component for extension and cooperative services by NGOs, civil society etc to support on voluntary basis Dept of Ag. Extension Services and Department of Cooperatives. Linked to NES priority sectors



2015

7.1.2.10 Include in NES Extension and Cooperatives Support Programme, use of lead farmers to disseminate information and technologies, adopted under ASWAP



2015

7.1.2.11 Include review of incentive structure for National Resource College grad-uates to work as extension officers in rural areas

4 MoAFS No ASWAP, Public finances

2015

7.1.2.12 Include large sensitization programmes, targeting NES priority crops, on benefits of good quality seed, farmer organisations, micro-fi-nance and saving schemes and land titling reforms



2015

7.1.2.13 Ensure in NES Extension and Coop-eratives Support Programme the promotion of outgrower schemes linked to commercial agriculture, where possible



2015

7.1.2.14 Ensure in Programme the inclusion of bulking centres, linked to the development of storage sector/warehouse receipts



2015

7.1.2.15 Include in 7.1.2 sensitization programmes for farmers on good quality seed, linked to priority NES crops and provide support for seed farmers to ensure good quality seed used in informal farmer seed sharing. Apply Good Agricultural Practices and Integrated Seed Systems Approach



2015

7.1.2.16 Include in NES Extension and Coop-eratives Support Programme a link to the fair trade network mechanism. Fair trade increases the tolerancy of buyers to lower standards



2015

7.1.2.17 Include the expediting of new ways of delivering extension and cooperative support services, such as mobile information services, e.g. Esoko.

4 MoAFS MoF, MEPD

No ASWAP 2015

7.1.2.18 Recruit staff to ensure all existing 21 positions (as per 2012 establish-ment) in Dept. of Cooperatives are filled by 2013. + reps in districts, chezani to check total number as per functional review.

5 MoIT MoF, MEPD

No 2013

204

Annex 5


and Activity










7.1.2.19 Recruit additional staff in Coop-eratives Department as called for through expert assessment (Action 7.1.1), tied to NES priority clusters and enabling sectors (energy, information, finance etc)

5 MoIT MoF, MEPD

No 2015

7.1.2.20 Include a human resource development component for Dept of Cooperatives that is focused on priority NES crops. Include training and staff development. Include market-related extension services in addition to agronomic extension, i.e. micro finance, contract farming, land management, farmer organisation benefits, market awareness, value addition awareness etc.

5 MoIT MoF, MEPD

No 2015

7.1.2.21 Ensure budget allocation to Dept of Cooperatives by 2017 as per requirement based on expert assessment in 7.1.1

5 MoIT OPC, MoF, MEPD

No Public finances

2017

7.1.2.22 Implement a staff development programme that is focused on staff retention, facilitation of cooperative establishment and provision of management training support to cooperatives


No Public finances, ASWAP, PSD Donor Group

7.1.2.23 Establish Work Plan for Dept of Cooperatives that focuses 80% of time facilitating farmer cooperatives that can link in to the Oil Seed Pro-cessors, Manufactures (Agro-Pro-cessing and Beverages), and Sugar Cane Processors


2014

7.1.2.24 Support Cooperatives Division of MoIT to be more interactive with the micro-finance sector and to create and develop cooperatives with access to finance as a key objective. Same as 6.3.10


2014

7.1.2.25 Implement a coordination programme for NGOs to support Department of Cooperatives in faciltiating establishment of sus-tainable cooperatives. Sustainable cooperatives means they need to be homegrown, with clear benefits to members



2014

7.1.2.26 Implement a management training programme with SMEDI for cooper-ative managers, including financing, governance, market awareness, business plans etc focused on NES priority clusters and key enabling sectors (energy, water, finance, information etc)



2014

7.1.2.27 Include in management training programme for cooperative and farmer organisation managers on issues of land tenure, governance, inputs, seed etc


MoAFS No ASWAP, Public finances

2014

7.1.2.28 Develop promotional materials, including case studies of the benefits of well organised cooper-atives. Make available to Dept of Agricultural Extension Services and NGOs signed up to coordination programme


MoAFS No 2014

7.1.3 Through ASWAp and TIPSD SWAp, raise profile & importance of cooperatives & farmer organisa-tions to increase budgetary allocations & improve management structures. Ensure representation of Director of Agricultural Extension Services on NES Oil Seed Products TWG and NES Sugar Cane Products TWG


MoIT No Public finances, ASWAP, PSD Donor Group

$0 2014

205

2013

- 2

018



and Activity










7.2 MSME Support7.2.1 Draft a Small Business Bill 6 MoIT 2013

7.2.2 Enact Small Business Bill 6 MoIT 2015

7.2.3 Merger of MEDI, SEDOM & DEMAT critical for Malawi’s ability to meet export target (as set by imports) because this can’t be achieved with commodities.


No Public finances, Donor PSD Group

2013

7.2.4 Public Private Partnership to finance SMEDI & review approaches to lead toward financial sustain-ability in 5-10 years

6 MoIT 2014

7.2.5 Development of MSMEs through effective, scaled support essential to ensure that Malawi can develop value addition necessary to meet its export target & address forex shortage in medium & long-term.


No AfDB Public finances, Donor PSD Group

2015

7.2.6 Set Vision and develop Strateic Plan for SMEDIs centred on business advisory and support services to MSMEs prioritising NES priority clusters and NES enabling sectors

6 MoIT 2013

7.2.7 Embed the MSME strategy in Malawi’s efforts to develop a productive base for both export and domestic-market oriented sectors. Ie Prioritise in MGDS

5 MoIT Yes Comsec 2013

7.2.8 Ensure strong between MSME strategy, SMEDI vision and NES


No $0 2013

7.2.9 Ensure that the MSME strategy is practical, appro-priate and fully implementable


Yes 2013

7.2.10 Ensure allocation of adequate resources to MSME Strategy (including management/administrative time) to prioritise its implementation.


No Public finances, PSD Donor Group

2013

7.2.11 Establish MSME committee to drive implementation of MSME policy and strategy as part of the Trade, Industry and PSD Strategy. MSME committee to report to Access to Inputs and Information TWG. In this way MSME issues are part of the Joint Sector Strategy and obstacles to MSME development receive high level attention



2013

7.2.12 Ensure the full implementation of the MSME policy and strategy



2017

7.2.13 Ensure that MSMEs strategy supports private or development partner efforts that seek to establish self-financing, or quasi self-financing, MSME support services.


To check $0 2013

7.2.14 Ensure that Small Industry Support Fund is man-aged through SME DI, and is managed efficiently and effectively

4 2013

7.2.15 Ensure clarity of SMEDI role relative to TEVET institutions and financial service providers, inc micro-finance agencies

4 2013

7.2.16 Use ILO Start and Improve Your Business programme to support SMEDI support services for youths. Ensure synchronisation between the two and a focus on the NES priority clusters and key enabling sectors. Ensure a minimum 24 trained trainers.

4 MoYS SMEDI Partial 2013

7.3 Professional Services7.3.1 Undertake analysis to determine whether Malawi

has capacity to supply quantities and quality needed to develop productive sectors.

2 MoIT PSD Donor Group

No PSD Donor Group

2014

206

Annex 5


and Activity










7.3.2 7.3.1 to serve as guidance for immigration policy and importation of key skills

2 Ministry of Home Affairs

OPC MoIT No 2014

7.3.3 Support the development of the legal sector. Work toward affordability of legal services for youth entrepreneurs, women and MSMEs through fair competition and liberalisation

2015

7.3.4 Support the development of the accountancy and audit sector

4 2015

7.3.5 Conduct a review of the Public Accountants and Auditors Bill, which was drafted in 2006 but is now outdated

4 MoF 2015

7.3.6 Enactment of the Public Accountants and Auditors Bill, which will establish the Chartered Accountants Institute of Malawi.

4 MoF 2015

7.3.7 Establishment of Chartered Accountants Institute of Malawi

4 MoF 2015

7.3.8 Support the development of the engineering sector, through the development of the Society of Engineers. Ensure a balance of affordability for customers and quality. Ensure liberalisation of sector

2015







Adequate-ly Re-sourced? (Y or N)

If Y, Re-sourcers




A. Taxation Obligations

8.1 Measures for short-term impact on exports8.1.1 Develop package for short-term tax support

to exports that accounts for revenue targets & transfer pricing

5 MoF MRA No Public Finances, CABS

2013

8.1.2 Review of anti-export bias in the tax system, direct & indirect e.g. taxes on imported inputs for exports


2013

8.1.3 Develop package of tax incentives specifically for NES prioritised clusters: sugar cane products, oil seed products, legumes, manufacturers (beverag-es, agro-processing, plastics, packaging)


2013

8.1.4 Establish dialogue mechanism to focus solely on is-sue of transfer pricing: Private-public collaboration to identify how to improve incentives to minimise transfer pricing and how to minimise impact of Government remedies, such as the turnover tax

5 MoF TIPSD SWAp MRA, MoIT n/a 2013

8.1.5 Remove inconsistencies between Taxation Act and Export Incentives Act

MoF TIPSD SWAp MRA, MoIT No Public Finances, CABS

2013

8.1.6 Reinstate export rebates (30 per cent corporate tax & tax of imported inputs) for Export Process-ing Zones, with priority on NES export clusters, & on short-term revenue generated sectors, as identified in Cluster Prioritization Method.

5 MoF TIPSD SWAp MRA, MoIT No Public Finances, CABS

2013

8.1.7 Remove VAT on machinery. This was reintroduced in 2011/12 budget.

5 Mof TIPSD SWAp MRA, MoIT No Pub. Finances

2013

8.1.8 Ensure existence of Industrial Rebate where if reg-istered with MoIT there are no taxes on imports.

3 MoF TIPSD SWAp MRA, MoIT No Pub. Finances

2013

8.1.9 Return of export incentive to 12% of turnover, not profits


2013

8.1.10 Re-raise export rebate on transport costs to 25%, from 15%


2013

8. Ease of Meeting Tax and Regulatory Obligations

207

2013

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018









If Y, Re-sourcers




8.1.11 Reintroduction of investment allowance 4 MoF TIPSD SWAp MRA, MoIT No Pub. Finances

2013

8.1.12 Increase transparency and dialogue in the setting of land rates, preferably through the Access to Market TWG, or Access to Finance TWG

3 MoLUHD TIPSD SWAp n/a 2013

8.1.13 Ensure consultation with stakeholders on charges, such as Labour Safety Inspection Charges, which rose from MK15,000 to MK560,000 in one year without any consultation or awareness

3 MoLabour TIPSD SWAp n/a 2013

8.2 Measures for medium to long-term impact on exports8.2.1 Conduct a review of the impact of the tax system

on productivity and export competitiveness based on simplicity, predictability and export bias. Take into account:

5 MoF TIPSD SWAp MRA No PSD DG $300,000 2014

8.2.1.1 PSD, NES & Public finances seen as one if fiscal imbal-ances are to be addressed

5 MoF TIPSD SWAp MRA No PSD DG

8.2.1.2 Tax Policy, and the use of tax incentives, as part of a wider concerted effort to develop export clusters


8.2.1.3 Widening of the tax base 5 MoF TIPSD SWAp MRA No PSD DG

8.2.1.4 Simplification of its tariff scheme for both exports and imported inputs.


8.2.1.5 Re-orientation of tax incentives away from import-substitution toward export-orientation


8.2.1.6 Duty free raw materials applied to exports not to domestic sales


8.2.1.7 Consistency between Export Incentives Act, Investment Promotion Act and Taxation Act


8.2.1.8 Application of export incentives on a scale of export share of sales. The greater the share of sales exported, the greater the export tax incentive


8.2.2 Implementation findings of tax reform, using a phased approach that suits public finances

4 MoF TIPSD SWAp MRA No PSD DG 2018

8.3 Regulatory Obligations8.3.1 Help all regulatory agencies understand that they

play critical role in allowing Malawi to develop its productive base & generate value addition.

5 TIPSD SWAp MEPD, MoIT No TIPSD SWAp

2014

8.3.2 Help such agencies develop permanent institution-al structures that can safeguard their regulatory mandate, while facilitating productive capacity.

5 TIPSD SWAp MEPD, MoIT TIPSD SWAp

2014

8.3.3 If regulatory environment is to be eased, this effort has to be pro-actively led by MoF or OPC

5 MoF MEPD, MoIT TIPSD SWAp No TIPSD SWAp

2014

8.3.4 Incentivise informal businesses to register through lowering cost of formalisation, favourable taxation & ease of access to finance & BDS.

3 MoF MEPD, MoIT 2014

8.3.5 Introduce policy to only allow export bans on priority NES commodities if agreed to by Oil Seed Products TWG, Sugar Cane Products TWG and Manufacturing TWG

4 MEPD OPC n/a n/a n/a n/a n/a

8.3.6 Introduce policy to not use Government minimum prices on NES Prioritized Clusters


8.3.7 Introduce policy to only allow Government mini-mum prices on maize and tobacco


208

Annex 5

9. Macroeconomic Prudence and Stability








If Y, Re-sourcers




8.3.8 Conduct an analysis of the typical gap between the domestic consumption of commodities vs export of commodities (ie not used for value addition) and ensure awareness of this gap as a measure to prevent reactionary export bans

3 MoIT MoF, MEPD No PSD DG 2014

8.3.9 Enactment of Business Registration Bill 3 RGD No PSD DG 2013

8.3.10 Operationalisation of Business Registration Act 3 RGD No PSD DG 2015

8.3.11 Establish comprehensive electronic business database

3 RGD No PSD DG 2015

8.3.12 Establish branches in major cities 3 RGD No PSD DG 2018

8.3.13 Ensure reasonable fees that do not disincentivise registration

3 RGD No PSD DG 2018

9. STAbLE, PrudEnT And ConduCIvE MACroEConoMIC EnvIronMEnTCode Category and Activity Priority






If Y, Re-sourcers


Indic-ative Cost, uS$


9.1 Measures for short-term improvements9.1.1 Align EDF to priority export clusters and to

revenue earning export clusters5 RBM MoF RBM 2013

9.1.2 Use EDF to insure agricultural processing in priority clusters to enable investment by processors

5 RBM MoF 2013

9.1.3 Use EDF for export credit guarantees 5 RBM MoF Yes RBM 2013

9.1.4 Constant Review of Retention Scheme through Trade, Industry and PSD SWAp. 100% Retention for EDF companies and companies registered under Manufacturing, Sugar Cane Products and Oil Seed Products TWGs

3 MoF RBM RBM 2013

9.1.5 Synchronise these measures with tax incen-tive package (section 8A)

5 MoF 2013

9.1.6 Use of external support, via concerted plan to stablise forex shortage and develop productive base of economy via NES

4 OPC MoF, IMF Possibly IMF, CABS Donors and other donors

2013

9.1.7 Ease/remove forex controls ($50,000+ transactions)

4 MoF RBM 2012

9.2 Measures for medium-term improvements9.2.1 Align exchange rate, monetary & fiscal policy

to NES Prioritized Clusters and to Cross-Cut-ting NES Priorities

5 OPC MoFDP, MoAFS, MoIT, RBM

OPC, MoF-DP, MoIT, MoAFS, RBM

2013

9.2.2 Use Access to Markets TWG to discuss measures to improve repatriation of export earnings, to address transfer pricing and improve export tracking, all in ways that do not undermine Malawi's capacity to export.

5 MoF RBM, MoIT, private sector through TWG

2013

9.2.3 Introduce policy allowing export bans only for maize for food security reasons. Export bans of other commodities undermine Malawi’s ability to produce inputs into value addition export.

5 OPC MoFDP, MoAFS, MoIT

No OPC, MoF-DP, MoIT, MoAFS

$0 2013

209

2013

- 2

018


10. Fair Competition

CroSS-CuTTIng ExPorT EnAbLEr STrATEgy

10. FAIR COMPETITIONCode Category and Activity Priority






If Y, Re-sourcers




10.1 Design a fair competition and consumer protection support project. Project to provide effective support to ensure CTFC has capacity to deliver on mandate in 5 years time. Project to include sensitization of key stakeholders, including judiciary and private sector

3 CFTC TIPSD SWAp MoIT, MoF, MEPD

No PSD Donor Group

0 2013

10.2 Implement project in 10.1 4 CFTC TIPSD SWAp MoIT, MoF, MEPD

No 2017

10.3 Increase budget allocation to Competition and Fair Trading Commission from MK50 million by 2017

4 MoIT MoF, MEPD, TIPSD SWAp

No Public Finance

2017

10.4 Fill outstanding director positions 4 MoIT OPC No Public Finances

2014

10.5 Fill outstanding staff positions 3 CFTC MoIT, OPC, MoF, MEPD, DPSM

No Public Finances

2014

10.6 Develop Strategic Plan, both for Com-petition Department and for Consumer Protection Department

3 CFTC MoIT, OPC, MoF, MEPD

No Public Finances

2014

10.7 Deliver proposal to SADC Competition Commission or others for technical assistance

2 CFTC MoIT No PSD DG, SADC Commission, others

2013

9. STAbLE, PrudEnT And ConduCIvE MACroEConoMIC EnvIronMEnTCode Category and Activity Priority






If Y, Re-sourcers


Indic-ative Cost, uS$


9.2.4 Formal recognition that value addition exports cannot be regulated for and can only be attained with adequate incentives for companies to transition from raw products to higher value products.

5 OPC MoFDP, MoAFS, MoIT

No OPC, MoF-DP, MoIT, MoAFS

$0 2013

9.3 Measures for long-term improvements9.3.1 Monetary & fiscal policy not detached from

policies to develop productive base of economy

5 OPC MoFDP, RBM, IMF

No 2013

9.3.2 Embed monetary, exchange rate and fiscal policy in a concerted, nationwide plan to appropriately prioritise skills development and human capacity


MoEST, Ministry of Heath

No 2013

9.3.3 Embed monetary, exchange rate and fiscal policy in a concerted, nationwide plan to appropriately prioritise development of productivity-determining institutions


See Section 2. of this Action Plan

No 2013

9.3.4 Embed monetary, exchange rate and fiscal policy in a concerted, nationwide plan to appropriately prioritise development of Prioritised Clusters under NES


MoIT, MoAFS

No 2013

210

Annex 5 211

2013

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018


Annex 1 – Implementation and Resourcing Plan 11

Documents