From Poverty to Prosperity in Malawi

TECHNICAL FILE

By Grain Wyson Phillip Malunga FIMMM Mining and Environmental Management Expert

Abstract

The development agenda for Malawi seems to be missing the key to kick-start. Energy and skills development should be in the forefront to transform Malawi from poverty to prosperity. The above combined by transport and agro processing form a good linkage with the mining sector. Greenbelt Irrigation development and tourism come in as other areas of priority for economic development. This paper tries to narrate this thinking.

Introduction

The country is undergoing a series of economic shocks requiring getting out of traditional and theoretical thinking.  Listening to people’s aspiration and the author’s independent analysis, there is need to have a period of deviating from common economic development theories and concentrate on Energy development, skills development, mining and transport infrastructure, commercial agriculture (focussing on commercial agriculture agro processing) and tourism.  It is worth noting that countries that are developing rapidly have infrastructure services and manufacturing ahead of agriculture.  The first two create wealth and the last one promotes food security.

Energy

Energy is the driver of any industrialisation. Energy capacity should always be ahead of demand.  Energy is required for irrigation farming and agro processing, mining and mineral processing, manufacturing and services. The activities mentioned above are the main source of government revenue through taxation and fees.

There is need to continue upgrading transmission and distribution systems ahead of increasing generation capacity. Focus should now be through hydropower generation using dams and thermal power using clean technologies. Regional interconnectivity should offer an opportunity to export power and not rely on drawing power from neighbouring countries.

Issuing of licenses to Independent Power Producers (IPP) should be simple with clear negotiation path. Economic rent seeking and inefficient administrative procedures frustrate investments. The guiding principles should be provisions in the energy policy, strategies and recent electricity laws.

Malawi generates about 353.1 MW the majority of which is hydro power.

The current electricity generation does not give hope to industrialisation or manufacturing. Malawi Electricity Investment plan (2010) projected energy demand which is currently at around 650 MW, 850 MW in 2020, 1150 MW in 2025 and 1,550 MW in 2030. The growing demand is attributed to industrialisation and increased prospects in the mining sector.

There is a lot of hydro power potential in Malawi on Ruo, Bua, South and North Rukuru; and Songwe .

Wind energy installation is possible in areas with adequate wind speeds. The minimum annual average wind speed should be rated at 6.7 m/s while the average cut-in speed should be 4m/s and average rated speed is 12 m/s. Wind energy is used to drive wind turbines which are connected to a generator for electricity generation. Table 3 shows that the month of October, has highest wind regime which is suitable for harnessing. Districts like Chitipa, Nkhotakota, and Blantyre have wind speeds ranging from 3.1m/s to 9.6m/s almost the whole year. This means that at heights of more than 20 metres these places should have higher wind speeds which can easily be harnessed for power generation.

The country’s two main coal fields, one in the North and the other in the South have proven coal reserves of about 17.5 million metric tonnes and probable reserves of 66 million metric tonnes. The Southern Coal Fields have estimated reserves of 5 million metric tonnes and probable reserves of 10 million metric tonnes. These can easily support coal fired power plants which can generate 300 MW. This will contribute to energy generation diversification.  The 300 MW plant will require an annual coal supply of 1 million metric tonnes with an average life span of 40 years. Other efforts include use of imported coal for Kamwamba Coal Fired thermal power plant.  Its sustainability depends on peace in Mozambique, interconnection economics and foreign exchange availability.  More exploration work on Malawi coal should be encouraged.

High energy consuming mining projects that are failing to take off include Mulanje (Bauxite), Salima and Nsanje (Mineral Sands) and Kasungu (tantalum, niobium, uranium). Kayerekera uranium project is under care and maintenance partly due to lack of cheap hydro power. Energy deficit has contributed to low industrial productivity and inability to attract more industrial projects.

Solar energy is not currently preferred for industrial applications. Experts believe that up to 20% of solar energy generated can find its way into national grids. There is potential to tap solar energy for process heat production. Other studies suggest that about two-thirds of the heat in the 100°C to 400°C range is used in industry at temperature levels lower than 200°C (. This can be obtained through solar heating. The challenge is high capital costs, availability at night and affordability. Careful investment analysis is necessary.

Skills Development

Vocational education in Malawi should have the ability to forge a working relationship between learning institutions and the private sector for promoting socio-economic development.  Reforms in technological development should reform education systems in Malawi. Areas of focus should be plastic recycling and moulding, automation, electronics, electrical installation, fabrication and welding. Vocational education should be associated with economic goals of promoting production and exporting. This means providing the necessary skills for technological advancement related with agriculture productivity, agro processing, mining and manufacturing.

The above skills development will form very good linkages or promote local content in mining and manufacturing. Expatriate employment will also be reduced.

Mining and Transport infrastructure

The Mining sector has the potential to generate significant economic benefits for Malawi. The Mining Governance and Growth Support Project (MGGSP) has opened efforts to improve governance of the mining sector and unveil mineral potential of the country.  The project is focussing on country-wide geological mapping and mineral Assessment.  The following activities will be included:

• Geochemical surveys in selected areas
• Enhancing human and infrastructure capacity in the mining sector
• Supporting Artisanal and Small-Scale Mining (ASM) to contribute to economic growth and povertyreduction.

Reliable Road Transport infrastructure network will be key to improve access to markets and resource rich areas. Government should look at opening up resource rich areas with the aim of improving access to markets and mineral resources. Priority should be put on roads such as Tsangano Road (T397), Manjawira-Katsekera Road, Malindi Road (S129), Nambazo Road, Kachulu Road (S143), Makawa-Njereza Katema Road (Undesignated), Mbenje-Lulwe-Marka Road (D397), Mzimba-Chisenga-Chitipa Road (M9), Dedza-Kamalinga Road (T371/T375), Mwanza-Chapananga-Chikwawa Road (S136), Mwenitete-Ifumbo Road (T301), Mwandenga- Mwenechendo (S100) and Kalikokha Kapichira Road (S113).

Water Transport should see the launch of budges for bulk goods transportation north to south of Lake Malawi. Focus should be on transportation of agro products, minerals and fuel. Important ports for rehabilitation should include Chilumba, Nkhata Bay, Nkhota Kota, Chipoka and Monkey Bay.

Rail Transport improvement to include reviving Nsanje port from Beira to Blantyre. Consider extending rail line from Lilongwe to Chitipa via Kasungu and Mzimba (along M9). Bilateral agreement to link Mchinji with Lusaka should be enhanced. The Chitipa line can join the TAZARA Railway line to Dar-es- Salaam. An extension of Chitipa to Karonga is another important link.

Agriculture

The agriculture sector has deteriorated a lot due to reduction in extension workers through natural attrition and due to lack of training adequate technicians. Most Extension Planning Areas have empty vandalised houses. Livestock development has lost direction and most dip tanks are idle or only serve as cattle and goat markets. Farm input subsidy has become the main focus of the ministry and has recently not been effective in   providing food security due to poor administrative and distribution logistics.

The fisheries sector faces over-exploitation of valuable fish species and aquaculture programs seem to face implementation and sustainability challenges. The private sector’s participation is weak due to inadequate support to access capital and extension work.

Irrigation farming has concentrated on small schemes and greenbelt projects seem to face land acquisition challenges and private sector participation is not clearly supported to introduce commercial irrigation. The greenbelt initiative will be highly successful if incorporation of integrated water resources management is done. This is a concept where water development encompasses hydro power development (Energy), portable water supply (Health), irrigation development (agriculture), and biodiversity sustainability (ground water recharge for flora and fauna survival). This in short is WEHAB concept.

Have we ever thought of subsidizing commercial farming with the intention of sharing staple food for poor and vulnerable families? This will be more effective than the farm input subsidy program. At least that is if we are focusing on economic development.

Greenbelt Irrigation should concentrate on river basins such Lower Shire Valley, Bwanje Valley, Kasitu/Henga Valley and Songwe River Basin. These should be managed by River Basin Authorities. This will attract much needed agro-processing, potable water reticulation, livestock development, aquaculture and commercial crops on top of staple food.

Tourism

The Tourism sector can generate foreign exchange and create jobs in the country. Business tourism will strive with increasing conference facilities and favourable investment climate. Cultural tourism will strive when we protect our game reserves and national parks through forest regeneration and animal restocking and protection from poaching. There is need to develop human capital skills and infrastructure. Enforce daily reporting of room occupancy in major accommodation facilities. We also need to capture pre-tour payments that happen abroad in order to obtain government’s fair share of the revenue.

Encourage participation of local communities in tourism through community-based initiatives.

Direct access to Malawi will reduce air fares. This is sustainable if we concentrate on rebuilding our economy to produce and export valuable goods.

Conclusion

Malawi’s economic development success will depend on energy development and skills development to support mining and manufacturing. Agriculture and tourism development are other areas of focus but require reforms to bring about food security and easy foreign exchange generation respectively. Commercial farming should be supported through   greenbelt initiatives to modernise and increase agro processing activities for food preservation and export. Revenue from Tourism should be tracked and Malawi as a destination for tourism should be easy and cheap to visit.

The country needs home grown solutions and all skilled and learned citizens should be encouraged to take part in Malawi’s economic transformation. Patriotism, hard work and integrity should indeed be the pillar for economic growth.

Our transport systems should be planned in such a way as to cater for access to markets and resource rich areas. We can extend this to rural electrification programs too.

References

1. Ministry of Economic Planning and Development (2012). Malawi Growth and Economic Strategy
2. Ministry of Natural Resources, Energy and Mining (2010), Malawi Electricity Investment Plan
3. South African Institute of International Affairs (2002), Lessons from Taiwan: Skills development, Trade and SMEs, Report No. 26

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The article above was initially published in Malawi’s Mining & Trade Review Issue Number 45 that is circulating this January 2017.

The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.