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TRADE: NGO Keeping An Eye on Malawi’s New Best Friend, China

Pilirani Semu-Banda

LILONGWE, May 26 2008 (IPS) - China continues to grow its presence in Africa, having just roped in the small southern African country of Malawi as another one of many trading partners on the continent. But some Malawians have adopted a cautious attitude towards their government’s new ally.

A local non-governmental organisation (NGO) is keeping an eye on the developing bilateral relationship, citing concerns about China’s importation of its own labour and the dumping of cheap goods in other African states.

The National Statistical Office (NSO) in Malawi reports that trade between the latter and China has increased by a record 4,894 percent over the past three years.

China’s relations with Malawi picked up noticeably when the two countries established diplomatic relations in December last year, a move which coincided with the southern African country severing its 41-year-old political ties with Taiwan.

Evidence shows that Chinese investment in some countries does not promote the interest of poor nationals, according to Mavuto Bamusi, the network coordinator of the Human Rights Consultative Committee (HRCC), which promotes human rights, including economic rights, in Malawi.

‘‘We know that the Chinese usually bring in their own workers when they invest in poor countries and that they have been accused of dumping cheap goods on such countries’ markets. Civil society will be quick to raise an alarm if such malpractices happen here,’’ Bamusi told IPS.


He said the Chinese should not bring unskilled labour to Malawi but rather create employment for locals if their initiative is to be seen as an ‘‘honest investment’’.

Civil society in Malawi also frowns upon Chinese aid as lacking democratic tenets. NGOs say the terms of Chinese aid contradict the Paris Declaration, an international agreement adopted by more than 100 parties, including governments, in 2005 with the improvement of aid effectiveness as its aim.

The declaration emphasises transparency and accountability in the use of development resources.

The HRCC worries that Chinese aid and investment as agreed with Malawi do not include any component on the rule of law. ‘‘China is giving us an incomplete package with no guarantee of accountability,’’ said Bamusi.

Malawi and China signed a memorandum of understanding (MOU) this month (May 12) with a view to advancing bilateral trade relations between the two countries. Malawi hopes to boost trade in its agricultural products, especially tobacco, tea, cotton and sugar – the backbone of the country’s economy.

China has also committed itself to investing in Malawi’s tourism, banking and insurance sectors, as well as in mining and fertilizer and cement production.

The MOU signed by Malawi and China comes hot on the heels of a visit to China by Malawi’s President Bingu wa Mutharika in March to woo investors. The Asian economic giant pledged 286 million dollars in grants, aid and soft loans to Malawi during Mutharika’s visit.

Beijing also promised to assist Malawi with human resource development. The two countries signed trade, economic and cultural exchange agreements. ‘‘I hope the private sector in Malawi will take advantage of my trip to forge further partnerships with our Chinese counterparts,’’ Mutharika told press upon his return from China.

The recent signing of the MOU happened during a visit by 43 Chinese businesspeople, led by Deputy Minister of Commerce Gao Hucheng. He described his delegation as ‘‘high-powered’’.

The Chinese struck several trade and investment deals with local entrepreneurs in the agricultural, banking and insurance sectors, among others.

Malawi’s Minister of Trade Henry Mussa is hoping that the country’s agricultural products will find new markets in China as the country’s exports benefit from preferential tariffs following the MOU.

Recently Malawi’s tobacco industry, for example, has been in disorder following wildly fluctuating prices. Protesting farmers forced frequent suspensions of the auction floors’ business. ‘‘We would like our Chinese counterparts to start manufacturing cigarettes right here in the country,’’ said Mussa.

The country generates up to 70 percent of its foreign exchange earnings from agriculture, with the tobacco industry contributing 15 percent towards Malawi’s gross domestic product. Tobacco and related industries provide livelihoods to about two million of the country’s 13 million people.

Malawi offers a conducive business environment and a favourable economic landscape for investment, according to a briefing that Suzanna Mjuweni, investment promotion manager of the Malawi Investment Promotion Agency (MIPA), made to the Chinese delegation.

‘‘Malawi already boasts attractive trade and investment policies,’’ said Mjuweni. She mentioned the accessibility of plentiful and cheap human capital as a guarantee of an encouraging business environment.

Mjuweni also named Malawi’s access to regional markets like the Southern African Development Community and the Common Market for East and Southern Africa as some of the factors that position the country as a conducive investment destination.

 
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