Tag: Malawi

Deloitte Fined for Audit of Malawi Leaf Company
The Institute of Chartered Accountants in Malawi (ICAM) has fined Deloitte Malawi after finding the auditing firm guilty in cases involving its audits of Malawi Leaf Company.
ICAM conducted investigations through the Ethics and Investigations Committee and convened disciplinary hearings through the Disciplinary Committee on cases of its members, according to Malawi24.
In one case, ICAM says Deloitte did not give due diligence to the procedures in auditing Malawi Leaf Company (MLC) , a subsidiary of Auction Holdings Limited. Deloitte assured that AHL Group had complied with the applicable International Financial Reporting Standards.
The company was found guilty for this and the ICAM council has imposed on Deloitte a maximum penalty of a severe reprimand and a fine of 1.5 million Kwacha.
Between 2014 and 2016, ICAM says Deloitte did not give due diligence to the procedures in auditing and assured financial statements for the years in question that had errors and misstatements because they included fictitious sales made to Eastern Tobacco Company for $1.2 million.
The company was found guilty for this and the council has imposed on Deloitte a maximum penalty of severe reprimand and a fine of 1.5 million Kwacha.
However, Deloitte was found not guilty on a third charge related to overvaluing stocks in financial statements for 2014, 2015 and 2016.
July 21, 2022
Mixed Sentiments as Markets Open in Africa

Photo: Taco Tuinstra
Farmers earned more than $243,500 from the sale of 94,453 kg of flue-cured tobacco on the first day of Zimbabwe’s 2022 marketing season, reports The Herald. This reflects a 40.54 percent increase over previous year when growers earned $173,256 from 92,106 kg on the first day of sales.
On the first day of the 2022 marketing season the average price was $2.58 per kg, compared with $1.88 on the first day of 2021, according to the Tobacco Industry and Marketing Board (TIMB).
TIMB Chief Execute Meanwell Gudu said prices are expected to be firm this year due to reduced volumes.
“Brazil is likely to be 80 million kg short of their usual production level because of drought. This creates less competition for us. India has fixed its 2021-2022 production of flue-cured Virginia up to 270 million kg, against 236 million kg in the previous year,” he said.
“Due to anticipated reduced volumes in Zimbabwe this season, there will be more pressure on the demand side to take the crop, which should naturally increase prices upwards. This is likely to be experienced in the medium to filler grades.”
Farmers in Malawi, meanwhile, were dissapointed with their earnings, with some asking President Lazarus Chakwera to intervene, according to The Nyasa Times.
On April 1, the highest price offered on the auction floor was $1.75 per kg and the highest offer on the contract market was $2.30.
Chakwera assured the farmers that the government would intervene. However, he also advised them to grade their tobacco properly to satisfy buyers’ requirement.
According to the Tobacco Control Commission there were more than 1,000 bales on the Lilongwe Auction Floors on the first day of the 2022 tobacco marketing season.
April 1, 2022
Tobacco Commission Malawi Returns to Profit

Photo: Taco Tuinstra
The Tobacco Commission of Malawi posted a profit of MKW325 million ($404,374) in 2021, allowing the parastatal to recover from previous financial losses, reports The Nyasa Times.
In 2019–2020, the Tobacco Commission posted revenue of MKW3.6 billion but recorded a loss of MKW81 million.
Tobacco Commission spokesperson Telephorus Chigwenembe attributed the improvement to reforms implemented last year. “The improved performance has come about because of sound financial management measures that the institution put in place to avoid the loss that was recorded in 2020,” he told The Nyasa Times.
Between March 2021 and February 2022, the Tobacco Commission said it strengthened its regulatory framework, enhanced tobacco production and marketing integrity, improved stakeholder understanding of the commission’s mandate and roles, improved financial sustainability and bolstered “institutional capacity.”
The Tobacco Commission generates its revenues from statutory levies.
February 22, 2022
Minister: Tobacco Will Remain Cash Crop

Workers at a Malawi leaf processing facility prepare to unload a fresh shipment of tobacco.
(Photo: Taco Tuinstra)
Tobacco will remain Malawi’s cash crop for the foreseeable future, according to Minister of Agriculture Lobin Lowe. Speaking after touring Japan Tobacco International Leaf Malawi Factory, Lowe urged farmers continue their commitment to the crop, according to Malawi24.
Citing JTI’s recent $1 million investment in maintaining its Malawi factory, Low said it is pleasing that companies consider Malawi as a leading processing country. The investment, he said, is evidence that tobacco has a bright future in Malawi.
“If we talk of other crops, we are talking of complementing tobacco and not getting away from tobacco. This alone shows that we are still relying on tobacco in the short, medium and long term,” said Lowe.
As global demand for cigarettes has stagnated, Malawi growers have increasingly been eying alternative crops. In May, Malawi’s president, Lazarus Chakwera, urged a switch to high-growth crops like cannabis, stating that tobacco, the country’s leading foreign exchange earner, was in terminal decline.
While expressing confidence in tobacco, Lowe lamented farmers’ low earnings. Growers, he said, retain little money after repaying the inputs they got from tobacco companies. He also complained that the ministry did not get enough forex from tobacco sales.
Low urged discussions between buyers, processors and the regulator to make sure that farmers are attracted to tobacco.
JTI Managing Director John Gauna called on government to remove non-value costs in order to make Malawi’s processing facilities financially appealing.
Gauna said that a number of tobacco processing factories have closed in the neighboring countries, and this has created an opportunity for Malawi to position itself as a competitive alternative.
But taxes and levies in commodity processing are making Malawi unattractive, according to Gauna.
“We boast capacity to process up to 240 million kilograms of tobacco leaf here in Malawi. But at the moment we aren’t achieving anywhere near this,” said Gauna.
The JTI factory can process up to 50 million kg of leaf but is currently processing around 40 million kg, up from 28 million last year.
October 26, 2021
Growers Protest Rejections and Prices

Photo: Taco Tuinstra
Sales at the Kanengo Auction Floors in Lilongwe came to a standstill on Aug. 23 as farmers protested high rejection rates and low offers made by tobacco buyers, according to The Nyasa Times.
The tobacco market was temporarily suspended over what farmers complained to be “continued low prices on offer.”
Some buyers have reportedly been offering as little as $0.50 per kg, which is below the government’s set minimum prices for the crop.
Minister of Agriculture Lobin Low urged the buyers to comply with the country’s laws in dealing with the farmers by offering improved prices for the leaf. “This is sad that currently farmers are getting as low as $0.50 on their tobacco,” he was quoted as saying. “What we are asking is to simply adjust the prices upward.”
His call was echoed by AHL Sales CEO Graham Kunimba, who said the rejection rate has hit an alarming 70 percent.
But the buyers seemed not ready to budge as they insisted that the leaf on offer is of low quality; hence, even the offered $0.50 is just there as a “favor” to the farmers.
Disappointed by their earnings from tobacco, a group of Malawi growers had earlier threatened to stop growing the golden leaf.
August 25, 2021
Malawi: Farmers Threaten to Quit

Photo: Taco Tuinstra
Some farmers in Malawi have threatened to stop growing tobacco due to lack of sustainable payment, according to Malawi24.
The farmers said that growing tobacco under the current contract system is leaving them more impoverished than they would be if they invested their own resources in the process.
“It’s better to withdraw and let those companies do the work; it’s not in order for a farmer to spend time growing tobacco and later earn less. This is disgusting,” said David Chirwa, a seasoned tobacco farmer.
“It’s not on. Imagine toiling for a year and earning MKW100,000 [$123], the rest being earned by a tobacco company. This is nuisance. We’re not their slaves,” said Tinkho Muyaba, interim chairperson for the Concerned Tobacco Growers Union.
Tobacco is a demanding crop to grow, requiring close monitoring throughout the whole process. “[Tobacco] is one of the most agonizing crops to grow,” said Jeremiah Chihana, another tobacco farmer. “We spend sleepless nights. It’s an insult, therefore, to be taken for granted by these tobacco companies.”
Tobacco farmers have said that unless the government intervenes to get rid of the contract system, they will likely venture to other crops, such as soya.
August 19, 2021
Russia Lifts Ban on Malawi Tobacco

Photo: Taco Tuinstra
Russia has lifted its ban on imports of tobacco and tobacco waste materials from Malawi, reports the AK&M Information Agency.
In 2021, Russia’s Federal Service for Veterinary and Phytosanitary Supervision detected five instances of the tobacco pest Megaselia scalaris in tobacco shipments from Malawi.
Malawian authorities reported that the multi-eating humpback fly is absent on the territory of the country and has never been found in places where tobacco is grown and in tobacco raw materials. They emphasized that Malawi applies strict control mechanisms for exported products that meet international standards. Each batch reportedly undergoes a fumigation procedure twice before shipment, after which the containers with the cargo are sealed and sent to the port of Mozambique where they undergo another stage of disinfection.
Given that the humpback fly prefers a humid climate, which is not typical for Malawi, as well as the fact that the import of tobacco raw materials from neighboring countries is prohibited, representatives of the Malawian departments suggested that the contamination of goods could have occurred during loading or transportation.
Nonetheless, Malawian authorities vowed to strengthen control of tobacco exports, prompting Russia to lift its embargo.
August 13, 2021
Malawi Child Labor Case to Proceed

Photo: AA+W
British American Tobacco and Imperial Brands failed to persuade the U.K. high court to throw out a case alleging they are responsible for the exploitation of farm families and child labor in Malawi, The Guardian reported on June 25.
The case was brought following a Guardian investigation in June 2018.
Lawyers at Leigh Day allege the working conditions on Malawi tobacco farms breach the definition of forced labor, unlawful compulsory labor and exploitation under Malawian law. They also say they breach the U.K. Modern Slavery Act, Article 14 of the European Convention on Human Rights, and the International Labor Organization definition of forced labor. They say the companies have unjustly enriched themselves at the expense of Malawi farming families.
British American Tobacco and Imperial Brands deny the allegations. They argued that the Malawian families could not prove that the tobacco they grew had ended up in the companies’ cigarettes.
In the high court, Justice Martin Spencer said the companies’ application to strike out the case had been “misconceived.” The judge said lawyers for the farmers were not required to offer proof at the beginning of a legal action, only when it came to full trial.
A spokesperson for Imperial said they could not comment further because the litigation was ongoing, “other than to reiterate that we will continue to defend the claim.”
BAT said it had “a longstanding commitment to respect the human rights of our employees, the people we work with and the communities in which we operate. We will continue to vigorously defend the claims, and we are unable to provide further comment while this case continues.”
June 29, 2021
U.S. Clears Malawi Imports from Premium

Photo: Taco Tuinstra
U.S. Customs and Border Protection (CBP) has modified an existing “Withhold Release Order” on imports of tobacco from Malawi.
Effective May 21, 2021, certain tobacco imports from Premium Tobacco Malawi Limited (PTML) will be admissible at all U.S. ports of entry. This modification applies only to tobacco harvested by club growers in Malawi. CBP previously prohibited the entry of these imports into the United States based on reasonable suspicion that they were produced using forced labor.
CBP issued a Withhold Release Order on tobacco imports from Malawi in November 2019 due to information reasonably indicating that the tobacco is produced using forced labor and forced child labor. The Withhold Release Order continues to apply to imports of tobacco from Malawi by any company that has not demonstrated to CBP that its supply chain is free of forced labor.
CBP modified the November 2019 Withhold Release Order based on a rigorous evaluation of PTML’s social compliance program and efforts to identify and minimize the risks of forced labor in its supply chain. These actions produced evidence that sufficiently supports PTML’s claims that tobacco from club growers (smallholder growers that use little or no farm worker labor) is not grown and harvested using forced labor or forced child labor.
“CBP’s forced labor enforcement efforts continue to effect positive change for workers around the globe,” said John Leonard, acting executive assistant commissioner of CBP’s Office of Trade. “Eliminating forced labor from our supply chains prevents the abuse of vulnerable workers, safeguards the competitiveness of law-abiding businesses and protects consumers from unethically made products.”
This is the third time that CBP has modified the Withhold Release Order on tobacco from Malawi. The agency modified the Withhold Release Order in June 2020 to allow imports of tobacco from Alliance One International and again in August 2020 to allow imports of tobacco from Limbe Leaf Tobacco Co. Both entities fully addressed CBP’s concerns about the use of forced labor in their production processes.
May 24, 2021
Malawi President Urges Diversification

Photo: Taco Tuinstra
Malawi’s president, Lazarus Chakwera, urged a switch to high-growth crops like cannabis, stating that tobacco, the country’s leading foreign exchange earner, was in terminal decline, reports Reuters.
Chakwera said tobacco was expected to earn less than $200 million in 2021, below previous earnings of $350 million.
“The inconvenient truth … is that while Malawi has come a long way by relying on tobacco as our … largest single crop contributor to our GDP, this reliance is now seriously threatened by declining demand worldwide,” Chakwera said. “Clearly, we need to diversify and grow other crops like cannabis, which was legalized last year for industrial and medicinal use.”
Last February, Malawi’s parliament passed a bill legalizing cultivation and the processing of cannabis for medicines and hemp fiber used in industry. It did not decriminalize recreational use, however.
The agriculture ministry will “search for a basket of alternative crops so that by 2030, Malawi can do away with its reliance on tobacco,” according to Chakwera.
Zimbabwe also recently changed regulations to encourage investment into cannabis. Zimbabwe’s new rules will allow investors to wholly own cannabis businesses instead of partnering with the government. Cannabis will now also be allowed to be produced anywhere in Zimbabwe instead of just in restricted locations. According to a government statement, investors can keep export earnings in U.S. dollars for up to four years.
May 13, 2021