Could you provide us with a brief historical and structural overview of Admarc and its activities ?
Admarc is a parastatal organization, established by an Act of Parliament, with the primary responsibility of providing a market for small farmers. Therefore we are located in mostly every corner of the country and we have the biggest network of any institution in the country, primarily to reach out to various small farmers wherever they are. We provide a market for the sale of any products to farmers, such as fertilizers, chemical or farm wheat, and we also provide the markets for them to sell their produce.
The other part of our activities is the investment wing, which grew up over the years as a result of the surplus profit which we made over the years. We used the funds to invest in other industrial activities, so we have quite a sizeable shareholding in certain industries in Malawi, like Illovo Sugar, the National Bank of Malawi, Auction Holdings and the Finance Corporation of Malawi. Of course, with the drive towards privatization, most of our shares in these investments are being sold to the public, and we endeavor only to keep a minimum of our shares in the companies in which we have interests.
Looking back at the core activity of Admarc, we are at a crossroad. Why do I say this? We continue to provide the market for the small farmer, but at the same time there is need to: 1) restructure the organization , and 2) certain people believe that there should be an element of privatization in Admarc itself, where some of the shares would be sold to private individuals. It is hoped that Admarc would perform better if in private hands than if it was all run by government.
The last few years have seen a transformation of Admarc, from being a monopoly to being broken up by the liberalization policy of the government, and we are now seeing numerous competitors coming into the scene. We call them collegues, but generally they are competitors; they are chasing the very same commodity we are chasing, they are providing the very same services we are providing, but they are not present everywhere we are. They strategically choose to be in good areas, whereas in our case we do not choose to be where we should be – we are everywhere, because we offer services to the community as well.
In terms of expectations, there are big expectations from the stakeholders for Admarc to be everywhere and yet to perform commercially. This is quite a paradox, and while the competition is selective in its establishments and activities, we do not have that choice. So during the past two years we have been managing this delicate situation of moving away from a monopolistic social commercial provider to a rather public organization, profitable and able to provide services more efficiently. That has been the emphasis: to reorganize our structure, our mindset, our infrastructure and our services to meet new expectations.
An important element is regional integration, yet at the same time it seems that everyone is fighting for the same markets. In this context, and the need for diversification of agricultural products, what can Admarc provide that possibly a competitor, or collegue, cannot?
In the regional context we are unique, from the point of view that perhaps we are the only parastatal in the region which is able to mobilize the activities of small farmers from a marketing point of view. There were similar organizations in other countries in the past, but these have basically disappeared. We have been very cautious of what we can do with Admarc, because Malawi is perhaps more rural than some of the other countries in the region, and therefore we have a greater deal of smaller farmers which have to be looked at in a special manner, and Malawi is a special case.
So what does Malawi offer? Being predominant in agriculture, there is still one big problem which is having this activity done at a small level, so the orders are very small although the output is very significant, and you have to mobilize the output in order to come up with numbers which are significant. Therefore, what Admarc is able to offer is the consolidation of a small sector, very fragmented and diverse, with a strong impact because of the services we can offer. From that point of view, we are the only ones who can do this.
For example, if we look at a particular crop like chilies, in other countries you might have five or ten chili growers, whereas in Malawi this is not the case. We have about half a million growers of chilies, but each of them growing maybe 5 Kgs, but as a country we are still able to produce a thousand tons of chilies, and this has been bought from half a million producers. This is the unique thing that Admarc is able to offer – to mobilize a strong output. It is like a savings bank that is able to mobilize savings from very small households, and even though it might not represent much money individually it produces a sizeable holding when pooled together.
What kind of incentives are being provided by Admarc in order to ensure growth, at a fragmented level, towards the next few years?
We have taken individual initiatives, and we are mindful of the fact that our own survival is dependent on a buoyant agricultural activities. We have also looked at constraints faced by smaller farmers, and these constraints are in the form of lack of capital to buy inputs for the farming activity, so we have provided credit to farmers in particular localities where we want a particular crop to be supported. For instance, where cotton is being grown we have extended credit in the form of agricultural inputs for the cotton growers of the area. We have done this for tobacco, maize and several other crops. These are the initiatives we have taken to help sort out the problems of farmers, and it also demonstrates our relationship with farmers, because we are in partnership with them and at the end of the day, their success is our success.
Is it a truism that the people of Malawi in the agricultural sector are extremely hard working?
Yes, the production and productivity levels are very high. But if they are using the wrong seeds, technology or know-how, you will find that you are putting in too much energy compared to what you produce. So the effort of the government has been to complement the hard working effort of the farmers with good agricultural techniques that will ensure higher productivity for the sector.
If we had the opportunity to meet in five years time, what would be the state of the agricultural sector and what would be the achievements of Admarc?
I am hoping that agriculture will still be a sector which plays a pivotal role in the overall economy of Malawi. I also believe that we are better endowed in agriculture than other countries of the region. What I see is an awakening and change of policy towards achieving greater output from the small farm holder.
At the same time, in terms of agriculture we see the need to diversify, and therefore, five years down the road I do not think that we will be sitting here and looking at tobacco as a predominant crop. We will be looking at other crops, and tobacco will no longer be emphasized much in Malawi because we believe that it is risky to focus on tobacco right now. It will be a diversified economy, and I do not see a very dominant crop like what tobacco has done in the past, but I see several new crops awakening. We have a lot of potential in the peanut industry, the ground nuts, we still believe that we have a role to play as far as tea is concerned, we produce coffee, sugar as well, and then there are other smaller crops which will grow in significance as the farmers change from the emphasis of tobacco to other crops.
Our previous concentration on tobacco has taught us the lesson that when you are concentrating on a product which faced problems like tobacco is facing right now, then the whole economy is destabilized to a situation where farmers will have to allocate resources to other crops other than tobacco.
How does the diversification of this market into niche markets help support poverty reduction?
The first phase is the realization that tobacco is no longer giving us the best return on our investment. Obviously, the allocation costs will be significant, and it is not easy to decide what to grow instead of tobacco. The first year or two, farmers will go through certain hardships as they adopt to new crops. Thereafter, when diversification has taken root, I predict significant growth and I can see a possible reduction in poverty that has not materialized in the past five to six years. The vulnerability of the economy will be smaller than now; when we are more diversified we will be less exposed to decisions by one company in one product. If we diversify it is likely to reduce poverty in a most significant manner. | During your time as a decision maker in Admarc, and during the time you have left, what would you like to accomplish?
It is true that our decisions have a significant impact on the economy. Although we are independent in decision making, and although we believe that we are supposed to become even more independent through the privatization or commercialization program of Admarc, we believe that we will enjoy greater cooperation with other stakeholders of the industry. There is the government on one side, and we have to work with the Minister of Agriculture to ensure that the decisions he will make are complemented by our efforts. We try to broaden our spectrum, to ensure that whatever decision we make, however commercial it might be, does not have a negative impact on the social or economic characteristics of the country. This represents our previous, present and future emphasis – to always ensure that the decisions which we make are done in concert with the major stakeholders so that we do not become isolated or marginalize in any way in the process.
How inevitable will the privatization process be in this sector, and at what stage do you think that joint ventures and foreign capital will have a big impact on the sector?
In order to keep on track with privatization and attract investment, we have to create confidence among investors. Confidence can only come when there is a role player, and we believe that during this transition stage we still need to play a leading role, not a dominating role. We do not dominate; we lead the scene towards making sound business decisions. Our leadership will actually set the pace and lead the way for private investors to come into Malawi. That is what we think should be the role of Admarc, and that should also be the role of agriculture. Along with political stability, sound economic activity will create confidence, which will have an overall impact on the improvement of the economy.
Are you active in seeking foreign investment?
Not directly, but we do try to seek foreign investment in particular investments like in the textile industry, and we would like to attract a foreign investor working hand in hand with Admarc. We also own the only transportation company, Shire, and we would like to see an investor joining us. So our focus is to attract investors by sector.
There are numerous opportunities for new investment in agriculture diversification, tourism, infrastructure and communications development. This creates a wonderful platform for the country, but how much of a reality is it that this will happen within the next five to ten years?
I think it will happen if you compare with other countries in the region. Looking at the advantages and disadvantages of Malawi, we score positively in numerous aspects. People want to attract tourists to an area which is free, where people are friendly, where natural resources are abundant, and where the tourism industry is virgin and virtually untapped. Therefore if you establish a hotel and casino in Cape Mac, for example, you will be the only one at this time, whereas if you wish to build a resort in another country, you will be competing with already established hotels. Because of the fact that tourism Malawi is untapped, there is much to gain from investing here.
Moreover, if you look at agriculture, the diversification and the forward integration has not been excellent. However, once the product is available, you simply have to add value before you start exporting it, so that it has a base for agro-processing as well. While other countries are also emphasizing on agriculture, the level of emphasis is different. We are focusing on agriculture by default; we have no choice because we have no other resources like minerals or oil. Due to this, we remain an area where agro-processing is a growth point for Malawi.
How do you think Malawi is perceived, from a regional stand point and an international stand point?
If you look back at our history, we were not particularly democratic. But the political liberalization came with a special characteristic – it was peaceful. In other countries change has been problematic and many people have shed blood, and this has not happened in Malawi. We changed from a one-party to a multi-party system and we have changed from a very conservative society to a climate where the press is very open and transparent. We are seeing a lot of interest in Malawi now because of the example we are setting vis-à-vis the other countries in Africa. We have an open mindset, and the political parties in this country are very vibrant. Because the country is small and relatively poor, it will sometimes be ignored on the world map. It is only those who have travelled to Malawi who know what the country is about. What we hope to do is to bring investment to this small and wonderful country.
If you talk of image, we are in a new state of development, and things are moving positively and in a peaceful manner. While international donors are concerned that things might not be going as fast as they would like, we are working together to improve the economy and we are making good progress. It is an image of a country which is peaceful, with a people that is prepared to listen and share ideas with other countries of the world, and prepared to meet challenges of the future.
As far as your strategy, how do you promote yourself and establish a reputation as the major player in the agricultural sector?
I would say that in Malawi, Admarc is a household name and we have established a strong partnership with local farmers of the country. Perhaps we have not sold ourselves well enough outside the borders of this country, but here people know Admarc. Nevertheless, we still maintain the view that we still have to promote public relations and awareness, which we do continually in the media.
Across the border, in the region and overseas, there are times that we subscribe to certain publications to promote our market. International publications are quite expensive, but when our resources allow it, we will participate in them.
What is your strategy in regards to environmental protection and sustainable environmental products?
We have seen some environmental degradation in the past eight to ten years. As a result of our poverty, it is sometimes difficult to enforce environmental rules. For example, to some extent we have degraded our forest reserves because the poor have cut down the trees to make charcoal for cooking. Although the Ministry has been discouraging this activity, we have to ask ourselves the question: What is the alternative? To which extent can we enforce environmental issues without seeming to be draconian vis-à-vis the country’s poor? Another example is over-fishing, which has to be controlled because otherwise reserves will be completely depleted. However, the fishermen argue that they cannot afford to substantially restrict their activities.
At the end of the day, while we know that the environment is being degraded because of our economic background and income levels, we still have to do something. Therefore, from that point of view, there has been quite an awareness campaign to let people know that that if we degrade our environment, we will not be preserving it for our very own children. Through the media and the radio, we seem to be gaining some ground. We have to respect nature, the environment and our natural resources.
How long have you been head of Admarc?
For two years now, but I have been in the Admarc family for a long time, when I was working in a subsidiary of Admarc.
What would you like to see as one of your major achievements?
Admarc is one of the biggest parastatals of the country, and we want to reduce it to a smaller size, make it more efficient and very effective.
As a former monopoly, Admarc is now in a competitive environment. We have to change our mindset to wake up and adapt to competition. We also have to have an stable profitability which will smoothen the ups and downs of the agricultural market and create a reasonable profit stability and improve our commercial strength.
If we can achieve those three objectives – reduce our size, change our mindset, increase profitability, and provide very efficient services to our small farmers, I will be very happy.
What would be your final message to our readers?
On a micro point of view, I believe that corporations should be aware of the existence of Admarc and its role in the development of the economy and its services for the community.
On a macro level, we have to create international awareness about Malawi. When people hear about Malawi they should not think of Malaysia. They have to know that Malawi is a country in the eastern-southern part of Africa, that it is a country with a lot of potential, and that it is an important point to visit. Malawi is the Switzerland of Africa, and if you do not come and visit us, you have not truly experienced south-east Africa! |
AGRICULTURAL DEVELOPMENT AND MARKETING CORPORATION (ADMARC)