While going through the 2008-09 Youth Social Enterprise Initiative (YSEI) fellow list, I noted that the work of at least three fellows is based on the concept of free trade and community empowerment. For instance, Malaysia based Devan Singaram, developed  an online platform that enables rural entrepreneurs to set up online shops and sell their crafts to a global market, while simultaneously channeling a portion of the sales to local non-government organizations.

Singaram argues that in Malaysia, the biggest obstacle for most indigenous craftsmen is lack of access to markets. Those with access often pay unreasonably high fees to middlemen, preventing them from retaining a sufficient percentage of sales as income. In Malawi, we also have our own fair trade issues. Just like Malaysia, we also have a lot of artisists who produce different forms of wood carvings (ziboliboli).

Over the years, I have seen a lot of people transporting ziboliboli and related products and selling them in South Africa, which is the region’s economic powerhouse. While studying in South Africa a few years ago, I used to interact with some of these businessmen. They used tell me that they were making some good monies of this business. Judging by their looks, one could easily tell that they were not lying. But are they practising fair trade? Do the craftsmen get enough from the works of their hands? I somehow suspect that the poor artists are being exploited just like their Malaysian counterparts. Which is why I look forward to the emergence of Malawian online platforms that will enable rural entrepreneurs to set up online shops and sell their crafts to a global market and retain a good portion of the profits. Africabags, a non-profit organization that is doing charitable work in Malawi, has already set the ball rolling. Apart from shopping bags, they also sell different types of hand-made crafts from Malawi and neighboring countries and 100% of the profits are returned to the villagers. If more non-profit organizations can set up similar online stores, artists in the villages will retain a significant percentage from the sales of their products. This will go a long way toward reducing poverty in the rural areas.

In a related development, Malawi, being an agricultural country, relies on cash crops such as tobacco and cotton for her export earnings. Even though don’t like it, tobacco is Malawi’s most important crop as it fetches about 70 percent of the country’s total foreign exchange every year. It contributes 30 per cent of the country’s Gross Domestic Product (GDP), 25 per cent of the country’s tax earnings and over 70 per cent of Malawians are directly or indirectly employed by the tobacco industry. In order to counter exploitation by buyers, the Malawi’s government has been setting minimum prices for cotton, corn and tobacco for the past few years. For the 2009 tobacco marketing season, the government has set the minimum prices for burley  at 2.15 US dollars and flue cured leaf at 3.09 US dollars per kilogramme. But the prices have  generally been lower than the government-mandated prices. At some point, President Mutharika even warned that if prices didn’t improve by a given date he would deport buyers of the leaf. My view is, however, that if government does not want someone from outside Malawi to dictate tobacco prices in the country, it should set up its own tobacco buying parastatal which should be competing with the so called foreign companies. The other option would be for government to have a stake in the the existing tobacco companies and protect the interests of the farmers from within.

For cotton, which is the country’s third biggest export product, government set minimum price of 75 Malawi Kwacha per kilogram. Government says that it consulted all the cocerned parties before fixing the price. But ginners claimed that they were not consulted and would, therefore, not take heed of the new prices since their side was not heard. They went on to set their own buying price at 36 Malawi kwacha per kilogram allegedly because of the global recession that has resulted in cotton lint prices dropping to 63 US cents per pound, from 88 cents last year. As I write, there is a stalemate in cotton trade such that some farmers are opting to sell their cotton to intermediate buyers who are also offering lower prices of 45 Malawi Kwacha per kilogram. Farmers have since threatened that government should expect fewer growers next season. While I appreciate government’s efforts in protecting cotton farmers, I somehow think that the ginners have a point. Therefore, through contact and dialogue, the two parties must reach a compromise so that the farmers  should, at least, have something from their work.

Finally, the cotton industry, in the current set up, does not serve the interests of the poor farmers, but rather those of the international companies. Now that government is trying to position cotton at the centre of the country’s industrial development thrust, it will be good if the Agricultural Development and Marketing Corporation (ADMARC) can be brought back to the cotton industry. With ADMARC in place, it will be easy for government to regulate cotton trade. Goverment must also come up with policies that will protect farmers from the fluctuations of cotton prices on the international market. The introduction of more local cotton processing companies will also be a good development. Otherwise, let us forget about cotton and let the poor farmers direct their meagre resources to food crops such as maize and rice.

Related posts:

1. Malawi Mobile operators must stop pegging their rates to the US dollar!
2. Steel rolling factory opens in Malawi
3. The 2009 Waste-to-Fuels Conference & Trade Show
4. The Friends of Malawi (FOM) Small Grants program