Malawians remain divided about thriving Chinese businesses in the country as election approaches

MLW040519HM001Lilongwe, Malawi – At 7 a.m., hundreds of women, teenagers and children flood the main streets of Mzuzu in the north, waiting for the Chinese-run shops to open an hour later.

Nearby, one of the city's main markets offering second-hand clothing shops, fruit and vegetable hawkers and food stalls are nearly deserted: A lone customer wandering through the aisles distracts the bored vendors as they scramble to lure him to buy.

Dozens of vendors here say they used to sell textiles and household goods before "the foreigners" came and killed their business. Almost 80 percent of the textile and household good shops in this city belong to the Chinese.

"We are closing down our shops because we can’t compete with the foreigners – they are more favored by the government than us,” said Jonathan Jere, president of Mzuzu Vendors Association, who sells rice and beans at the market. "We want them out of the country because they are depriving us (of sales).”

Addressing these complaints is a main part of the platform of the ruling party, whose president Peter Mutharika is up for reelection for a second term May 21.

And while targeting foreigners is not unusual for a politician running for reelection anywhere in the world, Mutharika's plan is: He says he will stop most foreign business from operating in Malawi to ensure Malawian small business get a fair shake.

"It has been a tendency for foreign investors coming in our country with a meaningless capital," said Mutharika. "Such investors only deprive the country’s growing businesses and in our manifesto we say all foreign investors with less than $250 million (to invest) shall not be allowed to run business in the country."

Facing competition from his vice president, Saulos Chilima, who formed a new party in November, and Lazarus Chakwera of Malawi Congress Party, Mutharika is still the frontrunner by an estimated 20 percent. Meanwhile, the other leading candidates are not shying away from the foreign blame-game, with Chakwera and Chilima promising voters to reclaim land and businesses given to foreigners by government through corruption.

In fact, foreign business has become the topic of the election.

Like many countries especially in Africa, Malawi has seen an influx of Chinese traders dominating local markets – here, that started after the government cut its bilateral relationship with Taiwan in favor of China in 2007.

China, critics say, used Malawi’s lack of infrastructure development as a way to convince then-President Bingu Wa Mutharika – brother of the incumbent president Peter Mutharika – to dump Taiwan for Beijing. Afterward, the Chinese built roads, a stadium, a new parliament building, hotels. And along with those projects came hundreds of Chinese nationals.

Many of these have created large businesses. Others, however, have turned to selling chickens, home goods and textiles or vegetables.
Edison Bakali says he finally had to close his textile shop in Limbe Township in Blantyre in the south of the country two months ago because he barely sold anything.

"The coming of Chinese traders has completely killed our businesses," he said.

Even so, Ben Kaluwa, an economics professor at the University of Malawi, warns that Mutharika’s proposal would have serious repercussions for the country’s economy.

Malawi ranks among the world's least developed countries and its economy is heavily dependent on agriculture. More than 50 percent live under the poverty line while the average income is 1,180 a year, according to the World Bank.

In Malawi, Kaluwa says, foreign business is becoming a major employer of youth, accounting for almost 70 percent of the population. Each Chinese shop, he adds, employs up to six workers, mostly with a lack of education and qualifications. Local traders don't usually employ others.

Kaluwa argues that instead of chasing out foreign business, the government should promote exports and reducing taxes to help local business. At the same time, the measure is likely to stifle the investment Malawi needs to grow.

"While it is important to put in place such requirements for the protection of local traders, it is important to consider the trends of the country’s economic development, and the role that foreign businesses play in Malawi’s economy," he said. "Foreign investors especially Chinese shop operators have brought competition especially in the textile and electronic industries. People are now able to buy clothes and other goods from Chinese shops at cheaper price due to high competition."

That's exactly why Mzuzu resident Tionge Kumwenda wants the Chinese to remain.

“I prefer buying in Chinese shops because they are located along the (main) road and I’m able to buy different things such as clothes, plates and shoes within one shop at cheaper prices than those offered by local traders,” said Kumwenda.

Meanwhile, Kaluwa says the president's ploy to win votes will certainly backfire. "You can’t achieve (economic growth) without foreign businesses – that’s a total lie,” he said.

Lu Juang, a Chinese national who runs a shop in Lilongwe, says such a policy would force most foreign businesses out of Malawi.
“We are already paying huge taxes and rentals, regardless of the scale of our shops,” he said. "The business environment in Malawi is tough, and we are not making profits because we spend more to import the goods.”

Meanwhile, Isaac Kapena, a vendor trading in hardware products at Blantyre flea market, says Mutharika would better attract votes if he targeted corruption and not opposition party supporters regularly beaten up at rallies. In November, Mutharika himself was forced to return a $200,000 "donation" from an Asian businessman facing a corruption case in a multi-million dollar kickback scheme involving a contract to supply food to the Malawi police.

"We have never heard Mutharika ordering the arrest of his youths walking with machetes and other weapons along the streets, threatening or injuring supporters of other parties or causing violence at opposition rallies,” he said. “And have you seen the president firing or government and party officials involved in high profile corruption? These are the issues people will look at when deciding whether to re-elect him or not.”

Photo: May 4, 2019 - Mzuzu, Malawi - Jonathan Jere, a Mzuzu city based vendor closed his clothes shop to sell soft drinks and plastic bags because he could not make sales the former business. He claims foreign business operators have killed his business.
Credit: Henry Kijimwana Mhango/ ARA Network Inc. (05/04/19)

Story/photo publish date: 05/21/19

A version of this story was published in the Washington Times.
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