China will provide $287 million in aid to Malawi during the next five years, a far cry from the $6 billion that had been touted when the two countries formally established diplomatic relations late last year.
Malawian President Bingu wa Mutharika announced the funding on Friday after returning from a state visit to China, praising Beijing for providing what he described as one of the largest aid packages received by the impoverished African nation.
"Malawi also plans to deepen trade and investment ties with China as part of a larger strategy to diversify our agriculture-dominated economy," he told a news conference in the capital Lilongwe.
Malawi, which was one of the last countries in Africa with diplomatic ties with Taiwan, cut relations with Taipei in late December and established links with China, an emerging economic power in Africa.
At the time Taiwanese officials said the island nation could not match a Chinese offer to provide some $6 billion in aid to Malawi.
But Malawian officials never said that was the amount they expected from China, though they confirmed that the prospect of increased aid was the main reason for breaking ties with Taiwan after 41 years.
China's government and its state-controlled companies have invested billions of dollars in Africa in a bid to tap natural resources for the Asian giant's growing economy and build Beijing's political influence in the developing world.
Malawi will use some of the Chinese funding to build a highway linking it with neighbouring Zambia and finish the construction of a government building in Lilongwe that was started by the Taiwanese.
China and Malawi have also signed an agreement allowing Malawian exports access to the Asian nation on a preferential tariff basis.
Friday, 4 April 2008
Malawi eyes China for tobacco earnings growth
Malawi is deepening trade and investment ties with China as part of a larger strategy to diversify its agriculture-dominated economy and increase its bargaining power in the international tobacco market, the country's trade minister said late on Thursday.
Henry Mussa, Malawi's Minister of Industry and Trade, said the country had last week signed an agreement with China that would allow its exports to the Asian economic giant to enjoy preferential tariffs. In return, it hopes to attract Chinese companies to come to Malawi to help it develop industries to process its crops.
"In tobacco, we would like the Chinese to come and manufacture cigarettes. In cotton, textiles manufacturing," Mussa said at a Malawi investment forum in London organised by the Commonwealth Business Council.
Tobacco accounts for about 15% of the economy of Malawi, one of the world's poorest nations, and about 60% of its foreign-currency earnings.
The country is one of the world's top 10 producers of tobacco, with peasant farmers in Malawi growing it.
In March, Malawi suspended a three-day-old tobacco auction after farmers withdrew their crop in protest against a drop in prices. Sales were resumed a few days later after government intervention to broker a settlement between market participants.
The main buyers of Malawi's tobacco are United States firms such as Philip Morris and Universal.
However, China is the largest producer of tobacco and according to some estimates, accounts for nearly a third of the world's total consumption of cigarettes.
"Tobacco will still be grown and sold in the foreseeable future but as a country we are diversifying into cotton, sugar, coffee, soya bean, ground-nuts," Mussa said.
He said the government would like to see cotton's share in total exports eventually rise to 30% from its current 7%.
Malawi established ties with mainland China in December after ending 41 years of relations with Taiwan, which Beijing views as a renegade province.
The government has forecast 8% growth this year, slightly higher than the International Monetary Fund's (IMF) forecast of 7,7% economic expansion.
Henry Mussa, Malawi's Minister of Industry and Trade, said the country had last week signed an agreement with China that would allow its exports to the Asian economic giant to enjoy preferential tariffs. In return, it hopes to attract Chinese companies to come to Malawi to help it develop industries to process its crops.
"In tobacco, we would like the Chinese to come and manufacture cigarettes. In cotton, textiles manufacturing," Mussa said at a Malawi investment forum in London organised by the Commonwealth Business Council.
Tobacco accounts for about 15% of the economy of Malawi, one of the world's poorest nations, and about 60% of its foreign-currency earnings.
The country is one of the world's top 10 producers of tobacco, with peasant farmers in Malawi growing it.
In March, Malawi suspended a three-day-old tobacco auction after farmers withdrew their crop in protest against a drop in prices. Sales were resumed a few days later after government intervention to broker a settlement between market participants.
The main buyers of Malawi's tobacco are United States firms such as Philip Morris and Universal.
However, China is the largest producer of tobacco and according to some estimates, accounts for nearly a third of the world's total consumption of cigarettes.
"Tobacco will still be grown and sold in the foreseeable future but as a country we are diversifying into cotton, sugar, coffee, soya bean, ground-nuts," Mussa said.
He said the government would like to see cotton's share in total exports eventually rise to 30% from its current 7%.
Malawi established ties with mainland China in December after ending 41 years of relations with Taiwan, which Beijing views as a renegade province.
The government has forecast 8% growth this year, slightly higher than the International Monetary Fund's (IMF) forecast of 7,7% economic expansion.
McConnell faces questions over his Malawi role
Jack McConnell is to be grilled by MPs later this month on his forthcoming role as Britain's High Commissioner to Malawi.
The former First Minister will give evidence to the Commons Foreign Affairs Committee on April 23. He was appointed to the role after being nominated by Tony Blair, the ex-Prime Minister, in August 2007 and is due to take up his post next year.
The committee said Mr McConnell's appearance before it was "in accord with the committee's previous decision to conduct scrutiny of the appointment of individuals outside the diplomatic service to senior diplomatic posts".
Among those who will question the ex-First Minister will be committee member Sir Menzies Campbell.
The former First Minister will give evidence to the Commons Foreign Affairs Committee on April 23. He was appointed to the role after being nominated by Tony Blair, the ex-Prime Minister, in August 2007 and is due to take up his post next year.
The committee said Mr McConnell's appearance before it was "in accord with the committee's previous decision to conduct scrutiny of the appointment of individuals outside the diplomatic service to senior diplomatic posts".
Among those who will question the ex-First Minister will be committee member Sir Menzies Campbell.
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