A total of 32 Members of Parliament in the parliamentary committees on Agriculture and Irrigation as well as Trade, Industry and Tourism on Wednesday, June 29, 2016 visited the AHL Commodities Exchange (AHCX) head office and trade floor at Old Town in Lilongwe to appreciate how the exchange works.
The MPs were taken through a presentation on the concept and benefits of the commodity exchange and observed a trade demonstration on AHCX’s state-of-the-art electronic trading platform.
AHCX General Manager, Davis Manyenje – in his presentation, described AHCX as a national asset that could rescue and help transform Malawi’s economy through increased earnings for farmers and foreign exchange earnings for Malawi.
“Right now, Malawi does not even know how much it earns from exports of pigeon peas, soya, groundnuts, beans and others because they are largely smuggled out without any means of tracing proceeds by the government,” said Manyenje.
He said under-declaration of proceeds was common among even some well-known exporters of commodities from the country.
According to Manyenje, Malawi may have lost about US$70 million in 2015 through under-declaration of prices in the export of pigeon peas, soya beans, groundnuts and sugar beans alone.
He said potential taxes of up to K15 billion may also have been lost as a result of the under-declaration by commodity exporters.
“From the export of these four commodities alone, Malawi could have realized US$138 million in foreign exchange but only US$68 million was declared. And this is just for the four commodities. More is being lost in other commodities. Our estimates show that Malawi can earn up to US$1 billion from grain and legumes by simply regulating exports,” said Manyenje.
He said if all exporters were compelled to go through the commodity exchange as it is done with tobacco through the auction floors, Malawi would not only be able to account for all export earnings but that the government will also collect more taxes from the earnings.
Speaking on behalf of the MPs, chairperson of the Parliamentary Committee on Agricultural, Felix Jumbe, agreed with Manyenje that Malawi could address many of its economic problems through organized farming and marketing of its agriculture commodities.
“The world-wide market for agricultural commodities is estimated at US$1.7 trillion. Malawi can easily tap US$3 billion of that by just organizing the production, marketing and exports of the crops,” he said.
He said the Parliamentary Committees were ready to further engage with AHCX and other stakeholders in the sector to discuss what steps can be under-taken to address the disorganised trading of commodities in the country.