Abusive foreign buyers deported: In early September, Malawi's President Bingu wa Mutharika took the bold step of revoking the temporary work permits of four foreign bosses of major tobacco-buying companies. He ordered them to immediately leave the country for persistently undermining his efforts to champion better tobacco prices.

In order to protect Malawian farmers, President Bingu wa Mutharika told four tobacco buyers to quit the country within 24 hours. His deportation order had followed repeated warnings to exploitative tobacco buyers following reports of the poor prices they were offering since the opening of tobacco marketing season in March. The buyers were bidding just US90[cents]/kg, substantially lower than the average $2.5o/kg agreed before the opening of auction floors. The buyers had argued that the crop was of poor quality, which the tobacco farmers had vehemently denied.

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Mutharika said he had decided to deport Kelvin Stainton, chief executive of Limbe Leaf Tobacco Co and his leaf-buying manager Van de Merwe; Collin Armstrong, the chief executive of Alliance One; and Alex Mackay, managing director of Premium TAMA Tobacco Co.

"These individuals connived to deliberately frustrate the policy of this government to improve the welfare of our people through obtaining better prices for tobacco. They have continued to exploit the poor people of Malawi by offering them much lower prices than those offered in neighbouring countries," the president commented.

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Government had entered into an agreement with tobacco companies in Malawi that Burley tobacco would not be sold at prices lower than $2.50/kg and flue-cured tobacco at not less than $3.09/kg.

"These prices had not been fixed arbitrarily," Mutharika reiterated. "These prices were not fixed arbitrarily, but through negotiations - taking into account the cost of inputs and other considerations. You will also recall that the government of Malawi has declared tobacco to be a crop of national importance to our economy."

A statement issued by Auction Holdings Ltd (AHL) had indicated that tobacco earnings fetched $161.2m by June this year, much lower than the $233.9m during the same period a year earlier. The price of Burley tobacco, a lower-grade variety of the leaf used to fill cigarettes flavoured with higher-grade flue-cured tobacco, had reportedly fallen 31% after 14 weeks trading, compared to last year.

The AHL statement also said that during the period, farmers sold 99.5m/kg of tobacco at an average price of $2.08/kg, compared with 98.7m/kg at an average price of $2.24/kg last year. But Mutharika said the low prices of tobacco offered this year were totally unacceptable. He said this was "an act of hostility to our country, to the country that offered them the hospitality and the opportunity to conduct their business here".

He therefore warned all tobacco buyers that any company that deliberately seeks to cheat the people of Malawi and ignore the agreed buying price of tobacco and any similar commodity will be dealt with accordingly. Mutharika had also made a strong appeal to all government departments, like the immigration, the police, the judiciary and the general public, to cooperate with government to protect "the poor black Malawi farmer from this unbridled exploitation".

Mutharika, himself a tobacco farmer, had previously accused foreign buyers of fixing prices and in 2006 had threatened to expel buyers conniving to corner the market by price fixing.

"Smallholder farmers are cheated by international cartels that connive to buy our tobacco at exploitative prices, and yet they sell the same tobacco at huge profits in their countries," Mutharika said in 2006, when the average price hovered around $0.70-$0.90/kg.

"I am ready to be called a dictator because I am protecting my people. I am not doing this for political reasons but I am concerned with the welfare of my people," he said. Officials from the affected tobacco-buying companies had refused to comment on the deportation of their bosses.

Immediate reports from Lilongwe auction floors had revealed tremendous improvement buying prices. According to local media reports a day after the buyers left, Burley tobacco was selling at not less than $2.20/kg while flue-cured tobacco was selling at $3.90/kg - a rise of $1.20 and $2 for Burley and flue-cured tobacco respectively. This was good news to farmers.

"I am happy with what President Mutharika has done. These people had been exploiting us," said Hartley Changamala, a tobacco farmer from the central district of Kasungu.

Instilling fair play

The president of the Economists Association of Malawi, Thomas Munthali, ruled out fears that this might scare away some buyers. He hailed Mutharika's action saying this would help instil a sense of fair play in investors coming to Malawi.

The Chinese Ambassador to Malawi, Lin Songtain, announced the day after the deportation order that a team of tobacco buyers from China were coming to Malawi to sign an purchase agreement for the tobacco. "About 18 of them are coming to Malawi. Last year we bought at least 2,000 tonnes of Malawi tobacco", said Songtain.

Tobacco, or 'green gold' as it is sometimes referred to, accounts for over 70% of Malawi's entire foreign exchange earnings. It contributes 30% of the country's GDP, 25% of the country's tax earnings and over 80% of Malawians are directly or indirectly employed by the tobacco industry. Malawi is one of the world's top 10 producers of tobacco, accounting for 5% of the world's total exports and 2% of total global production.

RELATED ARTICLE: Kenya

Tourism bounces back

Tourism was one of the biggest economic casualties of the violence that broke out in January 2008 following the release of the December 2007 election results that were hotly contested by the country's opposition. The situation was further worsened later in that year by the additional impacts of the high cost of jet fuel due to rocketing oil prices; the uncertainties following the global financial crisis; exchange rate fluctuations and a steep fall in the country's key commodity prices.

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The tourism sector is the third most-important source of foreign exchange for Kenya. It experienced a 33% drop in visitor numbers in 2008 while full-year earnings dropped by 19%. Ironically, 2007 had been the best year on record for Kenya's tourism with visitor numbers reaching 1.8m and earnings reaching $857m.

In general, matters could not have been more promising. For example, the annual wildebeest migration in the Maasai Mara game reserve was named one of the Seven Wonders of the World, giving a great boost to Kenya's tourism marketing. Investor confidence was also riding high, following an impressive four-year run that saw investments worth millions of dollars flowing into the sector.

However, because of the negative coverage in the international media, the mood suddenly changed. The mass cancellations and travel advisories by Western countries that followed the election violence meant that hotels and lodges that had been fully booked just days before experienced mass cancellations and plunging occupancy rates.

Investors, who had taken credit to expand and improve their facilities as well as opening new facilities in anticipation of a bumper season similar to that of 2007, were left stranded, with their creditors anxious to be repaid. Investor confidence that just before the elections had received positive ratings on its improved business climate, was decimated.

As Kenya tore itself apart, competitors reaped big rewards. Operators who sold African tourism products diverted most of the tourists who had been booked for Kenya to alternative destinations that could offer similar products.

Following the slump, the Marketing Recovery Committee was formed to repair Kenya's dented image. The need for a substantial budget for marketing placed the government in a quandary. Despite tourism being one of the leading sectors of Kenya's economy, government has only provided lacklustre support. Through the 2008/2009 fiscal budget, the government provided $8m for tourism marketing, less than half of the $19m the industry had lobbied for.

After increased lobbying by stakeholders, the government released an additional $3.2m for a marketing push early this year. A far larger boost to the recovery marketing campaign was made with a pledge of $26m over six years from the EU.

This funding is currently being used to pay for a global advertisement broadcast campaign on the CNN network. Part of the marketing has also seen Kenya attend most of the top international tourism exhibitions and this aggressive marketing push has borne fruit. Kenya's tourism has bounced back with authorities projecting a full recovery by next year. "Since the beginning of the year the industry has recovered by 82%," reported Kenya's tourism minister, Najib Balala.

He noted that the recovery was mainly due to aggressive marketing in Europe, Kenya's traditional market, but new markets in Eastern Europe, Scandinavia, and Asia have also contributed significantly to the upturn. Kenya has been eyeing Russia as a gateway into Eastern European countries and delegations have visited Moscow to sell the country's tourism attractions. China's booming economy has also caught the attention of Kenya's tourism marketers, who have stepped up their campaign.

Kenya now hopes to end its overreliance on the foreign market and follow the example of South Africa, whose tourism industry is mainly supported by the domestic tourism, accounting for 75% of its market.