Malawi’s only textile maker closes, 2000 laid off

Malawi’s loss-making giant textile manufacturer has closed shop and laid off 2 000 workers, trade and commerce minister Peter Kaleso said on Tuesday.

Kaleso told AFP the government had decided to stop subsidizing David Whitehead and Sons, the only textile manufacturer in the southern African country.

The impoverished country was paying $70-million annually in direct subsidies to the company, seen for many years as a symbol of economic growth and large-scale employment.

The government had a 51% share in the company, with the remainder owned by grain marketing parastatal Admarc.

”It’s not the death penalty to the company, but we want to solve its financial problems and offer opportunities to private investors to rejuvenate the company,” Kaleso said.

”Taxpayers’ money was being put down the drain,” Kaleso said. The government has invited bids for the purchase of the company, whose sale comes in the wake of increasing pressure from the International Monetary fund (IMF) for the southern African country to push through tough economic reforms.

Established in 1967, David Whitehead and Sons was initially owned by the multi-national Lonrho, which had a 51% stake, the rest belonging to Admarc.

Lonrho transferred its shares to the government in 1994 after sustaining heavy losses since 1991.

The decline in profitability was blamed on a drop in the local market share, low export margins, and the loss of its monopoly with the advent of economic liberalisation.

The company has accumulated debts of more than eight million dollars.

Production peaked at 33-million meters of cloth annually, but this has fallen down to seven million.

”It is currently financially unable to take advantage of new market access on highly favourable terms to the USA, Europe, South Africa and regional markets,” Maziko Sauti-Phiri, head of the privatisation commission, said.

Malawi has sold more than 30 of its 100 loss-making parastatals. – Sapa-AFP

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