Again, the state-owned enterprise Salima Sugar Company Limited is knocking on the government’s door. This time, we are seeking a whopping 24 billion K of relief. The question is why should ordinary Malawian taxpayers continue to implement bills for companies established to generate profits?
The requested relief is intended to repay legacy obligations that arise after the Malawi government terminated its partnership with India’s AUM Sugar and Allied Limited. The company claims that debt has ceased operations, slowed expansion and had a negative impact on production. But should taxpayers be expected to intervene despite these challenges?
During the visit of Agriculture Minister Sam Kaware yesterday, Salima Sugar Executive Chairperson and CEO Wester Kosam highlighted the issue of maintaining the machinery that has slowed sugar production this season and contributed to the ongoing shortage.
He acknowledged that K5 billion was repaid last year, but interest remains at 24 billion K5. The company hopes to pay back 10 billion KB this year, but it remains unclear where the money will come from without government help.
Kosamu also revealed that a $12 million loan aimed at developing 1,000 hectares of sugarcane land is intended to result in 400 hectares of use.
Thanks to a $1 million allocation from the Reserve Bank of Malawi, the company expects to import spare parts and replenish the market soon. Kosam remains optimistic, saying he is still on track to produce 22,000 tonnes of sugar this year.
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Minister Kaware praised the company’s resilience and said the government would consider support options. He also pointed out the newly passed sugarcane industry bill as a boost to the sector.
But in all this, the important question remains: why do companies that are originally profitable and already benefit from a substantial public investment rely on bailouts? This was particularly apparent after a forensic audit revealed that the $35 million (approximately 61 billion K) invested through previous partnerships would not be considered.
Salima Sugar was established in 2015 as a public-private partnership, with the Malawi government holding 40% stake and 60% AUM Sugar. The partnership ended in 2023 on suspicion of contractual breach and lack of funds.
The company is looking for yet another lifeline, so Malawian must ask: Where is the accountability? Who will benefit from these reliefs? And most importantly, how long are you expected to subsidize a company that is supposed to maintain itself through profits.
