Photo: Claire Ngozo/IPS Lilongwe — The move in Malawi to close down Chinese businesses outside of the four major cities has been condemned as xenophobic by rights organisations. A new law enforced Jul. 31 barred foreigners from carrying out trade in Malawi's outlying and rural areas.
The Investment and Export Promotion Bill required traders to move to the southern African nation's major cities Lilongwe, Blantyre, Mzuzu and Zomba. The law is an attempt to protect local small-scale businesses from competition from foreign traders.
Two prominent civil rights organisations, the Centre for Development of People and the Centre for Human Rights Rehabilitation (CHRR), have warned the Malawian government against encouraging the victimisation of foreign traders.
"We are worried about the increasing xenophobia sentiments and attacks on foreign nationals who are doing legal business across the country," the executive director of CHRR, Undule Mwakasungula, told IPS. He argued that the way Chinese traders were being treated was in violation of their human rights.
"Malawi should not be perpetrating xenophobic attacks on foreign nationals under the pretext of protecting the interests of local businesses."
The new legislation comes immediately after Malawian traders in some rural areas grouped together in May and convinced local government authorities to force out Chinese traders. The protests first began in Karonga, a bustling town in the north of Malawi, which borders Tanzania, and later spread to all 28 districts in the country.
While there are no official figures yet as to how many foreign traders have complied with the new law, IPS confirmed that in seven of the country's 28 districts, Chinese traders closed down their businesses.
They now have to apply for new licences to trade in the specified four cities. But many may not qualify, as the new legislation requires investors to deposit a minimum of 250,000 dollars in Malawi's central bank as start-up capital.
Malawi's Minister of Trade John Bande said that the new legislation was intended to regulate foreign investment.
"The new law clearly outlines what kind of businesses foreign investors will be allowed to get involved in. We will not accept foreigners to come all the way from places like China and open small businesses and shops in the rural areas of this country and compete with local traders," Bande told IPS.
But Mwakasungula said that the main challenge faced by local businesses was that they lacked the financial and technical muscle to compete favourably with the Chinese. He said that it was unreasonable for the government to resort to such a "drastic decision".
"It is unrealistic for the government to think that stopping foreign traders from doing business will automatically boost businesses run by locals," he said.
There are no official figures on the number of Chinese or foreign traders there are in Malawi. However, Chinese-run shops, restaurants and lodges have sprouted across the country since 2007, when Malawi established diplomatic relations with China. The country had just abandoned its 41-year-old ties with Taiwan in favour of the economic giant.
China has become Malawi's major economic partner since then. According to statistics from Malawi's Ministry of Trade, the country's trade volumes jumped to a record high of 100 million dollars in 2011 - a 400 percent increase from 2010.
The two countries have a 2008 memorandum of understanding about issues of industry, trade and investment. It commits China to increasing Malawi's productive capacity in tobacco, cotton, mining, forestry, and fertiliser production, among other things.
China has also given Malawi 260 million dollars in concessionary loans, grants and development support. This year, the country's first five-star hotel opened. It includes 14 opulent presidential suites and a state-of-the-art conference centre, and was built by the Chinese government.
In April 2012, China's direct investment in Africa surpassed 15.4 billion dollars, according to statistics from the Chinese embassy in Malawi.
But ordinary Malawians are not happy with the influence that the Chinese have on the country's economy.
Ellen Mwagomba, who has been at the forefront of the protests against Chinese traders in Karonga, has had a grocery store there since 2003. She told IPS that sales in her shop plummeted in 2008 when the Chinese started trading in the area.
"This place is a hive of activity since it is a border area. Business used to be good until the Chinese invaded us, bringing cheap goods and taking away our customers," Mwagomba said.
She said that her grocery store lost business to Chinese traders as they charged as little as a quarter of the price that local traders asked for their goods.
"The goods I stock are from the local industry and from South Africa and are of good quality, they are not very cheap. But people would rather go for the cheap Chinese goods, which are also of cheap quality," said Mwagomba.
She said that consumers preferred to purchase Chinese goods, to maximise their spending power. Up to 74 percent of the population in Malawi lives on less than 1.25 dollars a day.
But Mwagomba and other like-minded locals convinced the local assembly to remove Chinese traders from their district.
"They started leaving in June and business is now picking up for us, even before the new law became effective. I am now making up to 500 dollars a day in sales. I could barely make 100 dollars a day when the Chinese traders were here in full force," Mwagomba told IPS.
But many Chinese feel they have been treated unfairly. Fu-han Chao used to run a restaurant in Mzimba district, in northern Malawi. But he was forced to close it down on Jun. 30, before the new law came into effect, following an order by local government authorities after Malawian traders complained about the cheap goods sold at low prices by their Chinese counterparts.
"The local traders don't work as hard as we do. We open our shops much earlier and close them much later. We even open on Sundays when most businesses are closed, and we are hated for that. We have been treated very unfairly and I feel really angry about this. I felt threatened most times, and scared," Chao told IPS.
He added that business was meant to be about competition. He said that until he was forced to close his restaurant, he had a number of customers and was making up to 800 dollars a day.
"We are contributing a lot to the economy of this country. I am yet to decide on what to do next. Maybe I will go back to China, but it is also tough to run a business back there because the population is high and the competition is also high," he said.
Meanwhile, the Chinese government has not supported its traders on this issue.
"It is up to the Malawi government to thoroughly screen the Chinese nationals willing to invest in the country. These are small vendors and why should the Malawi government allow them to do business? They are capitalising on government's failure to screen foreign traders," China's Ambassador to Malawi Pan Hejun said at a press briefing on Jul. 23.
"Rules should be respected and we don't encourage these traders to go into rural areas. We encourage real investors," Hejun said.
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SOMETIMES ITS WORTH LOOKING AT THE SUCCESS OF SOMEONE ELSE AND IMPROVE ON YOUR OWN THING. THE WORK ETHICS OF THE CHINESE ARE VERY HARD ,THAT IS SOEMTHING AFRICANS NEED TO EMULATE. SUCCESS DOES NOT COME THAT EASY; WHEN YOU BECOME SUCCESSFUL THAT MEANS YOU HAVE COVERED ALL THE BASES.MALAWIANS EARN LESS THAN $1.00 OR JUST ABOUT THAT!!! WHOSE FAULT IS THAT? THE EDUCATION SYSTEM IS POOR IT HAS NOT LIFTED PEOPLE OUT OF POVERTY SECONDLY THE GOVERNMENT HAS BEEN GOVERNED BY A" BEGGING BORROWING MENTALITY THAT IS VERY SELF DEFAETING AS IT WAS WRITTEN DESIGNED JUST FOR THAT UNDERMINING DEMANOUR. "NOT TO INSULT THE THE PEOPLE THIS WAS CARRIED OUT BY THE FORMER IMPERIALSIT WHO , WHEN THEY GAVE THE PEOPLE THIER INDEPENDENCE THEY DEVELOPED THIS MENTALITY OF BEING DEPENDEANT AND NOT ENOUGH OF TRULY BEING INDEPENDENT"!!. TIMES ARE CHANGING THIS IS A DIFFERNT WORLD AND EDUCATION TECHNOLOGY IS A MUST. ' IN THESE TIMES, WHERE MODERN FARMING USING TECHNOLOGY AND METHODS OF DOING THINGS TO INCREAE PRODUCTION;THIS IS DOING IT WITHOUT BUYING INTO OR RESORTING TO BUYING CHENICAL OR MANUFACTURED UNORGANIC METHODS. THE WEST LIKES TO PROMOTE THINGS THEY MAKE IN LABS, AFRICA SHOULD STAY WIDE AND FAR REMOVED FROM THAT."AFRICA IS A VERY FERTILE LAND IT IS A GIFT FORM THE "ALLMIGHTY GOD"..' DO NOT FEEL THAT YOU ARE THERE BY ERROR OR THAT YOU ARE NOT WELL DESERVING OF WHERE YOU ARE!!!. "WHERE EVER YOU ARE IN AFRICA IT IS BLESSED WITH FERTILITY RICHES OF GOLD SILVER COPPER IRON OIL GAS BAUXITE EVERYTHING THAT THEY EXPLOIT IT IS NOW UP TO AFRICA TO REMEDY THE WRONGS OF THER FORMER COLONISERS THE ENSLAVERS". THEY CAME TO ABUSE EXPLOIT YOU CAN NOT DO THE SAME THINGS. THEY WERE ENSLAVERS USERS ABUSERS, THE PEOPLE ARE YORU FAMILIES YOU BROTHERS SISTERS UNCLES AUNTIES COUSINS ; THEY ARE OEN WITH THE SMAE BLOOD ALL THRU AFRICA IF WE KNOW THE BIBLE THENW E KNOW WE ARE ISRAEL ALL PEOPLE THRUOUT THE PROMISED LAND". WE MUST MARCH TRIUMPHANTLY LOOKING FORWARD NEVER LOOKING BACK NEVER EXPECTING TOO MUCH FROM THE EXTORTIONERS'. THEY WERE NEVER YOUR FREINDS THEY WERE NEVER YOUR ASSOCIATES THEY CAME AS CONQUORORS THEY RULED WITH MISAPPROPRIATION THE MISEDUCATED THEY MISDIRECTED SO WHEN DID THEY BECOME A FREIND? THEY CONTINUE TO LIE CHEAT YOU DISRESPECT YOU!! THEY DO NOT SHARE IN THIER KNOWLEDGE EVEN THOUGH ITS ALL STOLEN ; THEY NEVER LOOKED TO AFRICA THE LAND OF THE BIRTH OF HUMANITY ' "THEY INSULT THE AFRICAN BY SUIGGESTING WE CAME FROM SOME ANIMAL KINGDOM ,THAT THIER CLOSEST IN RELATION IS THE MONKEY". THEY NEVER EVEN WHEN EVIDENCE PROVES OTHER WISE ,THAT MAN IS MAN' AND NOT FROMTHE LOINS OF ANY ANIMAL". THE ONLY WAY THAT WOULD BE ,IF MAN INTERFERED WITH GENETICS AND INCLUDED THE DNA OF A MONKEY WITH A MAN'. WE KNOW FROM LESSONS THAT THESE PEOPLE HAVE ALWAYS SAID THAT THE APE HAS A BIGGER BRAIN THAN MAN SO INTHIER FUOOLISH ASSUMPTIONS THEY MIGHT HAVE EXPERIMENTD THINKING THAT THE BIG BRAIN MIGHT GIVE THEM SUPERIORITY BUT T WILL TELL YOU ONE THING THE APE IS NOT A MAN AND THE BRAIN WE HAVE WAS BUILT TO STORE KNOWLEDGE WAY BEYOND AND ABOVE THE CAPACITY OF THIER GREATEST COMPUITERS. LUSTING AFTER POWER EXPLOTING PEOPLE LYING STEALING MURDERRING THREATENING BULLYING IS NOT WORTHY TO EB ACKNWOLEDGED IN HSITORY, IN ANY REMARKABLE WAY. THEY WILL BE NOTHING BUT A FOOT NOTEIN THE WORLD HISTORY A BLIMP!!!C LETS BE CLEAR MAN HAS BEEN ONTHIS PALNET FOR MILLIONS OF YEARS, THIER TIME ON EARTH IS SMALL AND GOING TO BE INSIGNIFICANT. THEY DELUDE THEMSLVES CONSTANTLY NOT KNOWING WHICH WAY IS UP OR DOWN'. THEY DO NOT REALISE THAT EVERYTHING IS STORED AND WRITTEN IN A BOOKS THAT THEY WILL NEVER SEE AND THE THINGS THEY DO WILL ALL BE CHARGED TO THEM INAND THEY WILL BE HELD ACCOUNTABLE." MALAWI MUST LOOK AT ITSELF DEEPLY LEARN FROM OTHERS DO NOT TAKE THINGS AS A SLIGHT. THOSE WHOM YOU SHOULD LOOK AT CLOSELY ARE THOSE WHO REFUSE YOU EQUALITY THOSE WHO THINK THEY CAN COERCE YOU FORCE YOU TO ABANDON YOUR PRINCIPLES JUST SO YOU CAN EAT BREAD ;THESE ARE THE DISPICABLE THEY BACK STAB YOU THEY ROB EXPLOIT EXTORT THE AFRICANS AS IF THEY HAVE A RIGHT TO DO THESE THINGS". "THERE ARE NO RULERS OVER AFRICAN PEOPLE THAT WE DO NOT ELECT AS SUCH", THE PEOPLE MUST SEEK TO REBUKE THESE PEOPLE ,WHO EXPLOIT THIER POSTIONS, AS THEY RULE WITH THE WALTH THEY STEAL FROM AROUND THE WOLD'. "THEY ARE NOT TO BE COMPLIMENTED OR HONNOURED THEY ARE FORGERS THIEVES CRIMINALS WHO ARE THEY?? COMMON THUGS GANGSTERS RIPOFF ARTIST CON MEN FRAUDSTERS THEY ARE NOT HWO THEY PRETEND TO BE THEY ARE BULLIES LIARS HYPOCRITS"" THESE ARE THEY WHOM YOU WISH TO RESPECT?? THESE "TYPE OF PEOPLE ARE ONLY GOOD FOR ONE THING THAT IS THE FIRE!!!!!!!WE BURN UP THEM PEOPLE WE WISH THEM NO GOOD THING' THEY ABUSE MURDER CHEAT AN LIE TOO MUCH TO BE APRECIATED BY TRULY HONEST RIGHTEOUS PEOPLE". "AFRICA IS RURAL AND VERY LARGE THE PEOPLE WERE NOT USED TO HAVING TO LOCK DOORS, FEEELING AFRAID ; THEY ARE FREE THINKING FREE FEELING ,FREE KNOWING THAT THE STARS THE MOON WOULD BE THIER GUIDE !!"PRAISE GOD". TODAY THERE ARE MURDERS RAPES KIDNAPPINGS TORTURE DECIVERS YOU NAME IT THIER IT IS ??? THESE ARE NOT THE AFRICANS WAY, NOR IS IT PART OF OUR CULTURE YET THEY ARE HAPPENMING!!! . THESE ARE THINGS THAT HAVE BEEN IMPORTED INTO AFRICA BY THOSE WHO CAME IN AS CONQUORORS,THEY LIED FIRST THEY DECIEVD FIRST THEY FRAUDULENTLY REPRESENTED THEMSELVES , THEN THEY ENSLAVED ; BRAINWASHING WAS PART OF THEIR HYPOCRISY JEALOUSY OF THE AFRICAN IN AFRICA'. AGAIN TODAY WHEN WE SPEAK ABOUT INDEPENDENCE WE MUST THINK ABOUT FREEING OURSLVES FROM MENTAL SLAVER". THIS IS NO JOKE THEY HAVE WRITTEN THIER NAMES ALL OVER OUR " AND CORRUPTED ITS WORDS BY INTIATING THAT THEY THEMSELVES ARE GODS?? "THIS IS BLASPHEMEY BY ANY STANDARDS""!!!!;; THERE IS NO SUCH A GOD AS THEM ; THEY ARE MORE SATAN THAN GOD!!! WE MUST LOOK AT REALITY AND REKINDLE OUR PAST, ITS VERY IMPORTANT. READ YOUR BIBLE PROERLY AND ANY EVERY OLD PEOPLE WHO WERE NTO REEELED INTO THE REALM OF BRAINWASHING BECOMING ASSIMILATED BY THE WAYS OF THE FOREIGNERS THEN THEY WILL STILL REMEBER THE WAYS OF AFRICAN TRADITONS THAT WERE NOT SO DIFEFRENT THRUOUT ALL AFRICA. CIRCUMSISION WAS PRACTISED BY ALL NATIONS IN AFRICA FROM EAST WEST NORTH SOUTH,THIS IS AN INHERENT PART OF JUDAISM SOMETHING THAT WE BRPOUGHT TO THE WORLD. AGRICULTURE WAS ALSO IMPORTANT THAT WAS WHAT WE USED AS FOR FOOD BARTER ETC . WE ALSO MINED GOLD SILVER ETC.WE COEXISTD WITH ANIMALS FOR MILLIONS OF YEARS WE HAD TIGERS LIONS ANY ANIMAL AS PET FREIND. THE WATERS FO RAN THRU AFRICA COOL REFRESHING ABSOLVED OF POLUTION. WATER IS OUR MOST PRECIOUS COMODITY TODAY WE SEE OUR RIVERS LAKES DISAPPEARING OR THEY ARE FILLED WITH DESTRUCTIVE ELEMENTS. WHAT WE MUST KNOW THAT WHEN THER IS NO WATER THEN THERE IS NO LIFE. THE RESOURCE OF WATER IS VERY VERY IMPORTANT HTESE ARE THE HTINGS THAT YOU MUST KEEP CLOSE EYS ON NEVER DISRESPECTING THAT PRECIOUS LIQUID WATER IS MORE VALUABLE THAN ANY AMMOUNTS OF SILVER GOLD COPPER BRONZE ANYTHING YOU MAY NAME." WATER IS AFRICAS MOST PRECIOUS RESOURCET" IF WE HAVE NO RAIN THEN THE CROPS FAIL THERE ARE DROUGHTS. WHAT WE NEED TO DO IS TRUST IN THE " ALL MIGHTY GOD" LET HIM BE ORUR GUIDES. WE MUST LOOK CAREFULLY AT WHAT WE HAVE THEN WE MUST PUT THAT TO OUR BEST ADVANATGE WE NEED BETTER CCESS TO WATER RESOVOIRS BETER PIPES MORE TUNNELS TO BRING WATER THSE THINGS ARE NECESARRY THE PEOPLE ARE THE STAKEHOLDERS THEY NEED TO BE FURTHER EDUCATED ;SO INSETAD OF FIGHTING THOSE WHOM ARE YOUR GUEST IF THEY DO NOT HAVE THE KNOWLEDGE THEN THEY KNOW SOEMONE THAT DOES, IF YOU WANT TO COMPETB WITH CHINA IN YOUR OWN COUNTRY THEN THE COTTON THAT YOU GROW YOU NEED TO REFINE TO DESIGN A TEXTILE INDUSTRY WITH TOP QUALITY COTTON, HAVE SOEMONE ELSE START UP A DRSSMAKERS TROUSER AKERS SOM FORM OF INDUSTR THAT WILL GIVE WORK TO MANY AND YOU WILL BE ABLE TO COMPETE AT THE HIGHEST LEVELS. THIS IS HOW U LEARN TO DO FOR SELF. SEE WHAT YOU HAVE FIND THOSE THAT ARE READY TO LEARN GET THE KNOWLEDGE AND TAKE IT FROM THERE."MY THING IS THAT WE NEED TO SEE AFRICA MAINTAIN A STRONG VIBRANT INDEPENDENT' ECONMY FRST WORD IS INDEPENDENT NO BORROWING NO BEGGING NO BOWING""
I have conflicting reaction to Malawi's new Law. But if you think about it, the Chinese does not provide a condusive competative environment for Malawians or any Africans for that matter to operate the kinds of businesses they operate in Africa. In fact, i many case the Chines Government provide resources for these Businesses to operate. If the Chinese want to play fair and help Africa, then they should make it easy for Africans to run small businesses in China's rural and urban areas. But you know how unlikely that will be - racism and ... in the homeland.
@Dorowa
I too have conflicting opinions on the legislative move. However, in this case I think it is clear that the Chinese gov is NOT providing support for these small traders.
Something I think receives too little attention in these types of articles is the effect on local consumers. If their purchasing power increase due to cheap imports this could be viewed as a type of relative increase in people’s incomes.
Banning the sale of cheaper goods would just hurt the majority of people who are not traders.
Secondly, If the Malawi traders only sold local produce it would give them more weight to their argument for protection, however if they sell imported goods then it does not matter to the Malawi economy if the goods are imported from South Africa or China. This type of law only makes sense if one wants to protect local production that creates local jobs. Traders do not produce, they provide a service acting as a link between factory and consumer. In the case of selling imported goods we need to ensure that consumer benefits are maximized by sourcing them from where they are cheapest.
Thirdly, I am sure some of the SA imported goods were originally produced in China anyways. The Malawi traders need to explore new sourcing chains and establish direct links to the factories in China.