Africa-Press – Malawi. The recent decision by Illovo Sugar Malawi Plc to bypass small and medium-sized enterprises (SMEs) and sell scrap metals directly to recycling companies has raised concerns from the Chamber for Small and Medium Businesses Association (CSMBA), with its Executive Secretary James Chiutsi leading the charge of discontent.
Chiutsi has expressed disappointment over the move, accusing the company of undermining local SMEs, especially those in communities surrounding Illovo’s Nchalo and Dwangwa estates. Previously, Illovo had provided business opportunities to SMEs by allowing them to purchase scrap metal from its estates, a practice that directly benefitted local businesses. However, Illovo’s recent move to sell scrap metals directly to larger recycling companies in Limbe, Blantyre has sparked fears that it could lead to the demise of these smaller businesses.
“We plead with Illovo to reconsider this decision,” said Chiutsi. “Instead of terminating SME contracts, they should expedite investigations into the alleged irregularities and deal with the issues directly. It’s too punitive to take such a drastic action before concluding a proper investigation.”
Illovo’s managing director, Lekani Katandula, has defended the decision, stating that the company suspended contracts with SMEs at Nchalo after detecting irregularities. Chiutsi, however, has questioned the reasoning, calling it an overreach and urging the company to show more consideration for the local businesses that rely on such contracts for survival.
The controversy is further compounded by concerns over the potential tax implications of Illovo’s new business venture. One anonymous tax analyst expressed uncertainty over how Illovo plans to manage taxes related to its direct involvement in the scrap metal industry, which could be seen as a new and unrelated business stream beyond its core operations of sugar production.
Another angle to the issue is the alleged involvement of a senior manager of Indian descent at Nchalo, whose role in pushing for the decision has been questioned. Sources suggest that the manager is promoting the shift towards dealing directly with recycling companies in Blantyre, many of which are reportedly owned by Indian nationals.
As the debate rages on, Chiutsi has called for Illovo to reconsider its position, highlighting the company’s responsibility as a corporate citizen to support local businesses and ensure that SMEs are not unfairly excluded from opportunities.
The future of Illovo’s business relationship with local SMEs now hangs in the balance, and the company’s response to the calls for reconsideration could have lasting implications for its reputation and its impact on the communities it operates in.
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