VZCZCXRO4341
RR RUEHDU RUEHJO RUEHMR
DE RUEHLG #0019/01 0061112
ZNR UUUUU ZZH
R 061112Z JAN 06
FM AMEMBASSY LILONGWE
TO RUEHC/SECSTATE WASHDC 2194
INFO RUCNSAD/SOUTHERN AFRICAN DEVELOPMENT COMMUNITY
RUEHLO/AMEMBASSY LONDON 0178
RUEHFR/AMEMBASSY PARIS 0070
RUEHJO/AMCONSUL JOHANNESBURG 0173
RUEATRS/DEPT OF TREASURY WASHDC 0400
RUEAIIA/CIA WASHDC

UNCLAS SECTION 01 OF 02 LILONGWE 000019 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR AF/S G. MALLORY 
TREASURY FOR INTERNATIONAL AFFAIRS/AFRICA/BEN CUSHMAN 
STATE FOR EB/IFD/ODF LINDA SPECHT 
STATE PLEASE PASS TO MCC FOR KEVIN SABA 
PARIS FOR D'ELIA 
JOHANNESBURG FOR FCS 
 
E.O. 12958: N/A 
TAGS: EAGR ECON EAID MI
SUBJECT: NORTHERN MALAWI'S CAPITAL OUTLAWS GRAIN TRADING 
 
REF: 2005 LILONGWE 946 
 
LILONGWE 00000019  001.2 OF 002 
 
 
------- 
SUMMARY 
------- 
 
¶1. (SBU) The city assembly of Mzuzu, Malawi's northern 
regional capital, recently voted to ban private maize sales. 
The city's chief executive described the ban to us as a sop 
to popular sentiment and assured us that it would not be 
enforced.  In any case, the incident illustrates the 
prevalence of Malawi's suspicion of open grain markets and 
its irrational reliance on the parastatal ADMARC to keep the 
country in cheap maize.  At bottom, these attitudes, together 
with easy access to food aid, are important in supporting the 
GOM's counterproductive food security policy.  End summary. 
 
 
--------------------------------------------- -------------- 
MZUZU ASSEMBLY BRAVELY FACES THE MENACE OF BAREFOOT VENDORS 
--------------------------------------------- -------------- 
 
¶2. (U) During a January 3 meeting with traditional 
authorities (the area's "chiefs") and other constituents, 
Mzuzu City Assembly acted to prohibit the sale of maize by 
any merchants apart from the parastatal ADMARC.  (ADMARC is a 
vestige of the Kamuzu Banda era, when it was the sole 
purchaser and re-seller of agricultural commodiites, both 
crops and inputs, and thereby regulated virtually the entire 
economy of Malawi.)  The Assembly cited a proliferation of 
"unscrupulous traders," whom it accuses of buying the heavily 
subsidized maize at ADMARC depots to resell on the street. 
The Assembly also voted to prohibit children from buying 
maize, a measure meant to prevent vendors from hiring child 
proxies to stand in the long lines outside ADMARC depots. 
The Mzuzu Assembly's actions garnered headlines in both of 
Malawi's major daily newspapers.  Ironically, on the day the 
measure was passed, the Mzuzu ADMARC depot reportedly had for 
several days had no stocks of maize to sell.  Mzuzu is 
Malawi's fourth largest city and the administrative and 
commercial center of the country's Northern Region. 
 
¶3. (SBU) When asked by Embassy staff about the ban, Mzuzu 
Assembly Chief Executive Samson Chirwa said that the Assembly 
had no intention of enforcing it.  (That does not mean, 
however, that vendors will be immune from harassment or 
abuse.)  Evidently the constituents at Tuesday's meeting had 
demanded action, and the Assembly agreed to a ban as an 
expedient.  As at least one civil society organization has 
pointed out, city assemblies in Malawi have no authority to 
restrict or prohibit commerce--indeed the Malawian 
Constitution guarantees a right to engage in economic 
activity.  Several of the vendors (typically barefoot women 
by the side of the road, with a single bag of maize and a 
pail for measuring) were quoted in the press as claiming that 
they are buying maize trucked in from Tanzania and not 
reselling ADMARC grain. 
 
 
----------------------------------- 
FAITH IN ADMARC AND 17-KWACHA MAIZE 
----------------------------------- 
 
¶4. (SBU) While it is doubtful that the Mzuzu City Assembly 
will stop many vendors from selling maize, the incident is an 
interesting illustration of the average Malawian's thinking 
about market economics, which in turn goes some way toward 
expaining the GOM's peculiar approach to food security. 
Many--probably most--Malawians are convinced that there is a 
"right price" for maize: the ADMARC price of MK17/kg. 
Anything above that constitutes "unscrupulous trading."  That 
even people of the political class believe this is evidenced 
by the regular pronouncements by various Cabinet ministers. 
Meanwhile, maize is currently selling for twice that or more 
on the private market. 
 
¶5. (SBU) Yet the public, the press, and distressingly many 
politicians believe the long lines of buyers outside ADMARC 
sales points are evidence not of underpriced maize, but of 
 
LILONGWE 00000019  002.2 OF 002 
 
 
hunger in the countryside.  This is not to say that there is 
no hunger in the countryside, but the sizable food-insecure 
population here has, by definition, neither home-grown food 
nor money to buy food at any price.  Predictably, ADMARC's 
stocks, when they come, sell out immediately, and much of the 
cheap maize gets resold at market prices, at least some of it 
across Malawi's borders.  ADMARC has accordingly had to 
ration maize sales, first to 50 kg per person per sale, then 
25, and most recently 12.5. 
 
 
----------------------------------------- 
COMMENT: COMFORT IS THE MOTHER OF INERTIA 
----------------------------------------- 
 
¶6. (SBU) Despite endless exhortations from food aid experts 
to address food security separately from pricing, the 
prevalent GOM approach is to take the opposite tack: 
guarantee food security by guaranteeing infinite amounts of 
cheap maize to everyone.  In practice, this approach misses 
the subsistence farmers who become destitute when it fails to 
rain. (It is those destitute and overburdened families who 
benefit from the humanitarian programs operated under WFP and 
GOM auspices, programs virtually ignored by the politicians 
due to their single-minded focus on ensuring ADMARC grain.) 
It does not miss urban residents who would rather not pay 
market prices. 
 
¶7. (SBU) Cheap ADMARC maize has obviously become an 
expectation, to the extent that most policymakers view it as 
a political necessity.  Indeed, most politicians miss the 
plain economic reality that plentiful and cheap ADMARC maize 
prevents markets from working smoothly by providing exactly 
the wrong incentives, thereby increasing, not decreasing, 
Malawi's vulnerability to food shortages.  In the end, it 
hardly matters to them, since the ready availability of food 
aid and budget support cushions them from the consequences of 
their persistently broken policies.  It will be tough and 
perhaps impossible to fix the situation by privatizing ADMARC 
(a major World Bank conditionality), given the convenience of 
the present system and the huge public affection for the 
venerable parastatal. 
 
 
EASTHAM