Government sells textile company

The Malawi government has completed another sale in its privatisation programme, this time its textile company David Whitehead and Sons (DWS). The Privatisation Commission announced this week that DWS, famous for its bolts of bright African cotton prints, was sold to two bidders, Mapeto Wholesalers and its partner from India, Jimtex, who have formed a new company, Mapeto (DWSMalawi) Ltd. The new company is expected to invest over US $10 million in the rehabilitation of the plant and create employment for over 3,500 people over the next five years, the commission said. The Nation newspaper reported that DWS was sold for K73 million (US $816,000) - less than an offer made three years ago. The company was once a leader in cotton textile production but exports started to suffer in the 1990s as a result of machine breakdowns, a fire that destroyed important equipment, and increasing competition from Asian and central and eastern European factories. It was also adversely affected by lower cotton production due to falling world prices. Reports said the government was spending K20 million (US $223,000) a month to keep it going and that up to 2,000 people had lost their jobs. The government had to pay their retrenchment packages. The country's textile industry benefits from quota agreements with the South African Customs Union, the European Union/ACP preferential trade agreement and the US's African Growth and Opportunity Act. A report released last year said Malawi's textile industry employed about 29,000 people, 51 percent of whom are female. Under the newly elected government of President Bakili Muluzi, Malawi embarked on a programme of economic reforms in 1995, including the sale of many state-owned enterprises. While the programme has generally been praised, there has been concern over job shedding during privatisation. The programme was briefly suspended in 2001 for a government review amid accusations of irregularities and complaints that local bidders were not benefiting. Later in the year, the EU and the US and British governments suspended US $23 million worth of aid to the country, partly because of concerns over the privatisation programme. The government has reportedly already privatised over half the eligible firms in Malawi. Future privatisations include the Blantyre and Lilongwe water boards, national carrier Air Malawi and, controversially, the Agricultural Development and Marketing Corporation, the sole distributor and marketer of agricultural produce.