Malawi: Castel Malawi struggling with forex shortage issues

Castel Malawi has disclosed that it has unsettled outstanding bills totalling over USD18 mln which equals over MWK18 bln due to unavailability of forex and the situation, if continues, will see the production of its flagship brand, the Carlsberg Green being suspended for the unforeseeable future, the Nyasa Times reported on November 29.

Already, the company has stopped production of its spirits line, namely Malawi Gin, Premier Brandy, and Malawi Vodka, due to acute shortage of raw materials which can only be accessed through forex.

Speaking in Lilongwe last week when he was introduced to government officials including members of parliament, newly appointed Managing Director for Castel Malawi Thomas Reynaud said acute shortage of forex has seriously impacted the operations of the company.

“Spirits production has been suspended due to acute shortage of returnable bottles since we do not have a local supplier and Carlsberg Green is at the verge of suspension as well due to unavailability of materials. Foreign suppliers have stopped shipping key materials due to old overdue bills.”

“The company has a total unsettled outstanding bill of USD18 mln and we require USD14 mln immediately to ease the pressure with our suppliers to release new materials and in order for us to sustain the business, we require at least USD12 mln per month,” said Reynaud.

On the steps that the company has taken so far to sort out the situation, Reynaud said they have met with all banking partners with no clear commitments so far.

“We are lobbying for assistance to source forex, to enable our growth and expansion plans as we want to build a state-of-art brewing plant here in Lilongwe because we have a long-term ambition to expand the business and contribute more to the job creation as well as revenue generation for the government,” said Reynaud.

Reynaud also said Castel Malawi, which has been operating in the country since 2016 after buying majority shareholding in Carlsberg’s local subsidiary, has invested more than MWK80 bln in the past five years to improve capacity and product quality.

Chairperson of the Budget and Finance Committee of Parliament Gladys Ganda pledged her committee’s support in lobbying the government to allocate the forex that the company requires so that it does not shut down.

“We cannot allow this company to shut down considering that it is employing a lot of Malawians and is contributing to our economy through tax revenue, so we pledge our support,” said Ganda.

Castel Malawi Ltd directly employs 625 permanent employees and almost 300 temporary contract workers through brokers.

The company also provides about 100,000 indirect employments through distributors, suppliers, bars and groceries.

02 December, 2022