Standards and rents: a study of market distortions and anti-corruption in Malawi’s steel industry

Publication type: Working Paper

Country: Malawi

Author(s): Maria Nkhonjera Thando Vilakazi

ACE Strategies: Building Coalitions

Keywords: Steel

Standards and rents: a study of market distortions and anti-corruption in Malawi’s steel industry

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This paper is one of three country research studies analysing industry arrangements that are potentially corrupt and anti-competitive in the supply of steel products in Malawi, Zambia and Tanzania. The core issues are evaluated using a political settlements and anti-corruption framework, as adopted under the Anti-Corruption Evidence research consortium (SOAS-ACE).

Malawi’s steel industry is analysed for various reasons. It has an extensive history of rent extraction through collusion, as well as abuse of market power by South African companies that have exported to and operated in the Southern Africa region. The steel industry also warrants analysis as a critical input for infrastructure development and the building industry.

Our analysis draws on primary and secondary evidence, and relies extensively on information gathered through 14 in-depth, semi-structured interviews conducted with key stakeholders in Malawi’s steel sector in 2019. This includes representatives from the steel industry and government agencies.

One of our main findings is that there is a problem with the supply of substandard roofing sheets in the market in Malawi. While it is generally socially beneficial to maintain standards of quality for roofing sheets, the country faces a problem due to the lack of capacity of standards agencies to test and monitor quality, as well as potential corruption to circumvent customs rules at borders.

Given the context, it would be difficult to build a coalition that has self-interest in addressing such forms of corruption. However, our analysis suggests it may be feasible to design an anticorruption strategy that involves both the standards authority and formalised private-sector steel suppliers (including South African firms), and that advocates consumer interests to improve the monitoring of standards.