MCCCI faults failing exports on donors
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has blamed the country’s failure to make strides in commodity exports on heavy dependency on donor aid.
The remarks follow recent statistics from the United Nations Economic Commission for Africa (Uneca) indicating that Malawi’s export commodities remain relatively low at seven, below the average for African countries of 34 commodities, to a narrow range of primary commodities.
In an emailed response on Tuesday, MCCCI chief executive officer Chancellor Kaferapanjira said that most of the imports are being financed by money from donors.
“When you look at the structure of the Malawi economy, 56 percent comprises wholesale and retail, financial services, insurances, real estate and information communication technology. You will further notice that in 2015 Malawi’s exports were $1.08 billion while imports were more than double at $2.312 billion.
“One wonders how the imports were financed, but it is certainly not by foreign exchange stocks from previous years because this has been a trend for more than a decade and not private sector borrowing either. These imports were paid for by donor aid.”
He said because Malawi has been accessing foreign exchange freely without working for it, there has not been any incentive to really venture into new areas that can generate foreign exchange, hence the reason export commodity diversification has been limited in the country.
“Donor withdrawal will help us realise we have to do things on our own. It will be a very painful path with a lot of political risks as the public may not appreciate certain policy positions, but it will have to be done.”
According to the report, the commodities—tobacco, tea, sugar, cotton, pulses, edible nuts, coffee, and uranium—account for more than 60 percent of the total export value.
The report suggests it is essential that government embark on a well-formulated, comprehensive and efficient diversification programme, as a matter of urgency.
For instance, the value of uranium exports declined significantly in 2014. In 2015 and 2016, no uranium was exported from Malawi because of sharp drops in prices at the world market
Kaferapanjira’s sentiments are in tandem with those of Common Market for Eastern and Southern Africa (Comesa) secretary general Sindiso Ngwenya who recently confided to Business News that Malawi’s overreliance on a few commodities as main export commodities has not only affected the country’s trade performance, but also the exchange rate also.
“What is important is that we should not only be looking at these industries but also agro-industries because this is where we have inputs that can support the rural areas,” he said.
Minister of Industry, Trade and Tourism, Joseph Mwanamvekha is on record saying government has developed various interventions, including the Buy Malawi Strategy and the Industrialisation Policy and Export Strategy which seek to improve the country’s trade performance within and beyond borders.
Available figures from the National Statistical Office (NSO) indicate that as at September 2016, Malawi exported goods worth K10.8 billion and imported K97.6 billion to and from Comesa respectively.
