TThe Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said the country needs an annual growth rate of 10 percent if the economy is to register ripple effects.
Speaking in an interview on Tuesday, MCCCI chief executive officer Chancellor Kaferapanjira said at the rate Malawi is growing, there is little hope for the poor to get out of the poverty trap.
“For instance, it is projected that the economy will grow by around 4.5 percent this year but this does not translate into anything for the poor Malawians. As a result, there isn’t much of economic activity to stimulate improved economic welfare for the people.
“In the long run, this goes down to businesses which strive to grow but because the people’s economic welfare is not improved, they also fail to grow. We feel for the economy to improve, Malawi needs to have an economic growth of 10 percent per annum and this can be achieved if we institute and focus on the right policies for growth just like in Ethiopia and Tanzania,” he explained.
The Ministry of Finance, Economic Planning and Development projects the economy to grow by an average of four and 4.5 percent in 2017 and 2018, respectively.
Last year, the economy grew by 2.9 percent while the year before, Malawi’s economic growth rate was 3.1 percent largely due to adverse weather conditions that reduced harvest by over 30 percent.
This year, growth prospects have been have been dealt a big blow with the combined effects of dry spells and armyworms attack that could shutter this financial year’s growth prospects. The current drought is estimated to cut maize production by 40 percent or 210 740 tons while army worms would cut output by 10 percent or 73 201 tons.
The International Monetary Fund (IMF) projects the economy to grow by over six percent in the medium term, which it says is a recipe for unlocking the economy’s potential, despite existing downside risks.
In his Mid-Year Budget Statement, Finance, Economic Planning and Development Minister Goodall Gondwe said if the macroeconomic is managed well as it is now, the average economic growth rate of Malawi could reach seven percent.
The Malawi Chamber for Small and Medium Enterprises executive secretary James Chiutsi said in an interview that with improved agricultural productivity, the economy should really improve but this would also depend strict adherence to set monetary policies, where government keeps its expenditure in check, will really improve the economy.