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Political impasse dents business environment

Chancellor College economics professor Ben Kaluwa and the Indigenous Businesses Association of Malawi (Ibam) have said the current political impasse can generate negative effects on business environment and investor confidence.

Speaking separately in interviews on Monday, Kaluwa and Ibam president Mike Mlombwa said the economy might also be affected by a prolonged political impasse as several businesses have been shut down over fears of a turmoil engulfing the country.

“There have been a shutdown of several businesses during the post-election period and the situation has created uncertainty. Political uncertainty always affects the business sector. Investors are always anxious about stability and a political climate features on business index which is a barometer on areas to invest,” said Kaluwa while Mlombwa called for sanity an end to the current political circus.

“We are not doing any favour to our already fragile economy. We already have problems ranging from prohibitive interest rates, high inflation and unstable exchange rates and this impasse will dent Malawi’s attractiveness. The only factor that we have been enjoying so far is political stability which we apparently are throwing away,” said Mlombwa.

Mlombwa asked stakeholders to take heed to reason and not further personal interests.

 Business has slowed down in Mzuzu
Business has slowed down in Mzuzu

Malawi held tripartite elections last week which were marred by logistical nightmares.  Since then, there has been a political impasse following a delay in the announcement of the final results and legal battles between political parties and Malawi Electoral Commission (MEC) over the decision to recount votes.

In light of this uncertainty, business has almost been brought to a halt with most businesses and shops in Blantyre, Mzuzu and Lilongwe closed.

Notably in Mzuzu, a snap survey in the city shows that most shops are operating even though business has slowed down.

According to AAM Furnishers Mzuzu shop manager Siraj Patel business is slow because people from rural areas who are the main buyers are not patronising the city because of fear of the unknown as results are not yet out.

“We are experiencing a drop in customers from our normal days; we are therefore registering losses is sales,” Patel said.

While manager for Kwiksave shop 34 said business has just picked up on Monday as compared to previous week when they experienced a low customer turn out.

But as analysts have put it, the impasse, political uncertainty and instability may worsen Malawi’s already poor and fragile business environment.

In November last year, in the wake of Cashgate—plunder of public financial resources at Capital Hill—Malawi’s major donors froze aid consequently risking the economy that is largely dependent on donor support.

Recently, during its annual general meeting, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) said 2013 turned out to be a year of disappointments despite the optimism generated in 2012.

The MCCCI noted that last year was characterised by poor economic governance, greed, gross abuse of public resources and lack of direction to the business community highlighting shortage and erratic supply of electricity, lack of real reforms to promote exports and high inflation rate. – INNOCENT HELEMA , GOLDEN MATONGA & MARTHA SANDE

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