Inadequate productive capacity continues to hinder Malawi from exploiting its trade agreements despite having markets for exports, according to an official from the Ministry of Industry, Trade and Tourism.
In an interview yesterday in Blantyre on the sidelines of a trade facilitation workshop organised by the Malawi Investment and Trade Centre (Mitc), the ministry’s principal trade officer (technical) Diamond Chikhasu said while exporters could benefit from preferential market access, the challenge is inadequate productive capacity to take full advantage of these opportunities by producing goods and services of the right quantity and quality.
He said: “Malawi has enough markets, but it is inadequate productive capacity which is hindering it from exploiting its trade agreements. The private sector in Africa, and certainly in Malawi, has often played a passive role in integration processes.
“Integration in Africa is only at 11 percent against 50 percent for developing Asia, 21 percent for Latin America and the Caribbean and 70 percent for Europe. Evidence indicates that the continent’s actual level of trade is also below potential, given its level of development and factor endowments.”
Malawi has over the past years implemented various trade facilitation initiatives aimed at growing exports, including the National Export Strategy (NES), National Industrial Policy (NIP), Malawi Trade Policy and Trade Facilitation Agreement Facility, among others.
These instruments have, however, had minimal impact in reducing the country’s trade deficit, which has worsened over the years and projections point to a worsened trade deficit going forward, according to the National Trade Working Group.
Figures from the National Statistical Office (NSO) show that the country’s trade deficit has been running at roughly K300 billion, on average, over a seven-year period, which is about eight percent of nominal gross domestic product (GDP) at around $5 billion (K3.6 trillion).
One of the local exporters, Patrick Maseko, yesterday said over the years, implementation of trade agreements has proved to be a challenge due to increased cost of production and transportation.
Business magnate Mike Chilewe of Mikes Trading, said the inability to produce as a country not only affects businesses, but government as well as it loses out on potential tax.
Mitc chief executive officer Clement Kumbemba said as a trade promoting agency, their main challenge is on information; hence, engaging exporters on various trade agreements the country is implementing.
“We hope that with diversification from traditional export products, Malawi should be able to improve its export base,” he said. n