Export performance down,but minister still optimistic
Malawi’s exports continue to deteriorate three years after the country adopted the $37 million (about K65 billion) National Export Strategy (NES II) to boost exports’ share of gross domestic product (GDP) to 20 percent by 2026.
However, Minister of Industry and Trade Sosten Gwengwe said in an interview yesterday that the enactment of Special Economic Zones Bill will see construction of industrial parks, with the first one in Lilongwe to push the country’s production capacity to catch up with the NES II targets.
Malawi’s 2023 trade deficit widened by $800 million to $2.1 billion as exports were around $1 billion against imports at $3.1 billion, according to Reserve Bank of Malawi data.
But Gwengwe is optimistic that exports will peak up this year following a number of efforts that should start yielding results.
“The ministry is hoping that exports will be significantly bigger with more import substitution because more companies increased their production,” he said.
Gwengwe is also banking on the ATM Strategy that prioritises agriculture, tourism and mining, saying collaboration among government ministries, departments and agencies involved in the sectors to boost foreign exchange revenue will yield results.
“With the presidential emphasis on the ATM, there is more collaboration and there is now a government approach on exports,” he said.
The NES II focuses on markets which present good opportunities to products and services made in Malawi, targeting neighbouring countries, regional markets, European Union market, USA, Russia, Middle East, Asia and emerging markets that include Canada, Australia and Switzerland.
However, some of the traditional markets such as the United Kingdom (UK), China and the US have seen declining or stagnating levels of exports.
In 2023, exports to the UK were just $10 million, a 52.4 percent decrease over the previous year and a 100 percent drop from the NES II base year of 2019 when the country exported $20 million worth of goods and services.
Similarly, exports to the US market have declined from $79.5 million to $44.6 million during the review period.
In a recent Malawi Economic Monitor titled ‘A Narrow path to prosperity’, the World Bank acknowledges that trade performance has been declining over the recent decades, contributing to the economic stagnation.
Reads the report in part: “With strong commodity exports, Malawian exports as a share of GDP in the 1990s were ahead of regional averages and those of structural and aspirational peers.”
The report further said this has immediate macroeconomic consequences, including trade balance and foreign exchange challenges.
