Chamber explains poor AGOA performance

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said weak manufacturing base and continued overreliance on the domestic market continues to hamper local companies for utilising the African Growth and Opportunity Act (Agoa).

The development comes in the wake of Agoa’s initiation of the annual review of the eligibility of the sub-Saharan African countries where recommendations for the President on Agoa country eligibility for calendar year 2018 shall be presented.

Data from the Malawi Investment and Trade Centre (Mitc) shows the country has only one firm exporting to the United States under the pact, Blantyre-based Win Win Garments Limited.

Seventeen years and counting, Malawi is still failing to produce firms to export to the US market despite various government interventions to push exports including the draft private sector strategy, National Investment Policy, National Export Strategy (NES), an Updated Micro Small and Medium Enterprise (MSME) policy and the Buy Malawi Strategy.

MCCCI chief executive officer Chancellor Kaferapanjira told Business News on Thursday that the few companies which have ventured into manufacturing are either demovitated by the risks in the sector or produce for the domestic market.

“Our manufacturing base is weak because as it is now, one need to wait for atleast five years to start realising returns on investments which is a long time for a business. Again, the few firms that are still left in manufacturing are producing for the domestic market which is also very vulnerable to internal shocks,” said Kaferapanjira.

He said that while most of the companies had been sold when they were facing corporate governance problems, privatisation has not helped as there has not been enough government interventions to promote the industries.

“As is the case with countries such as South Korea and Taiwan, which have fully benefitted from the manufacturing sector, local companies are supported from the start in serving the local market before they graduate to the export market, which is not the case in Malawi, hence the underutilisation,” he said.

Government’s efforts to ensure the country fully benefits from the trade agreement are yet to bear fruits as the talks on coming up with the Agoa strategy continue gathering dust three years down the line.

Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi conceded that almost all countries, including Malawi, are underutilising Agoa and that discussions are under way on how they can improve.

“Almost all countries are underutilising Agoa due to many factors like supply side constraints, issues of stringent standards in the US, logistical problems and many more.

“Countries are discussing how they can improve their utilisation. This in short is called trade expansion as well as how they can attract more US investors into Africa,” he said.

Malawi exports to Agoa have been dwindling since 2012 only to pick up in 2016.