Economic freedom worsens, shows report

 The worsening macro-economic environment is withering prospects of attaining economic freedom for youthful cellphone accessories businessperson Clement Magiha.

Magiha, who at the time of setting up his business in 2019 had just become jobless, told Business News yesterday that contrary to expectations, his business has failed to survive.

His situation is reflected in a report by The Heritage Foundation, which shows that compared to a decade ago, economic freedom for Malawians has worsened, which means that Malawians continue to struggle financially.

Said Magiha: “I set up this business to escape the harsh economic challenges. But four years on, I am yet to start reaping fruits.

“The margins we are getting from the business are falling by day because things have become expensive and money is scarce.”

Such is the tale for many Malawians, who have experienced declining financial freedoms over the years.

The Heritage Foundation 2022 Index of Economic Freedom ranks Malawi as 134th freest economy out of 177 economies in the world.

In the sub-Saharan Africa region, Malawi is ranked 26th out of 47 economies.

In 2012, Malawi was ranked on position 112 and 18th freest economy on the globe and in the region, respectively.

Among others, The Heritage Foundation observes that fiscal health, business freedom and government integrity remains low.

Speaking in an interview, yesterday, economist Edward Chilima said the situation is disappointing considering the huge investments from within and outside to reverse this trend.

He said: “This worsening situation leaves the citizens in helpless and unproductive situations. In such moments, inequality increases as only few people make it in life.

“Economic freedom matters because without it, citizens’ freedoms are at risk, government sovereign power is at risk and generational poverty and dependency is unchecked.”

Consumers Association of Malawi executive director John Kapito said the figures are a reflection of the situation on the ground.

He said: “There is little foreign direct investment, high unemployment rate, low levels of consumer spending, inadequate foreign reserves, poor infrastructure, low volumes of exports and contradicting trade policies and laws.

“All these have contributed to the current status that makes Malawi one of the poorest countries and not freest.”

Centre for Social Concern economics governance officer Bernard Mphepo said the worsening of economic freedom entails a decrease in the standard of living among the citizenry.

“Economic freedom matters because it influences economic growth and poverty. This also contributes to decline in economic growth,” he said.

In recent years, Malawi has experienced slow growth, averaging four percent, which according to the World Bank, has increased fiscal pressure on government.

In its recent Public Investment Overview, the World Bank observed that trade policies and the business environment continue to impede investment and commercialisation