Firms courted to free trade area

Ministry of Trade and Industry says it it searching for businesses willing to trade in the guided trade initiative (GTI) under the African Continental Free Trade Area (AfCFTA).

This follows the adoption of the country’s Goods Market Access Offer by the Council of Ministers, making Malawi eligible to trade in the GTI and linking the country to other State parties that also have their goods market access offer verified.

But local businesses feel the economy is not ready for trade on the policy front.

In a written response on Wednesday, Ministry of Industry and Trade spokesperson Mayeso Msokera said as part of government’s preparedness, the ministry has called for expression of interest to secure the private sector’s willingness to participate in the GTI.

He said: “The aim is to identify firms and products that we can position for the AfCFTA market.

“We will further engage some of the private sector companies that we know have strong potential of producing and aggregating commodities for export.”

Msokera said for now, the focus is on West and North Africa as Malawi is already a member of the Common Market for Eastern and Southern Africa and Southern African Development Community.

He said products such as rice, fish, coffee, honey, beverages and sugar are on  high demand on the continental market.

The Malawi Government recognises the AfCFTA as an opportunity to achieve its goal of expanding and diversifying the export products and services at the regional and global levels under its National Export Strategy II.

This seeks to deal with the trade deficit as exports are three times lower than imports. For instance, in 2022, Malawi’s export earnings were around $1 billion  (about K1.7 trillion) against imports of roughly $3 billion (about K5.1 trillion).

Trade experts have also previously advised that the AfCFTA should be backed by increased productive capacity, enhanced regional value chains and remove internal obstacles to the growth of small and medium enterprises.

Malawi Confederation of Chambers of Commerce and Industry director of business environment Madalitso Kazembe said in an earlier interview that subjecting the manufacturing sector, which is still in its infancy, to rigorous pressure and competition from other countries would render it “completely dead”.

She said: “Government needs to bring in incentives to make sure the manufacturing sector becomes more productive.

“We want to make sure that government protects our industry so that it grows and becomes more competitive.”

National Working Group on Trade Policy chairperson Frederick Changaya said while business prepare for trading under the initiative, the key to success is the economy.

He said: “We have to reflect on the preparedness of our economy at large, otherwise, we may end up being a dump site of the free trade area which would worsen the terms of trade.

Changaya, who is also Applecore Grain and Milling managing director, urged government to raise the economy to the level that is capable of participating in the continental free trade area.

Overseas Development Institute research fellow Sherillyn Raga earlier observed that to start gaining from the AfCFTA, Malawi should put in place simultaneous efforts to undertake a comprehensive gap analysis between domestic laws and international trade commitments.

The AfCFTA is a trade pact that creates a harmonised and integrated continental market of 1.2 billion people in 55 countries with combined gross domestic product valued at $3.4 trillion.