Businesses have given 2024 a mixed rating, saying positive strides such as trade facilitation initiatives were overshadowed by high inflation and foreign exchange shortages that subdued industry’s capacity utilisation to slightly above 50 percent.
Malawi Confederation of Chambers of Commerce and Industry chief executive officer Daisy Kambalame said in an interview that during the year, most companies, apart from those in the financial sector, were hit by the effects of the November 2023 devaluation of the kwacha by 44 percent, which resulted in exchange rate losses in the first half and rising commodity prices that exerted pressure on inflation rate.
She said most businesses faced challenges due to macroeconomic imbalances, particularly scarcity of foreign exchange, rising inflation and a volatile exchange rate despite some positive developments.
Kambalame said foreign exchange shortages remained a critical issue throughout the year, with manufacturers struggling to secure vital inputs for production, resulting in dwindling production capacity.
She, however, described the signing of the Simplified Trade Regime with Mozambique and the enactment of the Micro Small and Medium Enterprises (MSME) Bill into law by Parliament as positives.
Said Kambalame: “The enactment of the MSME Bill into law by Parliament is expected to strengthen regulation and support for the sector, a key driver of the economy.
“Additionally, the Simplified Trade Regime framework between the governments of Malawi and Mozambique is set to facilitate cross-border trade, benefiting both economies.”
She said government’s push to promote railway infrastructure for fuel importation during the year would improve efficiency in supply of fuel and reduce operational costs.
In a separate interview, Business Partners International country manager Bond Mtembezeka described 2024 as mixed with most sectors suffering from lagged effects of the kwacha devaluation.
He said: “The year has been mixed with downside factors. We experienced the lagged effects of the November 2023 kwacha devaluation. Inflation rose sharply and the forex market got drier in 2024.
“We also experienced the worst fuel shortages this year. It has been a really tough year. The financial markets were resilient in 2024 like they have always been, which is a positive thing.”
Manufacturers Association of Malawi chairperson Gloria Zimba said in an interview that the persistent foreign exchange scarcity during the year heavily affected production as most industries operated at 50 percent.
She said the situation affected most manufacturers because they are failing to import raw materials for their production.
Zimba, who is Castel Malawi human resource and corporate affairs director, said: “We are facing a situation whereby although we have cash at bank, we are delaying payments of our import bills because of forex challenges and other companies have since been blacklisted by suppliers because of the delays.”
In an earlier interview, Minister of Trade and Industry Sosten Gwengwe, challenged industry players to be innovative by producing goods for the export market to generate foreign exchange for their operations at a time the economic terrain is hostile.
He, however, said government is in constant touch with the private sector, adding that it is aware of challenges they are facing, including forex scarcity.
“I know they are grappling with forex issues given the path that we are going through economically, but we are in constant touch and engagement to make sure that we help them thrive in times when the economic terrain is not as stable,” said Gwengwe.
Despite the inflation rate easing to 27 percent as of November this year, according to National Statistical Office, the exchange rate continues to be volatile while forex shortage is persisting.
