Minister of Trade and Industry Sosten Gwengwe has urged 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 said this on Thursday in Blantyre after a tour of two manufacturing firms, namely Pharmanova Limited and Metalo Trading Company.
Gwengwe’s visit comes against the backdrop of manufacturing industry’s utilisation capacity or the percentage of industries’ available production capacity that is being used, has dropped to just above 50 percent as at July this year from 70 percent during the same period last year due to scarcity of foreign exchange.
The country’s gross official foreign exchange reserves have dropped to $180.2 million (about K316 billion) or an equivalent of 0.7 months of import cover from the previous year’s $238.6 million (about K418 billion), which is
slightly above one month of import cover, according to Reserve Bank of Malawi (RBM) data.
Gwengwe 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 economic terrain is not as stable,” he said.
Gwengwe, however, advised manufacturers to be innovative in challenging periods by diversifying their businesses to ensure they generate foreign exchange, which he said others are already doing.
In an interview, Pharmanova Limited quality assurance manager Tawanda Musasa said they are only utilising 30 percent of their production capacity because of low orders from government.
“We produce 4.4 billion tablets of medicine per year because our factory capacity is large, but about 70 percent is lying idle because currently, we are only supplying 30 percent to the government,” he said.
Musasa decried acute shortage of foreign exchange, saying it is affecting their operations as they need imported raw materials to produce.
Metalo Trading Company chief executive officer Shivam Mittal said his firm has invested K870 million for a scrap metal recycling plant in Blantyre to produce electricity cables, among other metal products.
He said: “We used to import scrap metals from Malawi for our recycling plant in Mozambique, but after discussions with the Malawi Government, we decided to open a recycling plant right here so that we provide substitute cables imported from South Africa, China and India.”
Manufacturers Association of Malawi chairperson Gloria Zimba earlier said manufacturing firms are failing to access forex from banks to import critical raw materials for production, risking production cuts and thousands of jobs.
She 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.”
Common Market for Eastern and Southern Africa Business Council president James Chimwaza said there is a need for dialogue between the government and private sector on economic challenges.
