Centre for Social Concern (CfSC) says rising production costs reflected in the producer price index is making it increasingly difficult for low-income earners to afford some basic necessities.
CfSC economic governance officer Agness Nyirongo, in an interview on Tuesday, said for families struggling with high living costs currently at K797 908 for a family of six, high production costs are contributing to their ongoing struggles.
She said: “While these problems are multi-faceted, one of the most effective ways the government can address these challenges is by investing in education and skills development.
“Along with labour shortages, the rising costs of logistics and supply chains are major economic bottlenecks in Malawi. Investing in technology transfer and innovation can help reduce costs in energy production and logistics.”
To address the persistent economic challenges, Nyirongo said incentivising local manufacturing, supporting research and development, strengthening infrastructure to reduce logistical costs and improving the efficiency of supply chains could go a long way.
The producer price index (PPI) published by the National Statistical Office (NSO) measures the average change over time in the selling prices received by domestic producers for their output, providing insights into inflationary pressures and the health of various industries.
The PPI data shows that that total PPI, which is a combination of manufacturing, electricity and water supply increased by 20.6 percent between 2023 and 2024.
Manufacturing of food products alone increased by over 25 percent directly impacting food prices while manufacturing of beverages increased by 33.1 percent.
On the other hand, electricity, gas, steam and air conditioning supply increased, an indicationof increased energy production costs, according to NSO.
Consumers Association of Malawi executive director John Kapito, in an interview on Tuesday, observed that prices of goods and services have been rising since the 44 percent devaluation of the kwacha in November 2023.
He said: “The situation has been made worse by scarcity of foreign exchange and rising prices of raw materials.
“Majority of consumers, especially those with no stable income, are greatly affected.”
On his part, Chamber for Small and Medium Enterprises Association executive secretary James Chiutsi said in an intrview on Tuesay that since the Covid-19 pandemic, small-scale businesses have been working on establishing themselves and surviving.
“The economic environment has been so unforgiving,” he said.
Malawi Confederation of Chambers of Commerce and Industry data shows that in 2024, over 80 percent of businesses reported access to forex as one of the key challenges in operations, leading to operating levels of 50 to 75 percent below optimal levels.
The data also show that scarcity of foreign currency and exchange rate volatility were the top challenges, scoring 9.43 out of 10, highlighting the critical nature of foreign exchange issues in facilitating effective business operations.
Ministry of Trade and Industry spokesperson Patrick Botha is on record as having said government’s production strategy is prioritising the manufacturing sector.
