Imports drop offsets exports decline—RBM
Malawi’s agricultural exports faced a setback in April 2024, dropping by $10.1 million (about K18 billion) compared to the previous month, according to figures from the Reserve Bank of Malawi (RBM).
The central bank’s April 2024 Monthly Economic Review reported a decline in key commodities such as tobacco, soya beans and tea. Tobacco suffered the steepest drop, falling from $10.4 million to $7 million.
Soya bean exports plummeted by 96 percent from $2.5 million in March to $0.1 million, according to the report.
Tea exports also dipped 14.4 percent from $8.3 million to $7.1 million, reigniting concerns about the country’s overreliance on traditional agricultural exports.
However, a bright spot emerged in the form of pulses, a category of legumes. Exports of pulses exhibited a promising surge of $1.1 million, rising from $0.5 million to $1.6 million, according to the report.
This increase points towards potential diversification within Malawi’s agricultural export portfolio.
Importantly, the decline in exports was eclipsed by a steeper decrease in imports, leading to a narrowed trade deficit of $181.8 million in April 2024.
This improvement is primarily attributed to reduced purchases of various goods, including fertiliser.
Fuel imports led the decline, dropping by $6.5 million to $36.3 million. Fertiliser imports also dipped by $1.4 million to $5.3 million.
Mzuzu University agricultural economist Christopher Mbukwa attributed the export decline to delays in harvests and processing within the tobacco and soya bean value chains caused by El Nino weather patterns.
He, however, welcomed the positive decrease in imports, emphasising that it should act as a catalyst for the country to intensify efforts towards import substitution and ease pressure on foreign exchange.
Said Mbukwa: “We have been advocating for improved import substitution for a long time.
“We import an excessive amount of goods, many of which have substitutes available within our borders.”
In a separate interview, Catholic University of Malawi economics lecturer Derrick Thomo cautioned that long-term stagnation in exports could worsen the country’s foreign exchange position.
He said: “The decline will reduce Malawi’s export earnings and foreign exchange reserves.
“There could be potential ripple effects such as job losses in the agriculture and transportation sectors, despite an overall trade deficit improvement due to a sharper fall in imports of items like fertiliser and fuel.”
On his part, economic analyst Greenson Nyirenda says the drop in exports could signal severe shortages in forex, considering that Malawi witnesses sharp rises in agricultural exports. “[This] could be a bad signal of forex generation in months to come if the trend continues”
Overall, the slowdown in imports suggests a period of cautious spending in Malawi, according to expert.
While some sectors might be facing a slump, the rise in essential goods imports indicates a focus on maintaining public health and food security.
