Malawi, SADC trade Gap widens—report

Malawi’s trade with the 16-country Southern Africa Development Community (Sadc) is on the lower side, with figures showing that the country is importing more than it is exporting to the regional trade bloc.

An analysis by Trade and Law Centre (Tralac) published on Wednesday shows that in 2019, Malawi’s exports were valued at $69 million (about K51.7 billion) compared to imports at $130 million (K97.5 billion), creating a negative trade balance of $61 million (about K46 billion).

In comparison to 2018, imports dropped by 20 percent while exports eased by about three percent, according to the analysis, but imports still surpassed export, widening the trade.

Since Malawi’s economy is agro-based, agricultural products dominated the country’s export basket, accounting for about 80 percent of all exports.

Reacting to the report on Wednesday, economist Edward Chilima said it will be difficult for the country to make the most of international trade if it does not invest in sectors it is good at as well as empowering small and medium enterprises (SMEs).

He said: “We have not invested in areas where we have comparative advantage to create industries that can produce and export.

“To produce and export, we needed to invest heavily in SMEs that can produce quality products and in large and consistent quantities. Our financial system is not designed to deliberately promote SMEs to assist them to grow and compete on the export market.”

Chilima said because of this, the country’s SMEs have remained small and medium and only producing for the local market.

He said on top of the many challenges SMEs face, they are also burdened with high taxes and have not been assisted to qualify to start exporting due to quality issues with Malawi Bureau of Standards.

“Because we are not growing industries that can produce for the export market, we end up importing things that we could easily be producing locally,” said Chilima.

In an interview on Wednesday, Ministry of Trade spokesperson Mayeso Msokera admitted that Malawi remains a net importer, which is an issue of concern.

He said government will continue to implement policies and strategies such as the Buy Malawi Campaign, among others, to narrow the trade gap.

Msokera said government’s main focus is to build export readiness of the country’s exporters.

He said government is also developing regional and global value chains, promoting entrepreneurship with emphasis on SMEs and addressing critical enablers related to exports such as energy, transport, market intelligence and trade facilitation.

The Tralac analysis shows that in terms of total trade, South Africa was the biggest intra-Sadc Free Trade Area trading partner, accounting for 45 percent of total trade in the bloc.

Namibia came second at 10 percent trailed by Botswana and Mozambique at nine percent each.

Zimbabwe was fifth at eight percent, with Zambia at six percent.

The analysis shows that unmanufactured tobacco, tobacco refuse, unused postage, cement, mineral or chemical nitrogenous fertilisers and pesticides and herbicides topped imports list.