Malawi-South Africa trade gap widens to K11 billion

Malawi’s trade gap with South Africa doubled to over K11.5 billion in December 2012, from K5 billion in the same period the previous year in favour of Pretoria, posing a threat to local industries.
The National Statistical Office (NSO), July 2013 monthly statistical bulletin indicates that exports to South Africa declined to K1.3 billion in December 2012 while imports jumped to K12.8 billion in the same period.
Malawi and South Africa are both members of the Southern Africa Development Community (Sadc) and are party to the bloc’s agreement on trade.
The Sadc protocol on trade planned the establishment of a Free Trade Area (FTA) by 2008 to liberalise inter-regional trade in goods and services to enhance economic development.
But the Trade Law Centre (Tralac) analysis on trade in Sadc region indicates that all countries in the region have tariff free access to South Africa except for used clothing and selected vehicles and vehicle parts. However, the brief notes that Malawi has offered 380 of 790 tariff lines for South Africa’s free duty access.
But National Working Group on Trade Policy chairperson Geoff Mkandawire noted that by signing the Sadc trade agreement, Malawi made commitments which according to authorities are being implemented.
“Commitment was made several years ago with South Africa, and the Southern Africa Customs Union (Sacu). Of course South Africa has better developed industries than Malawi but all we need to do is to develop the competitiveness of our industries to match theirs. It should not be developing our private sector for the sake of increasing exports but rather focusing on priority areas by advocating for these and providing incentives,” said Mkandawire.
But last year Malawi launched the National Export Strategy (NES) whose goal is to match long-term export and import trends.
The NES is aimed at providing a clearly prioritised road map for building Malawi’s productive base to generate sufficient exports to match the upward pressure on Malawi’s imports while at the same time, maximising the direct contribution of exports to economic and social development.
It prioritises three export-oriented clusters for diversification: oil seed products, sugar cane and manufacturers. It also includes support plans to stakeholder efforts in other major existing clusters: tobacco, mining, tea, tourism and services.
According to NSO data, imports from Sadc jumped to K21.6 billion in December 2012 from K4 billion in favour of the 15 member states trade bloc.
And according to data provided by Tralac trade brief, in 2012 Malawi exported $68 million (K27 billion) to South Africa while it imported about $440 million (K176 billion) in the same period.