Malawi yet to start trading under AfCFTA
Ministry of Trade and Industry says it is in the process of applying for the guided trade initiative under the African Continental Free Trade Area (AfCFTA) to enable commercially meaningful trade.
In a written response on Tuesday on the progress of AfCFTA, a market with a combined gross domestic product (GDP) of $3.3 trillion, the ministry’s spokesperson Mayeso Msokera said they delayed because their offer was sent back for Malawi Revenue Authority (MRA) to work on some technicalities on tariffs.
He said: “We want to apply for the guided trade initiative. No country was ready to trade and AfCFTA secretariat decided to support and introduce guided trade to demonstrate that it is possible.”
The AfCFTA secretariat developed the AfCFTA Guided Trade Initiative to allow commercially meaningful trading under the continental free trade area to test the operational, institutional, legal and trade policy environment to send a positive message to the African economic operators.
The initiative has since attracted participation of Cameroon, Egypt, Ghana, Kenya, Mauritius, Rwanda, Tanzania and Tunisia.
The products earmarked for trading under AfCFTA Guided Trade Initiative include ceramic tiles, batteries, tea, coffee, processed meat products, corn starch, sugar, pasta, glucose syrup, dried fruits and sisal fibre in line with the AfCFTA focus on value chain development.
The development comes as the trade deficit between Malawi and the rest of African countries has continued to worsen in recent years, rising from $406 million (about K420 billion) in 2016 to $670 million (about K694 billion) in 2020, according to the Overseas Development Institute (ODI).
The data shows that, on average, between 2016 and 2020, about a third of Malawi’s exports or 34 percent, were destined for African countries while a similar share of Malawi’s imports originated from the continent.
ODI research fellow Sherillyn Raga observed in a statement that to start gaining from the AfCFTA, Malawi should put in place simultaneous efforts to undertake a comprehensive gap analysis between domestic laws and international trade commitments.
The Malawi Government recognises the AfCFTA as an opportunity to achieve its goal of expanding and diversifying its export products and services at the regional and global level under its National Export Strategy II 2021–2026.
Trade experts have also previously advised that the AfCFTA should be backed by increased productive capacity, enhanced regional value chains and remove internal obstacles to the growth of small and medium enterprises so that African countries, including Malawi, can compete well in the liberalised regional market.
Malawi Confederation of Chambers of Commerce and Industry chief executive officer Chancellor Kaferapanjira said in an interview that the major source of competitiveness is electricity, which the industry does not have, rendering the country uncompetitive.
From last year to now, Economic Commission for Africa data shows that trading under the AfCFTA is underway but with only about 100 products out of 4 500 products being traded under the AfCFTA tariff headings.
According to the International Monetary Fund (IMF), Malawi could be one of the top four economies to reap gains from AfCFTA, a market of 55 countries and 3.1 billion, which presents a wide market for Malawi products.
