Manufacturing sector continues to stagnate

 

Malawi has over the past 30 years failed to make headway in the manufacturing sector, leaving analysts wondering whether the promotion of import substitution, industrialisation and agricultural exports is yielding results.

A United Nations Industrial Development Organisation (Unido) report dubbed 2018 Competitiveness and Industrial Development has ranked Malawi 134th competitive and industrial country out of 150, slipping by two steps from last year.

At regional level, the country is also faring poorly at 22 out of 29 countries against her neighbours Zambia (13), Zimbabwe (15) and Mozambique (16).

Malawi’s industrial output has gone down

Frederick Changaya, chief executive officer of Candlex Malawi Limited, one of the country’s manufacturing firms, said in an interview on Tuesday that Malawi cannot achieve meaningful development if industrial policies continue to follow “palliative economics policies”.

“Malawi and its development partners treat symptoms of poverty and not causes of poverty. We, as a country, have been forced to open the borders and yet Unido says we are not competitive. When you are less competitive, your terms of trade are negative or in deficit.

“Industrial activities have more economic synergy, more increasing returns, more employment and rising wages,” he said.

Changaya, who is also chairperson of National Working Group on Trade Policy, said in the absence of a development bank, the industrial sector is left at the mercy of a predatory financial sector that aims at maximising profits.

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Prince Kapondamgaga in an interview yesterday said addressing low production in agriculture, which could feed into the manufacturing sector, could be a good starting point to turn Malawi’s manufacturing dream into reality.

He said because agriculture is mainly a private sector undertaking, government should spell out a policy framework that should provide incentives for organised farmers to promote agro-processing and value addition rather than production of primary commodities.

In an earlier interview, Ministry of Industry, Trade and Tourism spokesperson Mayeso Msokera argued that slow industrial growth is largely attributed to insufficient and intermittent power supply the country has experienced in recent years.

The poor industrial performance is despite the Malawi Government implementing policies aimed at supporting the private sector and promoting value addition such as National Industrial Policy, National Trade Policy and the National Export Strategy.

The country’s poor industrial performance is contrary to goal number 9.2 of the United Nations (UN) Sustainable Development Goals (SDG) on promoting inclusive and sustainable industrialisation by 2030.

The goal also talks about raising the industry’s share of employment and gross domestic product (GDP), in line with national circumstances and double its share in least developed countries, including Malawi.

Malawi’s drop in manufacturing over the past 25 years—which amounts to deindustrialisation—means that the country will find it harder to improve its employment numbers and sustain high economic growth rates, according to the report.

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