The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has decried the operating environment in the just-ended year, citing high costs of doing business and Covid-19 pandemic as factors undermining business growth.
MCCCI has since painted a gloomy outlook for businesses this new year as the environment is still depressed due to the effects of the Covid-19 pandemic.
In its 2021 Assessment of Business Environment, MCCCI said overall, the business operating environment in 2021 was largely suppressed due to the continued impact of the pandemic.
Reads in part the report co-signed by MCCCI president James Chimwaza and chief executive officer Chancellor Kaferapanjira: “Despite a good agriculture season, the country’s export earnings were weak compared to previous years attributed mainly to weak external demand and logistical challenges caused by border restrictions.
“The cost of doing business was high for exporters due to the emergence of pandemic-related non-tariff barriers and increase in shipping costs as a result of reduced number of ships in operation internationally.”
The private sector lobby group fears that 2022 may also turn out to be a difficult year for businesses depending on the pathway of the Covid-19 pandemic and weather patterns.
The chamber said that in 2021, pandemic-induced supply-demand mismatches triggered inflation rise and warned that if these persist for much longer this year, it could force the Reserve Bank of Malawi (RBM) to implement contractionary monetary policy to counter inflation.
According to the MCCCI, the short-term outlook does not look promising due to worsening pandemic dynamics and unfavourable weather patterns and that risks to economic prospects have increased and policy trade-offs have become more complex.
Covid-19 pandemic has left most businesses depressed due to the general economic slowdown and measures imposed by governments to slow the spread of the Covid-19 pandemic.
RBM Governor Wilson Banda is also on record as having said that in terms of the risks to the growth outlook, uncertainty around the evolution of the pandemic remains a key factor shaping the economic outlook.
“If the Covid-19 pandemic continues, progress on treatment and vaccines is slower than anticipated, or countries’ access to the vaccines remains unequal, economic activity could be lower than expected, with renewed social distancing and tighter lockdowns,” he said in the fourth Monetary Policy Committee statement.
In its recent Malawi Economic Monitor, the World Bank has projected that growth is at risk of further waves of Covid-19 and due to new variants and potentially heightened macroeconomic volatility that could arise when global financial conditions tighten.
Reads the report in part: “Supply-demand mismatches could persist, potentially due to another wave of Covid-19 cases, which could contribute to sustained elevated inflation.
“This could raise inflation expectations, which would risk creating self-reinforcing cycles of inflation and inflation expectations which are difficult for policy makers to counteract.” Two weeks ago, President Lazarus Chakwera unveiled a two-year Covid-19 Socio-Economic Recovery Plan that seeks to revive the country’s battered economy through various interventions.