MCCCI sees bad weather stifling growth
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has warned of tougher economic times ahead as unfavourable weather patterns threaten to stifle economic growth in the country.
MCCCI president Lekani Katandula, speaking in an interview on the sidelines of a dinner President Lazarus Chakwera hosted for business captains at Mzuzu State Lodge on Friday, said the rainy season has not been conducive and threatens to slow down economic growth.
He said the heavy rains in the Northern and Central regions, coupled with the dry spell and mostly erratic rains in the South, are challenges waiting to hit production levels.
Said Katandula: “Those factors could lead to much lower production than would otherwise be the case. But I hope that there will be a good programme for winter cropping and alternative food crops, whether it is sweet potatoes or anything that could substitute the maize shortage.”
He said the onus is on government to aptly implement the winter cropping programme which is already in place, saying that could be the way to slowing down inflation later in the year.
On Malawi’s ambitious three-year K580 billion Socio-Economic Recovery Plan, Katandula observed that when the programme was put in place, the country was not in an acute position as it has gone through in terms of forex supply.
“As I can recall well, we did not have the power challenges that arose post-Cyclone Ana and later the extra drag that came post-Cyclone Freddy. So, I do not think we have achieved what was intended because of those factors. But the idea of having a recovery plan makes sense. We just need to enforce the key tenets that should see us rebounding economically, going forward,” he said.
Katandula further said with the corporate tax as high as it is at 40 percent when other African countries have theirs at 15 or 20 percent, it means Malawi is less attractive for foreign direct investment. He said they have been urging government to expeditiously reverse the decision to hike corporate tax.
In his speech, Chakwera stressed that the country’s economic growth is banking on a positive working relationship with the private sector.
He described businesses and government as part of a flight engine whose failure would cause the aircraft to nosedive.
Said the President: “This gathering is a reminder of consequences that may come if the two parties fail to work together. It is an opportunity to chase out the devils that frustrate the engine. The rising cost of doing business is not different from the rising cost of running government.”
Minister of Finance and Economic affairs Simplex Chithyola Banda on February 23 presented a K6 trillion 2024/25 National Budget built on the assumption that the economy will grow by 3.6 percent and inflation rate moderating to 23.4 percent from the current 35 percent.
Malawi is also reeling under a growing public debt of K13 trillion or around 84.8 percent of the gross domestic product (GDP), the deficit financing plan can only shrink fiscal space further, especially in the absence of a sound debt-restructuring plan that major creditors can agree to.
In a joint analysis, researchers from the International Food Policy Research Institute, National Planning Commission, Malawi Liverpool Welcome Trust, Department of Climate Change and Meteorological Services, University of Malawi, Mwapata Institute and the Lilongwe University of Agriculture and Natural Resources established that Malawi’s 2023/24 GDP could contract by between four and 8.6 percent due to adverse climatic conditions due to the El Nino weather pattern.
On the other hand, in its January 2024 Global Prospects Report, the World Bank said elevated cost of living, high debt burden and interest rates as well as heightened financing needs and increased frequency and intensity of adverse weather will hinder growth during the year.
