MCCCI urges setting up of industrial development fund
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has asked Treasury to come up with an industrial development fund in the 2023/24 budget to provide capital for investments in the manufacturing sector.
MCCCI chief executive officer Chancellor Kaferapanjira said this on Monday against the backdrop of Reserve Bank of Malawi (RBM) data showing that the stock of private sector credit decreased by K1.8 billion to K1trillion in December 2022.
He said the fund should be made available for the production of goods that can be manufactured within the country, especially those that can be exported to substitute regular imports.
He said: “Special incentives should be provided to manufacturing entities to encourage investment in such industries.
“Government should provide tax incentives to manufacturing and processing industries that use a substantial portion of local inputs in their production to grant their products a competitive advantage over imported products to save foreign exchange.”
Data contained in the latest RBM monthly economic review shows that community, social and personal services sector continued to hold the largest share of outstanding stock of private sector credit at 35.7 percent trailed by the wholesale and retail trade sectors at 17.7 percent, agriculture, forestry, fishing and hunting sectors at 14.6 percent and manufacturing sector at 13.2 percent.
Reads the report in part: “The outturn was explained by net repayments of commercial and industrial loans and mortgages amounting to K6.8 billion and K2.2 billion, respectively.
“This was partially counteracted by increases in foreign currency denominated loans and individual household loans to the tune of K5.4 billion and K1.7 billion, respectively.”
However, in terms of economic sectors, expansions in credit were recorded in the community, social and personal services at K10.6 billion; manufacturing at K5.8 billion, electricity, gas, water and energy at K3.7 billion; financial services at K3.2 billion; construction at K2.5 billion; restaurants and hotels at K1.2 billion; transport, storage and communication at K287.3 million and mining and quarry sectors at K124.6 million.
In contrast, the wholesale and retail trade; agriculture, forestry, fishing and hunting; and real estate sectors recorded net repayments of K29.2 billion, K6.8 billion and K31.2 million, respectively.
MCCCI president Lekani Katandula is quoted as having said that appropriate tax measures and exchange rates that discourage unnecessary imports coupled with improved electricity supply could be a good starting point to resuscitate local production. Meanwhile, annual growth of private sector credit declined to 24.1 percent in December 2022 from 26.5 percent in the previous month.
