Mejn tips govt on trade

 The Malawi Economic Justice Network (Mejn) says Malawi needs to increase her exports fourfold to keep up the pace with our current levels of imports.

Speaking during a town hall meeting on public debt and budget, Mejn regional coordinator Mike Marvin Banda said this could help reduce the country’s trade deficit, which has been rising in recent years.

He said: “One potential solution to this issue could be for Malawi to focus on increasing its exports to other countries in order to reduce the trade deficit by diversifying the types of goods that the country exports and by finding new markets to sell these goods.

 “Additionally, the country may want to review its trade agreements and tariffs with other countries to ensure that it is not at a disadvantage, in terms of trade.”

Banda said another solution could be import substitution, which would involve encouraging local production of goods and services to reduce dependence on imports and create jobs which could be achieved by providing incentives to local businesses and supporting local industry.

Meanwhile, the year 2023 closed with a trade deficit of about $1.6 billion (about K2.7 trillion) as the country’s export earnings failed to keep up with its rising import bill, information from the

 Reserve Bank of Malawi (RBM) shows.

Data from RBM published in the latest Financial and Economic Review published last month shows that total exports at the end of the third-quarter of 2023 totaled $663 million (K1.127 trillion) while imports stood at $2.3 billion (about K3.91 trillion).

The d e f i c i t w a s marginally higher than the $1.5 million (about K2.5 trillion) recorded at the corresponding period in the previous year, representing a deterioration of about $117 million (about K198.9 billion) or 7.5 percent.

The growing trade deficit exerted a lot of pressure on the country’s foreign exchange reserves, with gross official reserves—the amount of forex under the direct control of the central bank—hovering between $321.53 million (1.29 months of import cover) and $194.83 (0.7 months of import cover).

Malawi Investment and Trade Centre (Mitc) chief executive officer Paul Kwengwere earlier cautioned that if left unchecked, the perennial deficits could worsen the country’s current account deficits and pile pressure on the kwacha.

To rectify the problem, Kwengwere, whose organisation is mandated to provide policy direction on trade facilitation, said the country should focus on improving the current and capital account positions by increasing exports while simultaneously reducing imports.