Plan to cut imports, exports costs by 40%

Ministry of Industry, Trade and Tourism has touted the newly-launched National Trade Facilitation Action Plan, saying it will help to reduce imports and exports cost by 40 percent in the next four years.

The plan intends to achieve the target by bringing radical simplification and harmonisation of all trade-related procedures, including the single integrated information system or electronic single window.

This, according to the action plan, will attract foreign investors as they will be allowed to easily import goods.

But National Working Group on Trade Policy chairperson Fredrick Changaya, while welcoming the initiative, challenged Capital Hill that reducing the cost of importing and exporting goods is not a panacea to Malawi’s dismal trade performance, saying persistent power outages and high cost of financing are

some of the key challenges hindering competitiveness.

Speaking during the launch of the plan in Lilongwe on Friday, Minister of Industry, Trade and Tourism Francis Kasaila said the country’s geographical position poses challenges in terms of trade competitiveness; hence, the plan will ensure enhanced ease of doing business.

He said: “As a landlocked country, Malawi is facing unique and daunting challenges in its endeavour for economic development and growth.

“The land-lockedness slows down competitiveness due to high cost of doing business because we are isolated in territorial access to the sea.”

The minister said most of the trade facilitation aspects fall under trading across the border index on the World Bank Doing Business ranking where Malawi is performing relatively well at 111 out of 189 countries in 2019.

But he acknowledged that the country should implement more interventions through the action plan to be within the top 100 bracket.

But Changaya said government needs to sort out the real challenges making Malawi uncompetitive on the continent and beyond.

“Malawi’s problem is not the time it takes to export to its neighbours or the cost for transporting goods and services, these are not major impediments we have as a country.

“The major challenges we know them as insufficient energy and the cost of finance, among others. What they are dealing with in the action plan are enablers to business,” he said, stressing that government is treating and healing the symptoms of the real problem to reduce the pain of the economic disease.

Changaya said the country also needs to look at revamping the rail transport sector to reduce transportation cost, bearing in mind the land-lockedness of Malawi is impeding the progress on the ease of doing business.

He said consumers are always sensitive to prices of goods and services, most Malawians like buying foreign products because they are cheaper compared to those produced locally as they are subjected to high cost of production, making them less competitive on the market.

Recently, Malawi Confederation of Chambers of Commerce and Industry (MCCCI) head of real sector and macroeconomic policy Hope Chavula said the cost of doing business in Malawi is expensive, citing production and transportation costs as among the key drivers.

He said this makes  doing business expensive, effectively affecting economic growth and development. n