Tobacco continues to dominate exports
For over a decade since the country launched an export diversification drive to boost exports and reduce concentration risk with tobacco dominance, the commodity continues to increase its influence, it has been established.
Reserve Bank of Malawi (RBM) data shows that in the past four years has seen tobacco proceeds as a share of total exports increased from 49 percent in 2019 to 66 percent in 2023.
However, RBM said it is optimistic that the emergence of mining investments will turn the fortunes in the short-term once they start operating.
RBM director of economic policy and research Kisu Simwaka said in an interview on Wednesday that there are some emerging exports that are increasing such as pulses and mineral exports that give the country hope for a turnaround.
“We see increased investments in mining sector and that will obviously diversify the export base. But there is also an increase in pulses,” he said.
RBM Financial and Economic Review isolates two commodities tea and sugar, as products that could also help to supplement foreign exchange from tobacco.
In 2023, Malawi exported $484.4 million (about K848 billion) worth of tobacco with the second largest export commodity being tea at $78.7 million (about K123 billion) while sugar came third at $51.7 million (about K90 billion).
However, while exports revenue for tea has increased gradually 2019 from $58 million (about K101 billion) to $78 million (about K137 billion), sugar has been struggling to keep momentum, dropping from $62.6 million (K109 billion) in 2019 to $51.7 million (about K90 billion) in 2023.
Cotton, on the other hand, has also struggled in exports, dropping from $29.6 million (about K50 billion) in 2019 to $4.5 million (about K8 billion) in 2023, according to RBM data.
Tobacco’s dominance appears to be carrying on in 2024 as the first quarter has already seen exports reaching $85.6 million (about K149 billion), a record high in that period compared to the past four years.
However, Minister of Industry and Trade Sosten Gwengwe said in an interview on Wednesdahy said government wants to ensure that exports are on value-added products with China as one of the targeted markets.
He said the current engagement with Chinese investor aim at courting Chinese firms to come and set up factories to add value to some key crops, targeting macadamia nuts and soya beans.
But Gwengwe decried productivity issue that undermine export increase and diversification, but hoped that the current efforts on the establishment of megafarms will avert the situation.
On the area of productivity, Mwapata Institute executive director William Chadza said in an interview on Wednesday that climate-related shocks have also put a toll on agricultural output,thereby affecting the country’s export potential.
