Trade, the act of buying and selling goods and services, is the buzzword in today’s world.
From individual countries to regional economic groupings as well as multilateral institutions, they are all talking about trade. Trade is one major source of foreign currency for countries.
In fact, the World Bank Group describes trade as a golden key towards ending global poverty as countries that are open to international trade have tended to grow faster, become innovative, improve productivity and provide higher income as well as more opportunities.
No country is an island. They are all dependent on each other. That is the reason countries such as Malawi are striving to get the best out of international trade through various bilateral and multilateral trade agreements. This is because the terrain in international trade is not for the faint-hearted, but characterised by cut-throat competition for foreign direct investment (FDI).
Political will at the highest level has become one of the golden keys to unlock trade and investment deals. This is the reason most global political leaders trot from one capital city to another to lend some weight to their countries’ bid for investment and trade.
In the same spirit, African leaders, including our own President Lazarus Chakwera on Monday took the opportunity to personally attend the official opening of the week-long Intra-African Trade Fair 2021 in Durban, South Africa.
Vice-President Saulos Chilima is also in Dubai, in the United Arab Emirates for the 2021 Dubai Expo, a platform that links potential investors. It is Malawi Day at the Expo this Saturday and I am hopeful that the business delegation will do the needful to convince some FDIs.
If truth be told, Malawi needs more meaningful FDIs, not mere trading by some ‘illegal’ foreign nationals who have for some time masqueraded as investors.
Malawi has not generally performed well in international trade, where it always has a negative trade balance or deficit regardless of which country or economic bloc it is dealing with, meaning that we are importing more goods and services than what we exporting in return. This, practically means that, as a country, Malawi is “exporting jobs” by buying more foreign-manufactured goods and less locally-produced products, thereby consuming huge volumes of foreign exchange.
Platforms such as the Intra-African Trade Fair and the Dubai Expo allow companies to showcase their products and even strike potential partnership deals for expansion as well as penetration into other markets. The Intra-African Trade Fair is also an important element in the implementation of the African Continental Free Trade Agreement (AfCFTA) which rolled out in January this year.
The AfCFTA agreement has a continental free-trade zone with a combined gross domestic product (GDP) of $3.4 trillion, according to the African Union (AU). It is one of the flagship projects of the First Ten-Year Implementation Plan (2014-2023) under the AU’s Agenda 2063, ‘The Africa We Want’.
During the Durban fair, Chakwera aptly said that to make intra-African trade a reality, there is need to make border procedures intra-African. He said the same should apply to transport infrastructure, including buses and airline routes.
To realise the objectives of the AfCFTA, African countries will need to remove or simplify barriers that frustrate free trade among themselves.
They say charity begins at home, but this is not happening among African countries in terms of trade. For instance, in 2019 intra-Africa trade accounted for 15 percent of Africa’s total trade. It was the same situation in 2018 and, in fact, the past 10 years with the exception of 2015 when it hit 19 percent and in 2016 at 20 percent.
Trade contributes to eradication of hunger and poverty by reducing the number of people suffering from hunger and those living on less than one dollar a day.
The statistics indicate that African countries trade more with other regions than among themselves. Of course, globalisation and trade present new opportunities, but there are challenges as well, including poor transport and logistics networks, poor telecommunications connectivity, anti-competitive behaviour and complicated regulatory environments or non-tariff barriers.
To narrow the ever widening trade deficit, it is critical that Malawi embarks on large-scale value addition.
There is also need for greater political will towards implementing policies that support trade, industry and the private sector. These include the Private Sector Strategy, National Investment Policy, National Export Strategy and the Buy Malawi Strategy. Malawi also needs aggressive implementation of the import substitution policy and industrialisation.
When these and many more are put in place, we will proudly say Malawi is fully open for business.