2015: A bad year for business
It is undisputed fact that the just ending year has been a nightmare especially to the business community. This has been so as the business environment has not been conducive enough for players to grow as well as survive the harsh environment created by the ailing economy.
The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), and stakeholders such as Small and Medium Enterprises Association of Malawi (Smea) as well as global watchdogs like The World Economic Forum (WEF) and the World Bank, emphasised in various surveys that the operating environment for businesses in Malawi has not improved.
Empty promises
Earlier in the year, Minister of Industry and Trade Joseph Mwanamvekha promised the private sector that government would create and sustain a pro-business environment to make it cheaper, easier and faster to do business in Malawi by reducing regulatory burden and red-tape.
He noted that a successful private sector would translate into more economic activity, jobs and value addition, the benefits of which are multi-dimensional while government would benefit through increased tax.
To achieve that goal, the ministry embarked on reforms including pushing for enactment of business-related bills, including the Business Registration Act, Business Licensing Act and Companies Act.
But little has changed on the ground, exports declined as high cost of finance ate into business and erratic power supply slowed down production.
In an interview, Smea president James Chiutsi said: “The business climate has been punitive for small enterprises.
He cited rising bank rates, kwacha volatility, unfavourable tax regime for SMEs, an increase in transportation cost and high cost of communication services as all have hampered operations of SMEs.
“Frequent power outages have negatively affected SMEs productivity and several SMEs have been forced to close shop,” Chiutsi says.
It was therefore not surprising that on the 2015/16 Global Competitiveness Index, Malawi slipped three steps to 135 out of 145 economies. The index is the most comprehensive assessment of national competitiveness worldwide.
Asked to explain why the country performed poorly, Ministry of Industry and Trade spokesperson Wiskes Nkombezi, defended the performance saying that while the report is a good tool for advice, it has not taken into account the reforms government is implementing, which may not yield instant results.
He explained: “First it was the floods which disturbed output of crops which also affected trade. In addition, the floods had caused a lot of damage to the infrastructure which forced government to divert its resources towards rebuilding of infrastructure including roads and rails which are critical to the transport sector development. This in turn affected business performance.”
Gloomy future
In its Malawi 2015 Business Climate Survey Report, MCCCI warns that businesses should brace for tough 2016.
MCCCI says weaker and inconsistent implementation of policy interventions will affect the private sector next year despite policies and strategies the country is implementing.
The report says challenges affecting businesses have remained the same over the years competing on the ratings with the cost of doing business, electricity, telecommunications, uncertainty in economic and regulatory policies, and crime remaining the major obstacles to doing business in the country.
Not much will change, MCCCI warns. n
