One of the firms exporting through the African Growth Opportunity Act (Agoa) to the United States (US) has decried the macroeconomic environment in Malawi and fears possible closure of the company should the situation not change.
Win-Win Garments, a textile company operating in the Chirimba Industrial area in Blantyre, stated that due to the macro economical hindrances, the company has reduced its workforce from 3 500 to 600 people.
In an e-mail response to Business Review questions last week, the company’s director Arpo Chang highlighted that due to the landlocked status of Malawi and lack of a port, transportation takes longer for Malawian commodities than for other countries who enjoy the comparative advantage of advanced infrastructural development. He said this is costly.
Said Arpo: “Our buyers just give us 120 days to 130 days delivery after they have issued an order for us, but according to these problems, we need 150 days delivery.”
The company imports its raw materials from foreign markets and adds value to them before exporting as finished products to the US.
According to Arpo, the failure of local garment manufacturing companies to provide the material they need for production also dents the company’s operations.
Development economists have in the past emphasised the need to develop road and rail network that would make the transportation easy for Malawi and its trading partners.
Currently, Win-Win Garments is the only firm from Malawi exporting textiles to the US market through Agoa, which is dominated by textiles in as far as trade between the two countries is concerned.
Malawi Revenue Authority (MRA) head of corporate Affairs Steven Kapoloma was surprised with the concerns on delays, saying with the switch to electronic system, there is even more faster clearance now than before.
Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira said they were not aware of any systems change that could delay exporting.
He said RBM is only involved in the exporting process where exporters declare their exports and reconcile with proceeds, which he said the company fully complies with.
However, the Agoa exports have been showing a declining trend since 2014.
Agoa is one of the many strategies by the US government to promote exports from African countries.
The Agoa trade agreement gives duty-free benefits to selected African countries to export to the US market.
From the local scene, export processing firms are exempted from all duties, which include import duty, excise tax and value added tax (VAT) on capital machinery, equipment and raw materials directly used in production. n