A study has found that the decision by the United Kingdom (UK) to withdraw from the European Union (EU), popularly referred to as Brexit, will have far-reaching economic implications on Malawi.
The study by the German Development Institute (DIE) says Malawi is among the world’s 49 least developed countries that have been enjoying Everything But Arms (EBA) initiative from the EU under which all imports that enter the EU single market are duty-free and quota-free, with the exception of arms.
However, the study entitled How Brexit Affects Least Developed Countries dated February 2019, says regardless of the final outcome of the current negotiations, Brexit implies fundamental changes in the British trade regime concerning third world countries such as Malawi.
“Moreover, Brexit may cause the number of those living in extreme poverty to rise by nearly 1.7 million in all EBA countries,” reads the report.
It is estimated in the study that 3.4 percent of Malawi’s total exports enter the UK market and this roughly means K30 billion in export earnings could be lost due to Brexit, basing on Malawi’s total exports valued at K807 billion.
In an interview yesterday, Malawi Investment and Trade Centre (Mitc) chief executive officer Clement Kumbemba, while saying he is yet to see the contents of the DIE study, expressed optimism that the UK will remain significant to Malawi because of strong historical ties.
“The UK is an important partner to Malawi. Of course figures show that it is Germany which is Malawi’s major trade partner in the EU because of tobacco exports, but we continue to export a lot of products to UK such as tea and rice under the Fairtrade agreement,” he said.
Malawi is a former British colony.
The DIE is a multidisciplinary research, policy advice and training institute for Germany’s bilateral and multilateral development co-operation. n