The continued political impasse arising from recently held elections may have a negative effect on the country’s economic growth pegged at five percent, a local investment and advisory firm has warned.
Malawi held tripartite elections on May 21 this year . Currently, a panel of five High Court judges sitting as the Cosntitutional Court is hearing a petition seeking nullification of presidential election results over alleged irregularities.
Besides the court case, Human Rights Defenders Coalition (HRDC) has been holding a series of demostrations to push for the resignation of Malawi Electoral Commission (MEC) chairperson Jane Ansah and her commissioners for allegedly presiding over a flawed electoral process.
The protests has grounded business to a halt in the country’s major cities. There is fear and uncertainity everytime demonstrations are held.
In its monthly economic report for September, Nico Asset Managers said the demonstrations which are affecting business activities, tourism industry, investors’ and donor confidence could ultimately affect the country’s gross domestic product (GDP).
“Apart from good performance of the agriculture sector, the real GDP growth of five percent for 2019 is underpinned by growth in different economic activities but if the political impasse is prolonged, the effect on the economic growth of the country will be felt,” said the firm.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) head of real sector and economic policy Hope Chavula said business performance has slowed to uncertainity.
“No business can thrive in an environment full of uncertainties. We have actually cited this in our Business Climate Survey as a major obstacle to doing business in Malawi. No one would want to invest in an environment where the future looks husky,” he said.
Cross Border Traders Association of Malawi president Esther Tchukambiri also told Business News that business is presently slow because people are not patronising cities because of fear of the unknown.
Speaking separately, University of Malawi’s Chancellor College economics lecturer Lucius Cassim said the current election conflicts are affecting not only revenue collection, but also businesses performance.
Presently, Reserve Bank of Malawi (RBM) figures indicate a drop in revenue collection in August by K13.2 billion to K81.4 billion, with tax revenue and non-tax revenue underperforming and dropping by K11.1 billion and K2.1 billion, respectively.
Treasury spokesperson Davis Saddo admitted that there is a correlation between stability and good economic performance, highlighting that the political impasse has led to occurrences which deter peace required in doing business. He said the ministry is observing the current situation and is still optimistic the economic targets set for this year will be achieved.