The Common Market for Eastern and Central Africa (Comesa) has warned commodity dependent countries such as Malawi to brace for tough times as demand for exports globally is poised to falter.
Comesa also warns that the manufacturing and industrial sectors within the trade bloc are on the verge of being severely impacted by a decreased supply of key components from China, Europe and America, owing to the disrupted global chain in the wake of coronavirus (Covid- 19) spread.
Comesa secretary general Chileshe Mpundu Kapwepwe said in a statement on Monday reduced imports of manufactured products, input supplies, travel restrictions and foreign direct inflows (FDI) are likely to put further constraints on growth and development, among member States, adding that countries must brace themselves for increased disease social and financial burdens.
“In the tourism sector, countries will experience reduced incomes generated from meetings, incentive travel, conventions and
“Reductions in investments in the tourism sector in several African countries is inevitable following massive restrictions on travel and social activities across the world,” said Kapwepwe in the statement.
She also said reductions in input supplies provides yet another opportunity for manufacturing companies in Comesa and Africa as a whole to expand production and supply the continental market under the frameworks of existing regional economic communities (RECs)and the wider continental free trade area.
On the way forward, Kapwepwe said Comesa recommends that Central Banks in member states should keep interest rates low to encourage private sector, including small and medium enterprises (SMEs), borrowing to stimulate domestic production and consumption.
The European Union (EU), China and US are the biggest sources of imports into Comesa countries including Malawi, accounting for 32 percent ($ 48 billion), 20 percent ($ 29.4billion) and 8 percent ($12 billion) share of total imports respectively as of 2018.
To date, EU remains Malawi’s biggest export market, receiving over 39 percent of Malawi’s exports worth $382 million (about K283 billion) as at 2018, according to a 2019 Government Annual Economic Report.
Currently, the EU grants Malawi unilateral preferential market access under the Everything But Arms (EBA) initiative, initialised in 2001 to give 49 LDCs full duty- and quota-free access for all their exports, with the exception of arms and armaments.
Malawi is also enjoying a preferential trade agreement under the African Growth and Opportunity Act (Agoa), while also enjoying several other bilateral trade regimes with China, South Africa, Zimbabwe, Mozambique, and Botswana.
Ministry of Trade, Industry and Tourism spokesperson Mayeso Msokera admitted that coronavirus outbreak is likely to affect volumes of trade between Malawi and its major trading partners, who are adopting measures to mitigate the spreading of the virus.
Msokera was, however, quick to say for now there is no any significant impact on the availability of the country’s strategic imports as supply chains are still functional. “This will certainly lead to a slowdown in business, as cross border traders will be unable to travel due to fears of being infected by coronavirus or restrictions imposed by some countries,” he said .