The Economics Association of Malawi (Ecama) has decried the country’s low levels of investments which it say is below the Sub-saharan Region (SSR)’s 20 percent average.
Published figures from the International Monetary Fund (IMF) World Economic Outlook (WEO) indicate that Malawi has one of the lowest rates of total investment in SSA, with the average rate standing at 14.9 percent of gross domestic product (GDP) from 2000 to 2017.
The figure is considerably lower than that of neighboring Tanzania (24.5 percent) and Zambia (34.7 percent).
But in a written response to a questionnaire on Wednesday, Ecama executive director Maleka Thula said as a consequence, the investments made may not provide meaningful impetus for the country’s growth.
“With unstable economic environment, it is difficult for local and foreign investors to make meaningful investments and even for new investors to invest in the country. On supply side challenges, factors like power supply shortages, unpredictability and volatility in agricultural productivity, poor legal systems and deep-rooted corruption act as bottlenecks to thriving of private sector.
“Besides, there is also poor mindset set that breeds and perpetuates dependency where households and private sector in general expect government to solve all the problems with themselves doing little and in most cases nothing,” he said.
Catholic University dean of Social Sciences Gilbert Kachamba observed that a lot of Malawians are risk averse, a situation which has affected income generation opportunities.
“We are afraid to take huge risks that will bear something good for the economy because we are rise averse and the income that a lot of Malawian earn is very small which all lead to low private sector investments in the country,” he said.
The World Bank, in its June 2019 Malawi Economic Monitor observes that in the past, both public and private investment have been undermined by macroeconomic instability, which has reduced the certainty needed for investors and driven up interest rates.
“Unreliable and limited energy and water supply, as well as high transport and trade costs, further constrain diversification and growth. High transportation and trade costs are a significant impediment, particularly with Malawi’s landlocked status and small domestic market. These factors limit investment and foreign direct investment (FDI), reduce competitiveness, raise the cost to acquire low-cost inputs, and impede the growth of small-scale value addition to agricultural products,” reads the report in part. n
