The continued influx of foreign traders in the rural areas of Malawi is threatening the survival of small-scale businesses to o lack of competitive advantage, Business News has learnt.
One of the small-scale businesspersons in Karonga, Regina Mwenitete said local businesses are finding it hard to compete with foreign businesses, including Chinese retailers, because of pricing.
She said: “I get my goods from Tanzania, and I am taxed for the same. However, things are a bit difficult here because we can’t stand up to prices being offered by the foreign traders.
“As a result, we have stocks piling while customers are rushing for the cheap products being offered by our competitors.”
Gift Banda, a small-scale trader from Mangochi, said although he tries to take advantage of the cheaper prices being offered by the foreign firms, it is difficult to sell the stocks once customers discover the shops offering cheaper stocks.
In Karonga, for instance, a skirts costs an average of K3 000 in a foreign owned shop fetches an average of K6 000 in local shops.
Blouses cost an average of K2 000 in foreign shops but the same fetch between K3 000 to K4 000 in local shops.
Chamber for Small and Medium Enterprises executive secretary James Chiutsi blamed laxity on the part of the authorities for the situation, which he said is pushing many small-scale businesses out of business.
He said in addition to the fact that most of foreign firms also offer higher rentals, forcing small-scale businesses to be unfairly evicted from their business premises.
According to the Business Licensing Act, it is illegal for business operators who are not citizens of Malawi to do their retail business in townships and rural areas.
The Act empowers the Ministry of Trade to licence all Foreign owned businesses whereas, Businesses owned by Malawians are licenced by the Local Authorities.
They are supposed to operate in central business districts (CBDs) of designated places such cities and municipalities which include Blantyre, Zomba, Lilongwe, Mzuzu, Kasungu and Luchenza.
“Unless a special approval is obtained from the ministry, any person who carries on a business in contravention to this provision commits an offence punishable by law.
“However, our inspection team will be undertaking a routine inspection to flush out all illegal traders,” said Ministry of Trade spokesperson Mayeso Msokera in a written response on Saturday.
He added that his ministry will be undertaking a routine inspection exercise to flush out illegal traders in the country.