Malawi-intra Africa trade gap widens
The negative trade gap between Malawi and regional trade blocs such as Common Market for Eastern and Southern Africa (Comesa) and Southern Africa Development Committee (Sadc) continues to widen, with new figures showing a $461 million (about K336 billion) last year.
This means that Malawi continues to import more from the Comesa and Sadc countries as compared to exporting.
According to figures the Trade and Law Centre (Tralac) has released this week, Malawi exported $297 million (K216 billion) worth of goods compared to imports at $758 million (about K553 billion).
The country’s worsening trade balance comes despite various policies and strategies such as the National Investment Policy, National Export Strategy (NES), an updated micro small and medium enterprise (MSME) policy and the Buy Malawi Strategy promoted by the government to counter the situation.
Economic commentator Gilbert Kachamba in an interview with Business News called for the need to diversify the country’s exports, saying this would help address the supply side constraints.
He said Malawi has a low export base where a few products that are exported are not processed which in the end attract low returns.
“Malawi also has other constraints other than the low export base. Some of these include the high cost of production which has made our exports become uncompetitive on the international market,” he said.
According to the Tralac figures, South Africa, Tanzania and Egypt are top export destinations for Malawi with a combined share of 63 percent of Malawi’s total intra-Africa trade.
In terms of import sources, South Africa accounted for 60 percent of Malawi’s imports in 2017.
With regards to export products; raw tobacco, oil cake (animal feed), tea, groundnuts, and soya beans topped the list accounting for 75 percent of Malawi’s total intra-Africa exports.
On the other hand, unmanufactured tobacco, tobacco refuse, cement, mineral or chemical nitrogenous fertilisers and pesticides and herbicides topped imports list accounting for 33 percent of Malawi’s total intra-Africa imports.
Currently narrowing trade balance is among the government’s plans in the next five years as outlined in the Malawi Growth and Development Strategy (MGDS) III.
Through the strategy, the government is targeting to narrow the trade balance by 0.5 percentage points to two percent of GDP in 2022 from 2.5 percent this year.
