Malawi’s Agoa exports still under pressure
Malawi’s exports to the United States (US) through the African Growth and Opportunity Act (Agoa) remain under pressure with latest statistics pointing that Malawi exports slipped again last year.
This is despite the country having the National Agoa Response Strategy, which seeks to increase exports from Malawi to the Agoa trade window by about 20 percent in the next five years.
The strategy provides a comprehensive plan for increasing exports from Malawi to the US market under the Agoa non-reciprocal unilateral trade preference programme.
But according to the World Trade Organsiation (WTO) report of the government of the US for the year 2018, Malawi’s contribution to the Agoa fell to 0.29 percent of its global share in the trade act, which has 164 members.
The trade statistics by the WTO shows that in 2018, US imports under Agoa fell 11.8 percent from $12.2 billion to $10.8 billion where Malawi reaped $31.1 million (about K23.2 billion) down from $35. 62 million (about K 26.7 billion) it realised in 2017.
Economic commentators and a Ministry of Industry, Trade and Tourism official have since blamed the country’s production levels and lack of diversification for the declining trends.
Catholic University dean of students and economic commentator Gilbert kachamba notes that for Malawi to fully enjoy the benefits of being part of Agoa, it needs to diversify its exports as this would help address the country’s supply side constraints.
He said Malawi has a low export base where the country’s few products that are exported to the USA with most of them not processed which in the end attracts low returns in value.
“Malawi has other constraints other than the low export base. Some of these are the increase in cost of production, which has made our exports become expensive as compared to their exports from other countries targeting the same market.
“This may be due to the business environment in Malawi coupled with up and down movements of the currency experienced recently. It is, therefore, important that government critically looks into such issues because the Agoa window is something we cannot afford to be missing out on,” he said.
Principal Secretary in the Ministry of Industry, Trade and Tourism Ken Ndala told Business News last week, government believes the way forward to boost and highly utilise available export markets is for firms to consider focusing and repositioning towards expanding production.
