Malawi’s trade balance, the difference between the monetary value of a nation’s exports and imports over a certain time period, has narrowed amid a declining imports and exports, National Statistical Office (NSO) figures has shown.
In its published August 2020 Monthly Statistical Review, NSO figures showed that as of May 2020, trade balance narrowed to a deficit of K91.8 billion from a deficit of K109.2 billion the same period the previous year.
Imports declined to K119.1 during the period under review from K179.3 billion the same period last year while exports declined to K27.3 billion from K70.1 billion.
Fertiliser (K5.9 billion), diesel (K3.4 billion) and petrol (K3.2 billion) topped Malawi’s imports while tea (K30.2 billion), nits (K7.9 billion) and tobacco (K4.1 billion) topped the country’s export basket.
Minister of Trade Sosten Gwengwe recently observed that Malawi’s export basket has been very narrow and concentrated on a few primary products, and with less focus on growing the trade in services.
He said: “My vision, therefore, is to see a sustained growth in exports for both merchandise and services trade, like tourism, accounting, banking and insurance, legal and education services.
“Furthermore, we also need to expand the market outreach for Malawi by exporting these goods and services to even more countries.”
This is coming at a time when Malawi, through the second National Export Strategy (NES II), which will cover the period between 2020 and 2025, aspires to reduce the trade deficit by 25 percent from negative $1 827 060 in 2018.
On fiscal side, the strategy aspires to increase government funding to export promotion by 40 percent from while doubling foreign direct investments by 2025 from $102 000 in 2018.
The trade gap exists on the back of the country having strategies such as National Export Strategy, Malawi Growth and Development Strategy (MGDS) and Buy Malawi Strategy (BMS) to ensure import substitution.
In the MGDS III, for instance, government plans to narrow the trade deficit in the next five years to two percent of GDP in 2022 from 2.5 percent in 2018.
National Working Group on Trade Association chairperson Frederick Changaya said lack of diversification and politicisation of trade policies is stiffing trade activities in the country.
He observed that the seasonality of agricultural exports and the Covid-19 cannot the only reasons for the colossal trade balance.