Manufacturing share of GDP still low—report
Manufacturing sector share of Malawi’s domestic gross product (GDP) has failed to pick up since the country started implementing the Sustainable Development Goals (SDGs) in 2015.
The SDGs, which are being implemented through the country’s overarching medium-term national development strategy, the Malawi Growth and Development Strategy (MGDS) III, aspires to increase the sector’s contribution to GDP to 19.2 percent by 2030.
On the other hand, government wants to grow the sector’s contribution to GDP to 25 percent as outlined in the MGDS III.
However, despite this, manufacturing sector’s contribution to GDP has declined by 0.6 percentage points from 9.6 percent in 2015 to nine percent in 2020.
Malawi Confederation of Chambers of Commerce and Industry head of business environment and policy advocacy Madalitso Kazembe said in an interview on Monday that it is unlikely for the sector to register growth in view of the prevailing challenging environment.
She said over the years, Malawi has pursued non-strategic trade and industry policy adjustments with adverse consequences on manufacturing production for both domestic consumption and export.
Said Kazembe: “Government incentives to stimulate manufacturing have proven to be inappropriately conceived and it appears the country does not have a clear strategy on manufacturing as evidenced by the lack of consistency in policy intervention by government.”
She said the sector continues to be face chronic challenges such as energy, long-term finance, infrastructure challenges and lack of strong market regulation for consumer goods.
In its 2020 Competitive Industrial Index, United Nations Industrial Development Organisation rates Malawi as a laggard, ranking at 143 against 152 countries.
On value addition and exports, the country is the sixth least competitive at 148 and 144, respectively.
The poor performance comes despite having policies such as the National Export Strategy and National Industry Policy focusing on promotion of value-addition of primary commodities and manufacturing.
Minister of Industry Roy Kachale observed on Tuesday that to revive the manufacturing sector, there is need to relook at import substitution, empowering productive cooperatives with access to capital, training and markets, revatalising value chains and wooing investors.
