Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says businesses should brace for weaker and inconsistent implementation of policy interventions that affect the private sector due to financial gaps in the 2015/16 National Budget.
Recently, Malawi registered an improvement on the World Bank Doing Business Report (2016) by jumping three steps to 141 from last year’s 144 despite slipping three steps on the World Economic Forum Global Competitiveness Index to 135 out of 145 economies.
But in its Malawi Business Climate Survey Report 2015 launched in Blantyre yesterday, MCCCI said despite policies and strategies the country is implementing, it is not clear what will drive the economy and private sector development.
Reads the report in part: “Out of all interventions put forward by authorities, restructuring of the economy is not taking shape which signifies that unless own resources are directed at what are termed priorities for the economy, economic transformation will be far-reached.”
The report, while pointing out a number of obstacles in doing business across the sectors, ranging from business competitiveness to regulatory policy and operating environment, notes that the challenges affecting businesses have remained the same over the years competing on the ratings.
According to the report, the cost of doing business, electricity, telecommunications, uncertainty in economic and regulatory policies, and crime are the major obstacles to doing business in the country.
“Over the years, the cost of finance has remained one of the top three obstacles and it has been rated the second most challenging factor to doing business in 2012 and third in 2013 and 2014 respectively. Lending rates in Malawi have remained extremely high since 2012 despite being cited as a major investment impediment over the years,” reads the report.
The report has also bemoaned the cost of telecommunications in the country, which it says “is becoming a serious problem to the businesses in their everyday operations. This is in respect of it being one of the major drivers of business sector growth in the economy.”
According to the report, uncertainty in economic regulatory policies is an obstacle as this may result into a crippled and inefficient business sector.
Crime and theft of companies’ assets as well as insecurity of lives for the investors continues to be a major threat of businesses both in cities and rural areas of the country, according to the report.
In October this year, the International Monetary Fund (IMF) declared its economic programme with Malawi, the Extended Credit Facility (ECF), off track after the country failed to meet set targets for end-June 2015.
IMF also revised downwards Malawi’s economic growth rates for the year from an earlier projection of 5.5 percent to three percent, reflecting a steep decline in maize harvest in addition to weak private sector investment and consumption.
Recently, the country failed to attain its planned targets that could have picked up the economy and also support the private sector growth when the country failed to meet the International Monitory Fund (IMF) requirements which could have won back donor support. n