Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says private sector capacity utilisation has been on the decline since 2014, contrary to government claims that there has been an increase between June and December 2016.
Presenting the 2016/17 Mid Year Budget Review Statement in Parliament last Friday, Minister of Finance, Economic Planning and Development Goodall Gondwe said private capacity utilisation has gone up to 68.5 percent which signifies a possible economic turn-around.
Said Gondwe: “In particular, during this period [July and December 2016], there has been a marked decline in inflation which resulted in a three percentage point reduction in the Reserve Bank [of Malawi] policy rate, while the exchange rate has remained relatively stable.
“Another significant indicator of a possible economic turnaround is that capacity utilisation has increased from 57.8 percent to 68.5 percent during the period, suggesting an increase in private sector confidence,” he said.
But in an interview on Wednesday, MCCCI chief executive officer Chancellor Kaferapanjira said capacity utilisation has been on a downward trajectory since 2014 and is now at 58.5 percent.
“From our survey, the Malawi Business Climate Survey, the Business Confidence Index—a qualitative index of scores of enterprises’ assessment of current as well as future expectations of business climate indicators, plummeted from 65 percent to 58.5 percent in the last six months of 2016 from July 2016,” he said.
Kaferapanjira described the period between July to December 2016 as “really lost half year”.
“There was no doubt notable improvement in the security situation, but the rest of the factors that affect businesses were seriously disturbing. Electricity continued to be a real problem—because of continued dependency on nature and misdirection of Escom resources from investment in core functions.
“We would expect the government to do something rather than telling everybody including the private sector to be patient. What we need is action, not words. We have submitted a portfolio of issues that we want resolved and a government that calls itself to be a ‘listening government’ must respond positively. The private sector is ready to make its contributions to the economy,” he said.
MCCCI said the private sector is reeling from various constraints to growth, including an opaque exchange rate management regime, high interest rates and lack of infrastructure, among many other challenges.
Meanwhile, Electricity Generation Company of (Malawi) Limited (Egenco) has warned the public and manufacturers that as a result lack of rainfalls in the second week of February they should expect electricity load shedding.
Egenco said it can only produce about 250 megawatts (MW) of electricity against suppressed demand of 350 MW due to inadequate water supply for power generation at the power stations.