Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says the country needs to invest in manufacturing infrastructure and pursue an export-oriented strategy that provides quick-wins to tame the rising trade deficits.
MCCCI president James Chimwaza said this in an interview on Sunday in the context of published National Statistical Office (NSO) figures indicating that the country’s trade balance worsened over a 10-year period to K1.4 trillion in 2020 from K159 billion in 2010.
He said the widening trade deficit has eliminated manufacturing sector jobs and has had a negative impact on the country’s foreign exchange reserves.
“We need to pursue an export-oriented strategy that provides quick wins and at the same time build our industrial sector to reduce imports that can easily be produced locally,” said Chimwaza.
He said there is also need to intensify initiatives for import substitution of products and services.
“Wherever possible, we should aim to fulfil the local demand with local supply whereby with specialisation, we may ultimately supply the same abroad,” said Chimwaza.
According to an NSO Trade Statistics Brief for July to December 2020, Malawi has in the past decade seen imports rise threefold from K325.8 billion in 2010 to K2 trillion in 2020 while exports rose threefold from K166.7 billion to K574.6 billion, creating a negative trade balance of K1.4 trillion.
Between July and December 2020, for instance, Malawi’s trade balance gap increased to K831.8 billion with imported merchandise at K1.18 trillion while exported merchandise stood at K326.6 billion.
In terms of markets, European Union (EU) was the major destination for Malawi’s exports in the review period with total exports amounting to K152.1 billion, followed by the Southern African Development Community and Common Market for Eastern and Southern Africa at K65.6 billion and K59.6 billion, respectively.
Ministry of Trade spokesperson Mayeso Msokera said in an interview last week that the ministry is banking on the National Export Strategy for a turnaround and the commencement of trading under African Continental Free Trade Agreement, which will cover a market of 1.2 billion people and estimated $3 trillion in combined gross domestic product, to boost exports through the expanded market.