Trade analysts have expressed mixed reactions on the potential impact of riots in South Africa on the Malawi economy.
The unrest follows the jailing of former South African president Jacob Zuma for contempt of court. In reaction, his supporters, especially in KwaZulu Natal and Gauteng, are looting businesses and damaging property.
In an interview on Wednesday, National Working Group on Trade Policy co-chairperson Frederick Changaya, who is also managing director of Applecore Grain & Milling Limited, described South Africa’s scenario as bad for Malawi because several value chains will be affected.
He said the supply lines will be frozen for some time and it may lead to short supply which could trigger price hikes.
Said Changaya: “We may experience stock outages and some of the products may run out completely.
“If the situation prolongs, it may lead to retrenchments in some shops in Malawi. It may also lead to shrinking demand for local products unrelated to those from South Africa and eventually shrinking local gross domestic product.”
But, on the other hand, he said the standoff could also be a blessing in disguise for Malawi to give a chance to locally made products to substitute the imports from South Africa on the shelves.
“The lesson is that Malawi should go into overdrive on import substitution. We need to industrialise quickly to reduce exogenous shocks that can negatively affect us for the upheavals in another country we rely on too much, in this case South Africa,” Changaya said.
Road Transport Operators Association executive director Chrissie Flao on Wednesday said a majority of transporters are stuck either on their way to deliver goods in South Africa or to transport goods to Malawi.
She cited transporters reportedly stuck at Beitbridge and Kempton Park in South Africa as they wait for the situation to calm down.
Flao said the transporters carry a wide range of goods from South Africa, including foodstuffs, building materials and motor vehicle spare parts while goods such as groundnuts, rice bran and tobacco hauled to the rainbow nation.
She said: “Due to the delays to transport goods in time, the impact on business is that we will incur extra costs in terms of upkeep for drivers among others”.
Flao also said in case of perishable goods there might be losses if there will be a prolonged period of wait.
In a written response, Ministry of Trade spokesperson Mayeso Msokera said they are monitoring the riots taking place in South Africa.
He said it is early to determine the extent which the riots could disrupt the supply of goods to Malawi and the impact on the economy.
Msokera said: “Nonetheless, the recent developments are worrisome because South Africa remains our key trading partner and our single largest source of imports.
“Any further escalation of violence, therefore, could disrupt the supply of goods and movement of trucks with transit goods from Durban port, which is among the main trade corridors for Malawi.”
He could, however, not ascertain quantities of essential goods that may be needed in the country if the unrest in South Africa prolongs.
Should the situation continue to deteriorate, Msokera said the ministry would encourage international traders and transporters to consider alternative routes and ports to transport goods, for instance, in Namibia, Mozambique and Tanzania.