The trade deficit, the difference between how much a country imports and how much it exports, as widened to 26 million British pounds (about K28 billion) in 2020, a situation trade analysts says calls for Malawi to move from traditional exports.
Data from the United Kingdom’s Department for International Trade on trade and investment between the UK and Malawi published on May 14 2021 indicate that Malawi imported goods and services worth 60 million British pounds (about K60 billion) from the UK in the four quarters to the end of fourth quarter (Q4) of 2020.
This is an increase of 15.4 percent or eight million British pounds (about K8 billion) compared to the previous period.
In contrast, the Malawi exported goods and services worth to 32 million British pounds (about K32 billion) to the UK in the four quarters to the end of Q4 of 2020—a decrease of 15.8 percent or six million British pounds or about K6 billion compared to the previous year.
Reads the Malawi trade and investment factsheet in part: “Of all UK imports from Malawi in the four quarters to the end of Q4 2020, £24 million [about K24 billion] or 75 percent were goods and £8 million [K8 billion] or 25 perent were services.
“In the same period, UK imports of goods from Malawi increased by 33.3 percent or 6 million British pounds [about K6 billion] compared to the four quarters to the end of Q4 2019 while UK imports of services from Malawi decreased by 60 percent or 12 million British pounds [about K12 billion] compared to the four quarters to the end of Q4 2019.”
During the review period, road vehicles other than cars, office machinery, scientific instruments, cars and other manufactures topped the list of Malawi’s imports from the UK.
On the other hand, coffee, tea and cocoa; vegetables and fruit, sugar, furniture (consumer) and cereals topped the list of Malawi’s imports to the UK.
The figures show that the total UK market share in Malawi stood at 2.5 percent in 2019 for goods and services. This is an increase of one percentage points from 2018.
In an interview on Wednesday, National Working Group on Trade and Policy Frederick Changaya said Malawi needs to replace traditional exports of produce with high-value added products.
This he said, calls for an overdrive into industrialisation and not export trading.
He said: “UK or not, our problems are the same. We export cheap produce and import high-value spare parts, for example. That’s a recipe for deficit. Of course, Covid-19 played a part in the reduction. But largely it is about the structure of our economy.
“Malawi needs to help factories to grow to a level where we can substitute imports. Further Malawi needs black participation in that industrialisation drive. No country develops when its people are excluded from value added goods production. So, you will see that though it appears far away, development and deficit reduction would take a few policy instruments and a few support actions.”
Speaking earlier, British High Commissioner David Beer advised Malawi to focus on unleashing the power of the private sector to create growth and substitute low-value with high-value crops in the Affordable Inputs Programme.
He advised government to look at shifting its resources and energies away from subsidised agricultural inputs on low-value crops and towards a policy mix centred on key infrastructure such as energy, irrigation and transport, and policies that create a more predictable business environment and lower costs.
“I do not pretend this shift will be easy. Tough decisions are needed. Government cannot, and should not, try to do everything. The private sector is the engine of growth and this requires government loosening its grip on some key sectors,” said Beer.