Negative trade balance widens
Malawi’s negative trade balance continues to widen despite various policy interventions to narrow the deficit, a National Statistical Office (NSO) report has shown.
A negative balance of trade occurs when a country’s imports exceed its exports.
According to NSO December 2016 quarterly statistical bulletin released on Tuesday, Malawi imported more that it exported during the period under review.
The report indicates that as at September 2016, Malawi’s trade deficit stood at K52 billion up from K31.5 billion during the same period last year.
In total, imports soared to K116.8 billion up from K101.5 billion the same period last year while exports slowed to K64.8 billion from K70 billion the same period last year.
According to the report, during the period under review, European Union (EU) was Malawi’s main exporter at K97.3 billion, followed by Southern African Development Community (Sadc) at K24.6 billion, then North America at K20.8 billion and Common Market for Eastern and Southern African (Comesa) at K10.8 billion while exports from neighbouring countries accounted for K8.3 billion.
On the other hand, Sadc emerged Malawi’s main importer at K163.5 billion followed by neighbours at K98.7 billion, Comesa at K97.6 billion, North America at K11.8 billion while the EU accounted for K42.8 billion.
The shows that tobacco, tea, sugar, coffee, apparel clothing, pulses, cotton, cotton fabrics, rice, groundnuts, cashews, macadamia nuts and natural rubber topped the list of Malawi’s exports while diesel, petrol, fertilisers and paraffin topped the list of imports.
The trade imbalance is widening amid policies, strategies and efforts to implement programmes in several key areas to support trade, industry and private sector.
They include draft private sector strategy, National Investment Policy, National Export Strategy and the Buy Malawi Strategy.
In an interview last week, European Union (EU) ambassador Marchel Gerrmann said Malawi needs to do more to fully benefit from the EU-Malawi trade relations.
“What is needed in Malawi is growth and jobs. When I talk about the right policies, Malawi has to create the best environment to attract investment,” he said.
In an earlier interview, finance and corporate strategy expert James Kamwachale Khomba said unless authorities re-look into its monetary policies and a change of attitude among consumers, increased importation will only help in killing local businesses.
“We have been so much engaged in more of importation. Unfortunately, most of the products are actually for consumption. If we can invest whatever we are importing, that could be good for the economy.
“We have been the net importers all long probably this is also to do with the issue of substitution of our products to the extent that we are even importing tomatoes, crisp and cornflakes,” he said.
National Working Group on Trade Policy chairperson Frederick Changaya said that there are several policy instruments that Malawi can use to encourage export of products, including taxation and pricing of electricity.
“We have several policy issues that Malawi can use to promote exports, but we are failing to benefit from these because they do not favour exporters.
“For instance, electricity pricing, especially for maximum demand users, has always been on the higher side more so in times of load shedding where industries are also affected,” he said.
Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi is on record as having said the main problem has been that while the country strives to grow its exports, Malawians tend to increase imports as well thereby maintaining, and at times, expanding the trade deficit.
