Ministry of Trade says the National Services Export Strategy (Nses) will help to support locally produced innovative value-added services for the domestic and export markets.
The ministry’s director of trade Charity Musonzo said in a statement that while the National Export Strategy II (NESII), launched by President Lazarus Chakwera in December last year, is targeting trade in goods, Nses aims at promoting trade in services.
She said the strategy embraces digital/e-trade, information and communications technology (ICT) innovations, skills
and creative industry and sectors that embrace the youth.
Musonzo said: “The strategies recognise that international trade is a fiercely competitive economic space where the strongest and fittest win and where without the State intervention, the micro, small and medium enterprises, especially the youth entrepreneurs, are marginalised.
“Thus, the strategies intend to close the inequality gap between young and established entrepreneurs by addressing the challenges that youth entrepreneurs in Malawi are facing, with a view to mainstream their participation in the regional and global value chains, to operate in higher value-added industries to meaningfully participate in trade.”
She said some of the critical challenges that the strategy addresses include limited access to credit and finance, low brand identity, limited access to technology, restricted management skills and capacity.
It also addresses challenges on inadequate access to information and business networking, lack
of export capacity support, lack of compliance to market norms, standards and technical requirements and limited access to markets.
The strategy comes as government has noted that the sector has huge potential to contribute towards diversification of the country’s export basket.
The five-year draft Nses shows that the services sector can be enhanced by increased supply of tradable services, promoting services market access and enhanced economic sustainability and inclusivity.
Reads the draft in part: “While appreciating the critical role of services in facilitating the production of goods and other services and in promoting both domestic and foreign trade, isolating services exports is critical in emphasising the significance of promoting the regional and global competitiveness of the country’s tradable services.”
In his Services Sectors and Services Trade in Malawi Situational Analysis Report, Ministry of Trade consultant Ronald Mangani attributed the growing economic significance of services to an increase in the distribution of imported products, a trend he said erodes foreign exchange and distresses the trade balance.
He said despite the recognition to promote export-led growth among policymakers, alongside the associated efforts, the country’s trade performance has not registered any improvement with a negative trade balance of $661.3 million (about K542 billion) between 1980 and 2018 and contributing about 20 percent to the labour force.
“In general, the productive economy of Malawi is not well diversified as it still depends on a poorly structured agricultural sector.
“Structural and supply-side challenges, low commodity prices and a weak industrial base are still daunting challenges,” said Mangani, who is also former Secretary to Treasury.
The services sector contributes about 52 percent to the country’s nominal gross domestic product (GDP) pegged at $10.9 billion (about K8.9 trillion).
Malawi’s economy is predominantly agriculture-based, with agriculture accounting for about 30 percent of GDP and generates over 80 percent of national export earnings. n