By Benadetta Chiwanda Mia
Industry players have expressed worry over the subdued business performance in the year to date, which they say has been characterized by a challenging operating environment. Manufacturers Association of Malawi Chairperson Gloria Zimba cited Kwacha devaluation speculation among pressure points.
According to Zimba, the recent 44 percent devaluation had a detrimental impact, resulting in financial losses on the industry.
“There are so many strong rumours that we are going to be hit by another big devaluation. So the fact that it remains a rumour makes it so difficult to trade, to plan, and so on and so forth, because you don’t know what is going to hit you.”
“The previous big devaluation of 44 percent meant we lost almost 50 percent of whatever was sitting in our bank accounts. All of a sudden, a foreign supplier’s bill became too big to pay. It was a struggle to catch up and recover,” Zimba said.
She further highlighted that the past three quarters have seen the proliferation of smuggled goods and the informal sector’s dominance.
Zimba said sporadic electricity outages and unreliable water supplies are also contributing to an increase in production costs and hindering operational efficiency. She then expressed hope that as Malawi heads into the final quarter of 2024, there will be meaningful engagement with government entities like the Malawi Revenue Authority, Ministry of Trade, and Ministry of Finance to advocate for policies that will revive the struggling sectors.
“We hope that those engagements will be meaningful and fruitful, that whatever proposals are coming from the industry, the government should at least be able to reason and listen and apply, because most of the industries in Malawi are really almost on a deathbed,” she said.
She added that if the economy does not improve, businesses are likely to continue facing retrenchments, resising or downsising of companies, and some will even end up shutting down.
Meanwhile, National Coordinator for National Small and Medium Enterprises (SMEs) William Mwale has described the business environment in the third quarter as tough.
According to Mwale, while many SMEs survived, growth remained stunted due to low access to finance. “The good part is that they have removed the collateral on the loans meant for the youth and some vulnerable groups. On that one, we are very happy,” Mwale said.
Mwale however has called for a broader reduction in borrowing costs, arguing that the prevailing high interest rates eat into SMEs’ profits and elevate default risks.
Looking ahead, Mwale sees a potential uptick in business activity in the agricultural sector, with farmers purchasing inputs and rural communities engaging in seasonal work.
Ministry of Trade spokesperson Patrick Botha said the government is implementing a number of projects for improved trade facilitation and to support Malawi’s competitiveness.
“The ministry would like to continue engaging in regional and international preferential trade agreements negotiations in order to continue opening new markets for Malawi. For instance, we would like to leverage agreements such as the African Continental Free Trade Area to boost exports,” Botha said.
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