Malawi’s exports poised for growth

Industries which are expected to immensely contribute to the country’s exports include pharmaceuticals, packaging, publishing, printing, paints and soap as major exporters to countries Common Market for East and Southern Africa (Comesa) member countries which include Zambia, Mozambique, Kenya, Tanzania and Zimbabwe. Said the report: “The situation is likely to improve with the signing of the Malawi-Mozambique bilateral trade agreement.” However, the report indicates that the same sub-sectors expect to increase imports, implying an increase in imports of raw materials. The survey describes the current and expected business environment as encouraging largely due to the improvement in fiscal management and monetary fundamentals such as reduced interest rates and the fight against corruption. The challenges faced include trade tariffs and customs charges, access to finance and reliable transportation. These perceptions are in line with the World Bank’s Doing Business Report and the World Economic Forum Global Competitiveness Report 2005-2006 in which Malawi’s ranking in growth competitiveness and business competitiveness dropped from 87 and 77 in 2004 to 105 and 91 in 2005 respectively. South Africa accounts for 22,6 percent of Malawi exports, the United States 13 percent, Germany 10,9 percent, Egypt 5,6 percent, Portugal 4,7 percent, Japan 4,3 percent, Netherlands 4 percent, Poland 4 percent and Russia 4 percent, according to the 2004 statistics. The Zambian export sector, meanwhile, has recorded tremendous growth since 1999 with total export earnings increasing to US$1,6 billion in 2004 from US$772 million in 1999, according to the Export Board of Zambia (EBZ). EBZ said firming of metal prices and enhanced production resulting from increased investment in the mining sector has accounted for the greater part of the improvement. The EBZ also several cited factors that have adversely affected the export sector. These include livestock diseases compounded by droughts, rampant smuggling of skins and hides, oversupply of commodities such as coffee and fresh flowers, and transport constraints. The board suggested that the need to build capacity in the affected industries that will lead to an increase in production volumes, which will in turn subsidise freight costs due to economies of scale. And apart from strict sanitary and phytosanitary (SPS) measures, EBZ said regular changes on such measures as quality, packaging and labeling increase the cost (certification, inspection and maintenance costs) to the producer as adverse factors to the export sectors. The board also noted that serious lack of investment capital has limited the development of the export sector in the country. He also suggested a continuation of the government’s efforts to reduce borrowing from commercial banks, and the need to remove quota restrictions on such products as sugar, cotton and yarn entering the South African market.

March 2006
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