By Wezzie Gausi:
The 2023 Malawi Business Climate Survey published by the Malawi Confederations of Chambers of Commerce and Industry (MCCCI), indicates that 50 percent of businesses increased their levels of production, while 20.4 percent decreased their levels of production in the gone by.
According to the report, the poor performance is attributed to shortage of foreign currency with which to import raw materials, high levels of inflation and fuel scarcity which affected business operations especially in the transportation and construction sectors.
The report further shows that subdued demand for goods and services by consumers, and high cost of loanable funds for investment also had an impact on business performance, among others.
However, the report shows that the performance of businesses in 2023 was better than the previous year, according to the results of the survey.
“In the year under review, 27 percent of businesses rated their performance as good and 35 percent as fair while in 2022, 18 percent of businesses rated their performance as good and 25 percent as fair.
“Businesses expect better performance in 2024 than in 2023 due to the stability of electricity supply, availability of foreign currency, and the confidence that an inflow of FDI will follow as a result of the Extended Credit Facility and budgetary support from the World Bank,” the report reads.
The report further highlighted that in the year 2023, 16.1 percent of the businesses decreased their capital expenditure, compared to 13.2 percent in 2022. In 2024, only 5.8 percent of businesses are expected to decrease their capital expenditure.
Furthermore, there was marginal improvement in capital expenditure with 64.2 percent of the businesses increasing their capital expenditure in 2023, compared to 56.1 percent in 2022. In 2024, 78.1 percent of businesses plan to increase their capital expenditure.
In an interview Secretary to Treasury Betchani Tchereni said it’s good to know that business generally performed better than the previous year although in a difficult environment.
He said some of the challenges faced are exogenous and must be dealt with.
“For example, it is always the expectation of the government that foreign exchange generation is an expertise of the sector. Although many may not have operated due to the scarcity of forex, that should have been an opportunity for the private sector, especially those in manufacturing, to venture into import knowing that there are so many products which Malawians need but are not produced in the country,” Tchereni said.
Ministry of Trade Spokesperson Mayeso Msokera said indeed, most businesses failed to perform in the year 2023 due to the highlighted challenges.
“ However, going forward the economic outlook is more promising for the coming years due to expected improvement in the availability of foreign exchange following the acquisition of the IMF Extended Credit Facility (ECF) program; establishment of several mega farms and operationalization of the AfCFTA agreement in Malawi, resumptions of consistent power supply; better fuel availability just to mention but a few positive developments, ” Msokera said.
