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Agric contribution to GDP shrinks to 27.1%

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KAPONDAMGAGA—Government needs to encourage farmers

Agriculture’s contribution to the country’s Gross Domestic Product (GDP) is expected to shrink by 0.2 percentage points in 2019 from 27.3 percent to 27.1 percent, latest National Account figures from the Reserve Bank of Malawi (RBM) have shown.

Despite the shrink, the statistics indicate that agriculture still remains, by far, Malawi’s biggest contributor to the GDP.

The figures show that agriculture’s contribution to the GDP has been slowly declining in the past nine years from 30 percent in 2010 to 27.1 percent this year.

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Despite being described as an agro-based economy, Malawi has over the past decades failed to build on the strides in farming to jump-start other sectors of the economy such as manufacturing.

This has resulted in Malawi exporting raw materials without any significant value addition which would have made the country earn forex.

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) President, Prince Kapondamgaga, recently noted that addressing issues of low production in agriculture, which could feed into manufacturing, could be a good starting point to turn Malawi’s manufacturing dream into reality.

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Kapondamgaga said low productivity means very little left for commercial purposes after domestic consumption.

He said such low productivity levels arise from the fact that the vast majority of agricultural activities in Malawi are undertaken at subsistence levels, on very small pieces of land.

“Over the years, such low levels of productivity have derailed industrialization efforts and prevented the promotion of sound agro-processing industries in Malawi. In this respect, government needs to encourage farmers to become commercially viable by aggregating their pieces of land and renting the enlarged pieces to commercial farmers.

“This has been done successfully in a number of places. The owners of the small pieces of land would in this case just be earning rent from the commercial farmers. This will in one way improve productivity in the sector,” Kapondamgaga said.

He added that Malawi needs to identify a finite number of agricultural commodities in which it has a well-defined competitive advantage and come up with a well-structured strategy to produce such commodities.

According to Kapondamgaga, because agriculture is mainly a private sector undertaking, government should spell out a policy framework that would provide an incentive for organised farmers to invest in the sector and promote agro-processing and value-addition rather than production of primary commodities.

Presenting the 2019/2020 national budget early this month, Finance Minister Joseph Mwanamvekha, said government has allocated K13.1 billion towards the Agriculture Commercialization Project.

Mwanamvekha said government through the Agriculture Commercialisation Project will develop value chains for 14 high value crops such as pulses, oil seeds, tubers, horticulture products, livestock and fisheries in order to promote these products for the regional and international export markets.

“This in effect, will improve the incomes of smallholder farmers at household level and boost the availability of foreign exchange at macro level, thereby contributing to economic growth and development of this country,” he said.

According to RBM data, sectors such as tourism and mining which have for a long time been regarded as Malawi’s next biggest think continue to register subdued performances with mining expected to contribute 0.8 percent while accommodation and food service activities are expected to contribute two percent.

The national accounts statistics show that wholesale and retail trade is the second biggest contributor to the economy expected to contribute 15.9 percent to the GDP this year.

Manufacturing is third with a contribution of 9.1 percent followed by real estate activities which are expected to contribute 7.6 percent to the GDP.

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