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Agriculture losing grip on economy

Latest national account figures from the Reserve Bank of Malawi (RBM) have shown that agriculture’s contribution to the GDP (Gross Domestic Product) has been marginally shrinking in recent years and is expected to fall to 28 percent in 2017.

The figures show that agriculture, which is the mainstay of the economy, has seen its contributions lowly falling from 30 percent in 2010 to 28.6 percent in 2015. This year, the input is expected to fall further to 28.1 percent.

Analysts have over the past years pressed on Capital Hill to diversify the economy in the wake of unreliable rainfall patter ns and falling commodity prices.

Speaking when he presented a paper on ‘Malawi’s Economic Priorities and Partnerships: Diversification for Development’ at Chatham House in London last year, President Peter Mutharika admitted that overdependence on agriculture renders the economy vulnerable to external shocks hence the need to diversify.

“My government’s drive for diversification of the economy in other sectors such as mining, tourism and services has also included attracting massive Foreign Direct Investment (FDI). In December, 2012, the Government of Malawi launched the National Export Strategy (NES), which provides a prioritised road map for developing Malawi’s productive base to allow for both export competitiveness and economic empowerment,” Mutharika said.

He said Malawi, therefore, urgently needs to develop its productive base to drive her export capacity on a scale that exports can maintain the pace of imports as well as to economically empower youths, women, small-holder farmers, job seekers, micro and small businesses and the poor through ensuring that they are included in the productive base

According to RBM, wholesale and retail trade is the second biggest contributor to the economy at an estimated 16.1 percent in 2016. The industry’s contribution is expected to move a notch higher in 2017 to 16.2 percent.

Manufacturing has also slowly seen its contribution falling from 10 percent in 2010 and is expected to shrink to 9.3 percent by 2017 probably due to the challenges in agriculture which is supposed to feed into manufacturing.

Fourth in the line of contributors to the national economy is the real estate sector whose contribution has also been marginally declining over the years and is estimated at 7.6 percent in 2016 from 7.7 percent last year.

Ironically, the contribution of tourism to the economy has remained minimal at 2 percent and is expected to remain like that next year.

Another sector which has been touted to have the potential to propel the economy is mining. However, its contribution to the economy in 2016 is estimated at a mere 0.9 percent from 1 percent in 2010. The sector’s contribution is expected to register a further decline to 0.8 percent next year.

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