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Counting cost of imports appetite

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CHIGWE—Government should come in quick

Today, you hardly view WhatsApp statuses without a call for orders.

“Direct Message (DM) me for prices.” That usually the screaming caption accompanying products likely to be imported from China, South Africa or neighboring, Tanzania.

Mostly, the products include clothes, shoes, kitchen wear, jewelries and blankets, but they cost the country millions of its hard earned forex.

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Thandi Maseko, a Blantyre-based 22-year woman studying Banking and Finance at the Polytechnic’s Management and Development Centre is making ends meet through online business.

She started the business in 2018 with a K200, 000 capital. It is on a growth trajectory as Maseko attests.

She claims locally made merchandise has failed to stand the competition.

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“Malawi has very few companies that do textile and apart from that, clothes made in Malawi lack quality.

“They do not follow trends of fashion hence, they are not preferred to by customers. So, I have to give customers what they want,” she said.

Maseko is just one of the of Malawians with passion to trade in local goods.

But the local manufacturing industry seems unready for them. This, is coupled with the country’s growing appetite for imported material where “everything foreign is deemed good.”

Economics Association of Malawi (Ecama) President Lauryn Nyasulu said the country’s appetite for imports has exposed that the manufacturing sector is not producing what Malawians need.

She noted that for the country, focus has heavily been on agricultural products.

She laments the lost glory of the local manufacture sector where firms have been shutting down in the past years instead of rising.

“We produce a lot of cotton but there is very little creativity and innovativeness in terms of diversifying the products from the cotton that we produce and that is just one side.

“This trend is also telling us that there is a huge market in the country which is not being fed what it wants and would grow if investment can be channeled towards it,” she said.

Figures from the Reserve Bank of Malawi show that value for imports continued to rise, seen at K28 785 billion in December 2020.

During first quarter of the year, imports stood at K498.078 billion as Malawi exported items valued at K128.321 billion.

During the second quarter, the imports were seen at K397 864 billion while Malawi exported products worth K106 146.

In the third quarter, Malawi imported goods and services worth K634 333 billion but exported K167 222 worth goods.

During the fourth quarter, imports stood at K576 283 while exports were K155 584 billion.

This confirms fears by the private’s umbrella body, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI), that the growing demand for imports could choke the local businesses.

In its input into the 2020/21 National Budget, the Chamber said the private sector was failing to supply enough to the citizenry due to some government policies impinging its growth.

For instance, MCCCI singled out the need to review some tax measures that are deemed punitive to the sector.

“The country has a problem of increased counterfeit products whose genuine products attract excise taxes,” MCCCI states.

Minister of Industry Roy Kachale Banda conceded the bottlenecks have greatly affected the local industry’s potential.

He said the government is drafting policies towards reversing the status quo.

He said in the interim the ministry is consulting financial institutions to help investors with access to capital and other stakeholders to help with access to entrepreneurial trainings and markets which it has noted as being some of the problems hindering the manufacturing sector in the country.

“We will empower businesses by giving innovative solutions to them in accessing finance by talking to different banks and other institutions such as Neef to see if we can channel that money towards the sector so that they can be able to produce goods of similar or better-quality than what is being imported,” he explained.

A Blantyre-based market analyst Cosmas Chigwe said the nation has no choice but to put in place some form of protectionist policies.

“The onus is on the government to find room within our tight budget to significantly invest in areas like technical education to improve the quality of our products and eventually achieve import substitution for some of these products,” Chigwe says.

Minister of Finance Felix Mlusu is still optimistic that stride towards resuscitating the sector are on course.

“Enhanced growth prospects in 2021 are also buttressed by the on-going Government infrastructure development projects in the road, energy and agriculture sectors, most of which are growth enablers,” he said.

Malawi, a landlocked country, highly depends on exporting raw agricultural materials with tobacco remaining singling top export crop.

The importance of agriculture to the economy especially in exports and growth of gross domestic product continues to be watered down by climate change and the anti-smoking lobby being championed by the World Health Organisation.

If nothing is done by the government or the private sector, ‘taking orders, DM for prices’ will not only mean high appetite for fashionable and high-quality goods but will continue hurting the local industry.

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