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Experts commend Africa trade pact

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Sosten Gwengwe

Some economic commentators are supporting the government’s intent to ratify the African Continental Free Trade Area (AfCFTA), saying Malawi still has a chance to reap the most of the pact if systematically positioned.

This comes against the background that some private sector players are against the move until room for further dialogue is created to protect the local industry.

It also comes against the backdrop of Malawi having a negative trade balance against major trading partners on the continent.

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For example, figures from the International Trade Centre (ITC) show that in 2019 Malawi exported goods worth K44.9 billion to South Africa but imported goods worth K359.5 billion.

Malawi exported goods valued at K23.3 billion to Tanzania but imported K45.9 billion worth of goods. It also exported goods worth K22.7 billion to Zambia but imported goods worth K77 billion.

In an interview Wednesday, the United Kingdom-based Malawian economist Sane Zuka said it was important that Malawi ratifies the pact as Africa is a market the country needs for its industrial growth agenda.

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“It is true that Malawi’s balance of trade is favouring our partner countries but this is not a permanent situation. This is where the government should implement policies to reverse the situation. We cannot depend on protectionist policies within Africa. These are economies with similar potentialities.

“With coordinated government investment into the key sectors of the economy, we can manage to sell more to other countries as production costs will likely be cheaper in Malawi,” Zuka said.

Chancellor College economics lecturer Laston Manja said in a separate interview that it was viable for Malawi to was the AfCFTA despite its poor standing on trade balance.

“Malawi will benefit from the proposed removal of all tariffs on 90 percent of goods. Each country in the Area will most likely be incentivised to trade in higher-value manufactured goods, instead of predominantly trading in volatile-priced raw materials as is generally the case now,” Manja said.

Local opaque beer manufacture Chibuku Products Limited welcomed the ratification.

Chibuku Products Limited Business Development and Corporate Affairs Manager Gloria Zimba, however, said the government should consider harmonising the tax regime with region counterparts.

“We want to export to our neighbouring countries but we cannot because our products are expensive as our taxes remain very high,” Zimba said.

In an earlier interview Minister of Trade Sosten Gwengwe said the instruments of ratification were being vetted at the Ministry of Justice before being submitted to the African Union.

The AfCFTA is expected to come into force on January 1, 2021.

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