Industry captains positive on transforming economy

There is a shift in ideology among industry captains in the country on what needs to be done to transform the local economy.

Recent sentiments are portraying positivity from the private sector towards achieving the Malawi 2063 development plan.

Over the past decade and beyond, the conversation has mainly been a blame game between the private sector and the government over the business environment, with the former claiming it is not conducive and the latter saying the private sector is not doing enough.

Over the weekend, Chief Executive Officer of Standard Bank Malawi Phillip Madinga posted on LinkedIn that the future of Malawi’s export manufacturing industry looks promising, as evidenced by the groundbreaking ceremony for the Magwero Industrial Park in Lumbadzi.

He says private sector engagement is crucial for driving growth and achieving the national vision.

“To drive growth and enhance export manufacturing, private sector players must focus on key areas; Leveraging Public Private Partnerships, especially for projects in Special Economic Zones; financing infrastructure projects in sectors like transport, telecommunications and energy; strengthening trade finance to support exporters in managing risk and improving cash flows and providing tailored support to SME exporters through innovative products, advisory services, market linkages, and capacity building,” Madinga wrote.

Similar sentiments were shared during the recent Business Leaders Summit by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) by Press Corporation Limited Chief Executive Officer Ronald Mangani and Old Mutual Malawi Chief Executive Officer Edith Jiya.

Making a presentation titled ‘Re-orienting Businesses for Export Production’, Mangani said unless necessity births innovative export-focused production by private capital, Malawian authorities will never be able to defend the Kwacha sustainably.

He emphasised the need for an honest government–private sector dialogue on addressing constraints to private investment and export promotion, securing enforceable private sector commitment to produce for export and establishing synergetic partnerships between foreign and domestic capital.

“The private sector is the engine for economic growth. The economy is not growing; it means the private sector is not meeting what is required to grow the economy. Rather than sit and curse the darkness or complain about the environment, there is a need to take advantage of the opportunities that exist so that the government should create more opportunities,” Mangani said.

Another presentation by Jiya, titled ‘Producing for Import Substitution’, highlighted that there is potential to develop agriculture value chain and key industries that can locally provide substitutes for imports.

She emphasised on the Mega farm initiatives and industrialisation of the agriculture sector beyond subsistence farming, climate change resilient farming methods and large-scale organic fertilizer production as a substitute for large fertilizer bills that the country has experienced.

“There is a need to develop industries to produce for import substitution, ensure proper skills development training which can improve competitiveness and industrial capacity.

We also need to harness Malawi’s climate, the solar and wind generated power as a cheaper substitute to imported fuels, focus on locally produced cement, steel, and timber and develop mineral processing and value addition of uranium, coal, and rare earth minerals, reducing finished product imports,” Jiya said.

However, during the opening of the just ended Malawi International Trade Fair, MCCCI President Wisely Phiri reiterated that the cost of doing business is high mainly due to high taxes.

For example, Phiri said the current tax regime is a deterrent to potential investors citing the additional 10 percent corporate income tax for profits above K10 billion and 20 percent withholding tax for new entrants in the industry sector.

“Our taxation policies should deliberately be inclined to favour investment and production and not act as a deterrent,” Phiri said.

During the same event, Minister of Trade Sosten Gwengwe agreed that there is a need for continuous engagement between the government and the private sector to make sure that the business environment continues improving.

“One expects the private sector to be lobbying for such kinds of things but it goes down to the government to look at such kinds of concerns and see how best to compromise so that business flourishes but also at the same time the government collects something for other essential services.

“What MCCCI has said has been noted and will continue engagement in various private and public forums.

Key is to avoid suppressing the private sector. Consultation is always the best but you can never have a country with no taxes.

So, there will always be taxes even when the private sector may not want taxes,” Gwengwe said.

It is evident that such optimism from the private sector is crucial to transforming the local economy and the government should leverage on such leads for meaningful gains in the local economy.