The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has lamented what it has described as an unfavourable business environment that prevailed in the first half of 2024.
But Secretary to Treasury Betchani Tchereni said there have been so many positive things that have happened in the first half of the year which the private sector must appreciate.
In an interview Monday, MCCCI President Wisely Phiri said the beginning of the year 2024 brought in optimism amongst most businesses as the economy was expected to rebound from years of economic shocks and macroeconomic imbalances.
Phiri said the International Monetary Fund (IMF) approved a $175 million Extended Credit Facility (ECF) arrangement that aimed to support the government’s commitment to economic reforms designed to jumpstart inclusive and sustainable growth.
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He said the IMF programme was a stamp of approval on Malawi’s commitment to creating a conducive macroeconomic and business environment, and there was an expectation of increased foreign direct investment (FDI) following the ECF approval.
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At the beginning of the year, authorities had projected economic growth to pick up to 3.2 percent in 2024, up from 1.5 percent in 2023.
“However, the economic performance of the first half of 2024 has been far from the expectations which businesses had at the beginning of the year. The macroeconomic fundamentals remained unfavourable for businesses.
High inflation (thus high production costs) and interest rates continue to hinder business growth, productivity and foreign direct investment inflow,” Phiri said.
Figures he provided show that inflation in the first half of 2024 averaged 33.07 percent (as of May 31 2024), compared to 27.48 percent in the first half of 2023. Similarly, the policy rate concluded the first half of 2024 at 26 percent, compared to 22 percent in the first half of 2023.
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He observed that despite the devaluation of the local currency and the approval of the ECF, foreign exchange for businesses remains scarce, and challenges of importing raw materials for production persist.
Looking ahead into the second half of the year, the MCCCI President said the economic trajectory does not look promising either.
He said Malawi’s economic trajectory tends to be challenging for both businesses and consumers, as the lean season approaches.
But commenting on the development, Tchereni said it is the expectation of the government that the private sector would take advantage of improved macroeconomic conditions to start producing more to generate the much-needed forex.
According to Tchereni, all over the world forex is generated by the private sector and that it is the duty of the central bank to manage that forex.
“Throughout the first half, there have been a number of positives that have happened. If you look at the market, fuel has been continuously flowing. There are no queues for fuel. What about drugs in hospitals,” Tchereni said.
Blantyre-based economist Marvin Banda said it is unfortunate that there is no short-term fix to the malady the economy is experiencing.
