Local investors, particularly those who are in the agriculture sector, have decried continued financing challenges deterring them to make significant inroads in the industry sector.
This came out over the weekend during an investor engagement forum organised by the Malawi Investment and Trade Centre (MITC).
Director at Corran Farming Limited Stuart Ross said commercial banks in the country have not been interested in the agricultural sector.
“We applied for grant funding from MITC and UNDP, and we finished that project in December 2021. That project is still going. We’re going to expand it. At the moment, we export 2,000 crocodile skins a year to Italy and we’re looking to expand that to 10,000 skins. So that’s earning valuable foreign exchange for Malawi as well as promoting the community,” Ross said.
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MITC Chief Executive Officer Paul Kwengwere said since 2022 investments picked up registering a record $2 billion in a single year.
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“There are a number of macroeconomic developments that we’ve experienced.
“Malawi has got a good market; we’ve got about 20 million people but surrounding countries is another better market,” Kwengwere said.
The World Bank indicates that the country has an estimated 1.6 million micro small and medium sized enterprises (MSMEs) in the country.
It says such largely informal micro-enterprises are a major part of the private sector in the country.
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In 2019, the Malawi FinScope MSME Survey estimated that MSMEs were employing about 1.8 million people.
It further indicated that about three in four enterprises (74 percent) are micro enterprises, 23 percent are small enterprises and that 3 percent are medium enterprises.
According to the survey, the MSME sector contributes about 40 percent of gross domestic product (GDP) and 24 percent of employment, which is one of the trump cards of the governing Tonse Alliance.
The National Statistical Office indicated at the time that about 21 percent of Malawi’s adult population derived their livelihood from the sector.
However, the World Bank indicates that the capacity of MSMEs remains low because, unlike large-scale businesses, they lack access to requisite knowledge and networks.
It also indicated that MSMEs lack financing and have limitations in many areas such as business planning and management, book-keeping, financial management, marketing, and employee management.
It also decried lack of resources for them to pay for support services that can culminate in business growth and resilience.
“In addition to the high cost of formal credit, the MSMEs tend to depend on informal credit mechanisms, village savings and loan associations, contributions from family and friends, rotating savings and credit associations, and loan sharks. These sources provide expensive money,” it says in a report.
It further indicates that in 2020 and 2021, the impact of the Covid pandemic on private sector businesses, especially on the MSMEs, heightened the risks of bankruptcy and insolvency.
