The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says Malawi needs a leader of US President Donald Trump’s calibre to help bring the ailing economy back to its feet.
In its inaugural edition of its monthly economic update, The Business Perspective, MCCCI says what Trump is implementing as part of his Tramponomics should ordinarily be done by a developing country president.
The industry mouthpiece says it is common to see a country in an economic tailspin, as the United States is with respect to jobs and balance of payment position, adopt such inward looking measures.
According to the chamber, it is not a secret anymore that from the viewpoint of free movement of goods and services, evidently globalisation benefits economies that are tilted towards exporting more than those that are import dependent such as Malawi.
MCCCI says economies that produce goods and services that are consumed locally such as non-tradable goods end up losing and the majority of factories in such economies shut down as a result of heavy competition arising from imports from already competitive economies.
On the other hand the Chamber says economies that produce goods and services that are exported benefit tremendously as they take advantage of the expanded market and reduce their average unit costs through economies of scale.
The US imports more than it exports on average and its balance of trade is in trillions in the negative territory.
Some of its exporting companies have moved to produce their goods and services elsewhere because, mainly, of wage competitiveness reasons.
“When local companies are decimated by competition, the natural instinct is for leadership to move quickly to manage the foreign competition. We think that that is the reason why Mr. Trump keeps threatening American companies that continue to manufacture goods from outside America with a 35 percent border tax when those goods are imported into America.
“When your companies have moved away due to competitiveness reasons, you invite them back and offer them incentives. That’s what Mr. Trump is doing. Mr. Trump knows that an economy does not create jobs by making it easy for imports to obliterate local companies. Jobs are created by local manufacturing, and other companies.
“Whatever it will take to bring back the lost glory to America, Mr. Trump seems determined to do it. That is a big lesson for Malawi, a perennial net importer, which appears to cherish imported goods which are serviced with donor money and/or loans,” reads the report in part.
According to the World Bank’s Enterprise Survey (2007), Malawi exports only 14 percent of what it manufactures. That situation qualifies Malawi as an economy which derives its aggregate income from non-tradable goods.
“When one enters a shop these days, one is welcomed by shelves filled with a sea of imported goods paid for by foreign exchange from donors. However with the waning of donor assistance, imports will not be propped up forever. Malawi thus needs to stand on its own feet.
“Malawi needs a ‘Mr. Trump’ to decisively put Malawi first; not other countries first through promoting their exports into Malawi. There is no reward in being a nice guy to the advocates of liberalization and globalisation – the International Monetary Fund (IMF), the World Bank, and the US Treasury,” says MCCCI.
According to the Chamber, all the currently developed economies, in their initial stages of development, applied protectionist and, infant industry policies.
“If countries such as the US are protecting their borders now, why should Malawi accept the undesirable consequences of globalisation in silence? It is high time the Malawi Government acted to serve the few remaining industries against malign foreign competition.
“Private sector will not create jobs on its own; government will need to play a developmental role by creating a meaningful business environment – an environment that recognizes that infant industries need time to mature; just like industries in developed economies were given time to become what they have become today,” MCCCI says.
State House Press Officer, Mgeme Kalilani, could not be reached for comment yesterday.
Commenting on the economic activity in general in 2017, MCCCI says economic growth remains weak at the outset of 2017 as projections remain at 2.9 percent in 2016 and 5.7 percent in 2017 which are downward revisions from 5.1 percent in 2016 and 7.0 percent in 2017.
MCCCI says the real sector continues to be affected by a myriad of factors including high and prohibitive cost of accessing financing from the financial sector, which mirrors the sluggish pace of economic development, especially as there are no attractive alternative financing mechanisms