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Malawi fails to satisfy South Sudan demand

ZHUWAO—We will improve capacity

Mike Mlombwa

Malawi has supplied approximately 10 percent of the goods that South Sudan demanded during the first year of the deal, which is under the Africa Continental Free Trade Area (AfCFTA).

The commodities supplied include maize flour and rice.

This was revealed on the sidelines of a capacity building workshop for investment to support Malawi in negotiations of the AfCFTA which took place in Blantyre on Wednesday.

According to the Ministry of Trade Principal Secretary Francis Zhuwao, the subdued supply is a result of Malawi’s shrinking capacity, a problem which, he says, the government is working to address.

“We have exported much less largely on account of our lack of production capacity but, mindful of the fact that we have now signed the agreement, we will make sure that we put systems that will capacitate our small and medium enterprises so that they add value to goods,” he said.

Early last year, the Malawi Government struck a deal with South Sudan to supply commodities such as maize, maize flour, beans and rice worth $127 million.

Value of the deal was increased to $295 million late last year when the then minister of Trade Sosten Gwengwe negotiated for an additional $168 million worth of exports.

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI)—the private sector’s mouth piece—has repeatedly singled out lack of finance and a harsh operating environment among constraints.

MCCCI’s remarks were echoed by Indigenous Business Association of Malawi (Ibam) President Mike Mlombwa, who indicated that the government needs to put in place policies that will build the capacity of the local industry.

The Reserve Bank of Malawi, through its 2021 Financial Stability report, believes one of the reasons why industries fail to access finance is relatively high interest rates stemming from high operating expenses.

“Alternatively, cheaper sources of funds from the Fines (Financial Inclusion and Entrepreneurship Scaling) project are expected to minimise the levels of interest rates in the sector,” reads the report.

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