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MCCCI doubts projected GDP growth

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said it is difficult for the government to justify the technique that will be used to register a projected real Gross Domestic Product (GDP) growth of 5.4 percent this year considering the inactive private sector and harsh weather-hit agriculture sector.

MCCCI Chief Executive Officer Chancellor Kaferapanjira said the failure to pay a larger part of the K157 billion arrears that the government owes suppliers has resulted into inactivity among several businesses.

In his State of the Nation Address on Tuesday, President Peter Mutharika said during the presentation of the state of Nation Address the economy is projected to register a real GDP growth of 5.4 percent in 2015, despite setbacks such as recent floods and dry spells that have affected agricultural production.

Mutharika also said next year, the economy is projected to rebound with a strong growth of 6.5 percent.

But Kaferapanjira said most suppliers that the government has failed to pay over the years have been forced to stop doing business or downgrade thereby rendering them unproductive for the economy.

“The president is talking about the projected growth of about 5.4 percent but I do not know where that will come from, if we consider the conditions on the ground. The agriculture sector, we know, will suffer a lot because of the weather conditions which include very long dry spell. I, therefore, do not see where such kind of growth will come from. The alternative source of growth would be the private sector but then, the government owes these people a lot of money.

“He is talking about industrialisation, he is talking about private sector thriving. But we have seen how much the economy had shrunk and I am telling you from the experiences of our members because we visit them and I can tell you there is literally no activity in the majority of the businesses. K157 billion of arrears is a lot of money for the private sector,” Kaferapanjira said.

He also said due the idleness of many companies, the number of MCCCI members has gone down from about 300 to 240 businesses and the inactive business have no other option but to lay off some of their workers.

“A number of our very important investors have even downgraded. In fact some of the companies that are connected to international companies are forced to get money from outside the country to pay their workers,” he said.

“I get so many copies of companies writing the Ministry of Labour that they are retrenching so many people because there is no activity. It is very sad. Then we hear the President saying we are delivering on our promises. But are we becoming any richer? Our per capita income has gone down and people are being laid-off, is that prosperity?” he said.

Kaferapanjira said the banks are now reluctant to give loans to some businesses fearing that they will not pay back which is also affecting the banks as thrive on people’s borrowing.

Ministry of Finance spokesperson Nations Msowoya said the K30 billion that was approved for the arrears in the 2014/15 has already been paid off.

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