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More businesses were shut in 2020

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A study by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has shown that 15 percent of formal businesses closed shop in the country in 2020 alone.

This is largely attributed to disruptions in the global value chain due to Covid pandemic, which made it harder for players in the local industry to access raw materials for production.

It also found that 15 percent of businesses faced challenges with reduced opportunity to meet customers, contributing to reduced sales and revenue.

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This came out during an interface of private sector players in Blantyre on Friday.

Findings of the study further show that a substantial number of workers in businesses could not return to work due to government restrictions, thereby affecting production.

Statistics provided show that about 49 percent of the businesses source their supplies both locally and internationally.

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South Africa remains the top source of imports by local businesses at 39 percent, seconded by China at 15 percent of the companies.

“Unsurprisingly, closure of borders in these countries heavily affected local businesses in Malawi,” the report reads.

It states that, in the coming 12 months, 47.5 percent of the businesses foresee moderate growth compared to 24.9 percent that envisage moderate contraction and 14.9 percent that expect severe contraction.

A separate MCCCI study focusing on the business climate in 2020 highlights that Covid tops the list of challenges to doing business followed by low electricity supply, high cost of transport, high cost of telecommunication and exchange rate volatility.

It also indicates that the majority of the businesses that had a poor and very poor rating belonged to accommodation and food and professional services sectors.

In an interview on the sidelines, MCCCI President James Chimwaza said the government should consider assisting businesses whose orientation is domestic but use local resources to upscale production.

He said this could be done through incentives such as tax breaks, Value Added Tax and corporate tax rate reduction, reduced electricity charges and loans to upscale their production.

“They (government) should pay all arrears to businesses to improve businesses’ liquidity positions and thus enable them to meet wage and other statutory obligations,” Chimwaza said.

In an interview yesterday, Ministry of Trade spokesperson Mayeso Msokera was optimistic that business was returning to normalcy.

“We are optimistic that if the (positivity) rate consistently stays below five percent, government might consider easing some of the restrictions and open up the economy,” Msokera said.

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