The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and Economics Association of Malawi (Ecama) have reiterated the need for enhanced value addition on products that Malawi exports in order to avert devastating economic trends that lie ahead.
This follows a recent Reserve Bank of Malawi monetary policy report which projects international oil and fertiliser to increase in the second half of 2021.
It adds that rising prices of imports will outweigh the rise in export prices and, as a result, Malawi’s terms of trade are projected to deteriorate in the short to medium term.
MCCCI President James Chimwaza said there should be coordinated promotion of ideas to increase capacity to produce.
He said manufacturing has to be intensified in order to ensure more agriculture products end up value-added as it will improve the value the country gets from the same tonnage of what it would have exported raw.
“…for example, instead of exporting maize lets export flour, if we export flour we add value but also we create jobs; to turn maize into flour, more jobs are created and the value of flour is higher than the value of maize, so we will begin to improve what we earn and improve the value of the kwacha,” Chimwaza said.
In a separate interview, Ecama Executive Director Frank Chikuta said the commodities that Malawi imports such as fertilisers, fuel and medicine are essential, feeding into its production process in the local economy, but the exports need to be improved.
“Most of our exports are primary commodities, in terms of agriculture products and the other items, but for us to make sure that the terms of trade are not normally against us, we should make sure that our exports are of high value by adding value to whatever we produce including agricultural commodities,” Chikuta said.
Minister of Trade Sosten Gwengwe conceded that the country remained vulnerable to international economic shocks such as increase in fuel prices.
“Malawi is a price-taker and in order to mitigate the drop of the terms of trade, we need to increase efforts in industrialisation and value addition in the goods moving out of the country,” Gwengwe said.
According to figures from the International Trade Centre, Trade Map Malawi registered a trade balance of -$1,948,292,000 (about K1.5 trillion at the current rate) after exporting goods worth $781,981,000 and importing goods worth $ 2,730,273,000 in 2020.