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Revitalising trade amid pandemic

ESSENTIAL—Cross-border trade

Mayeso Msokera

Malawi, a predominantly importing nation, is among countries greatly suffering from pangs of the Covid pandemic.

Cross-border traders caught the cold as most economies were partially closed.

Ironically, Malawi’s external position improved slightly in the first three months of 2021, but not necessarily buoyed by improved exports. It was due to a sharp decline in imports.

The values for both exports and imports dropped in the first quarter, with imports declining more than exports, leading to the narrowing of the trade deficit.

Figures from the Reserve Bank of Malawi (RBM) show that import outlays declined by $60 million to $693.1 million while exports dropped by $2.7 million to $201.6 million in the same period.

“Thus, the trade deficit improved to $491.5 million in 2021 Q1 from $548.8 million in 2020 Q4,” reads RBM’s recent Monetary Policy Committee statement.

Tales of cross-borders traders’ pointing to limitations to doing business dates back to November 2019 when the first Covid case was registered in Wuhan Province in China, one of Malawi’s key trading partners.

According to The National Association of Business Women Executive Director Barbara Banda, 2020 would be a year to forget for most traders.

“We are greatly affected as most countries were either on partial of full lockdown with some borders sealed. We have lost out on business,” she laments.

Steps to keeping businesses afloat

Considering the worst socio-economic crisis brought about by the pandemic to countries whose ramifications are still unfolding, the Common Market for East and Southern Africa (Comesa) is working towards ensuring continued trade amid the pandemic.

Comesa is implementing the Simplified Trade Regime, an arrangement which facilitates easy movement and clearance of goods and services by small-scale cross border traders.

“The initiative aims at simplifying clearance procedures as well as reduces the cost of trading for exporting and importing to enable small-scale cross border-traders to undertake more cross border trade,” reads the 41st Comesa Council of Ministers Brief.

The bloc is also implementing a programme aimed at reducing non-tariff barriers which supports the online reporting, monitoring and eliminating mechanism.

It provides a legal framework for establishment of reporting, monitoring and elimination tools, national and regional institutional arrangements for management of non-tariff barriers programme.

Also through the Regional Approach to Implement WTO Trade Facilitation Agreement, Comesa secured €85 million from the European Union.

The funds are aimed at increasing intra-regional trade flows of goods, persons and services by reducing the costs or delays of imports and exports at specific border posts, implementation of digital free trade area, improvements of coordinated border management, liberalisation of Trade in Services and free movement of persons.

What’s in it for Malawi?

As a Comesa founding member, Malawi has participated actively in the regional integration activities.

According to Ministry of Trade spokesperson Mayeso Msokera, the country is systematically positioned to reap the most from the initiative.

He called on local cross-border traders to leverage from the existing opportunities within the block.

With about 21 member states, a population of over 583 million and a Gross Domestic Product of $805 billion, the block is a formidable force as it commands a global export and import trade in goods worth $ 324 billion.

Malawi launched the Comesa STR with Zambia in May 2010 and with Zimbabwe allowing small-scale traders importing and exporting goods duty free for goods worth $2,000 or less.

This, according to Msokera could help reducing costs for small cross border traders and increase the speed of crossing the border

He says Comesa is also implementing an internet-based online tool for reporting, monitoring and eliminating Non Tarrif Barriers which must be utilised to the fullest by local traders.

“Our cross border traders can report any barriers to doing business across the region on the portal or through the Ministry of Trade for quick resolutions,” he says.

Under the Comesa Regional Integration Support Mechanism, Malawi was supported with resources to set up state-of-the-art Leather Products Design Studio in Blantyre, and for the procurement of equipment such as sewing machines and cooking oil refineries for cooperatives in the textile.

Just recently, the Malawi Government in collaboration with Comesa unveiled the 50 Million African Women Speak platform that allows Malawian business Women to engage actively with fellow women entrepreneurs in the region and access the platform as a one- stop-shop to gain knowledge on financial support, markets, and access information on how to run their businesses.

Under 11th European Development Fund (EDF) Malawi also expect to receive support through Comesa for a Trade Facilitation Programme that seek to facilitate reduced cost of cross-border trade, through removal of internal barriers but also increase formal small-scale cross border trade flows in the Comesa/ tripartite region.

“The above is just a few among the many programmes and benefits that Malawi has been enjoying under the Comesa FTA,” Msokera says

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