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Trade deficit scares MITC

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By William Kumwembe:

Local manufacturers have been urged to intensify efforts towards increasing productivity and lowering trade deficit which continues widening.

Malawi continues suffering from a negative trade balance due to insatiable appetite for foreign goods and continued reliance on imported inputs for production.

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According to the Reserve Bank of Malawi’s 2018 third quarter economic report, Malawi’s trade balance worsened in the third quarter (Q3) of 2018 as imports growth outpaced exports.

Malawi’s trade balance worsened to minus $525.1 million from a deficit of $419.6 million in Q2. The position was higher than a deficit of $372.3 million recorded in Q3 of 2017.

Malawi, relatively undersized when compared to neighbours Zambia, Tanzania and Mozambique, is, ironically, the destination of a thousand-plus products.

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Speaking when opening a day-long industrial workshop in Blantyre, Malawi Investment Trade Centre (MITC) Chief Executive Officer, Clement Kumbemba, said manufacturers should take a leading role to improve the country’s export base.

“It is only the manufacturing sector that predominantly can reverse this trend,” Kumbemba said.

Kumbemba, however, conceded that businesses in the country are still going through turbulent times.

He cited effects of high transport costs, scarcity of land for investment, inadequate power, and irrational administrative processes among major challenges facing the industry.

One of the participants, Mapeto David Whitehead Malawi General Manager, Martin Mpata, said smuggling of products into the country was also rampant, affecting the local industry.

He also lamented tax evasion practices by some players which, he said, was stifling the economic growth prospects.

Malawi’s main exports remain raw tobacco, sugar and tea.

The main export destinations include the European Union (EU), Zimbabwe and Mozambique while the majority of the imports are from South Africa, the EU and China.

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