2019; a year to forget for business

Post was last updated: December 23, 2019

From the outset , there were mixed expectations among industry players over business performance in 2019.

At the end of 2018, most were excited that 2019, being an election year, they would make merry with a possibility of increased money circulation on the market during the campaign period and enhanced business activity.

Others however, were hesitant and on a wait and see as the environment was unpredictable.

For some reason, the 2019 elections brought a lot of enthusiasm among Malawians.

The tripartite elections were conducted on May 21 and the presidential results were announced on May 27. The results were challenged by Malawi Congress Party (MCP) and the UTM.

Pre-elections

Despite Malawi Electoral Commission (Mec) opening the campaign period on March 19, the election hype had already been built nearly the whole of 2018.

However, as usual, the first quarter of 2019 was slow in business as many companies were consolidating figures from the previous year and strategising for the year.

At household levels, people were strategic in their spending.

The second quarter, which was the actual campaign and election period, also saw businesses slowing down. Many businesses lamented a weak buying power among other things.

The resurgence of xenophobic attacks in South Africa during the second quarter also impacted negatively on Malawian businesses. Traders failed to travel, and others were trapped in that country.

Post-elections

The aftermath of the elections was even more detrimental to business operations.

After announcement of the presidential election results, civil society organisations under the banner, Human Rights Defenders Coalition, disputed the results and started mobilising people from all cities of to go to the streets.

They demanded resignation of Mec Chairperson, Jane Ansah.

This led to property worth billions being destroyed and most of the shops and companies closed for fear of being targeted.

Businesses claimed that when the demonstrations were at the peak, they lost almost 80 percent of their businesses.

It took months for business operations to get back to its normal.

Executive Director of the Chamber for Small and Medium Enterprises, James Chiutsi, says local SMEs were hard hit.

“Local industry has been negatively affected by uncertainty brought about by the political environment.

“Most of our exports are raw and the few that are processed are not to that high standard, due to constraining factors because adding value requires huge investments in terms of right machinery and as such SMEs cannot afford on their own and need support from government institutions,” Chiutsi said.

He added that they want to engage the government because most of the emphasis on exports is on agribusiness and yet other sectors like furniture manufacturing are given little attention yet the country is importing the same in very large volumes.

“It is high time the country invested in local production by deliberately supporting and financing SMEs who venture into such,” Chiutsi added.

President of the Indigenous Business Association of Malawi, Mike Mlombwa, said many SME are in debts because of the situation which they will surely suffer to get out of.

He maintains that until the presidential elections case come to an end, businesses cannot operate freely and thrive again.

“This is the year we have created a lot of beggars because a lot of SMEs support their families when they juggle in business but they were not able to do so because of the political environment even at the start of the year, before the elections, people were on a wait and see mode and after the elections, demonstration were order of the day so it has been really bad for business,” Mlombwa said.

He added that they expect the elections case to be concluded as soon as possible so that people can go back to their businesses to get things moving.

However, the Reserve Bank of Malawi (RBM) holds that 2019 was not such a bad year for business. RBM spokesperson, Mbane Ngwira, said the economy has stabilised and has grown in comparison to the previous year, the interest rates this year are lower than last year and inflation has remained in single digit for a better part of the year.

Spokesperson in the Ministry of Industry Trade and Tourism, Mayeso Msokera, said complete data compilation and economic performance assessment for the 2019 is likely be finalised early next year (2020).

Howe v e r, he was quick to mention that there are indications that the manufacturing industry is expected to register a growth of around 4.6 percent in 2019.

He cited availability of raw materials for the industries as a result of increased agricultural production in the year and improvements in electricity generation and supply.

“Given that our economy is still agro-based, with most of the agricultural products dominating the export basket, we are likely to register an increase in the value of exports for the year 2019.

“The Ministry is committed to implement policies and strategies aimed at structurally transforming the economy by encouraging investment, production and exportation of value-added products and through various trade facilitation initiatives,” Msokera said.

He added: “We have the deve lopment of Industrial Parks and Special Economic Zones, promotion of Rural Industrialization, implementation of the Buy Malawi Strategy, development of the Nacala Transport Corridor,setting up One Stop Boarder Posts and the National Single Window (NSW) for Trade Facilitation.”

It remains a fact that the elections and the demonstrations that followed had a huge impact on performance of trade and the industry.

There was reduced activity in trade over a long period than was the case in previous elections.

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