The European Union (EU) has challenged Malawi to be systematic in its positioning for international trade competitiveness if it is to reap the most of the existing market under the African Continental Free Trade Area (AfCFTA).
Representative of the EU delegation to Malawi at a validation workshop of the AfCFTA National Implementation Strategy Jose Maria Median Navaro said the local industry needed a radical boost.
Malawi is a signatory to the AfCFTA, which is expected to create the largest free-trade area in the world measured by the number of countries participating.
The pact connects 1.3 billion people across 55 countries with a combined gross domestic product (GDP) valued at $3.4 trillion.
Ironically, this posses a great threat to Malawi, a net importer, as experts feel it would be perceived as a dumping ground.
Figures available show that, in the past two decades, Malawi’s trade deficit has more than doubled to nearly $2 billion, thereby putting massive pressure on the Balance of Payments position.
This has piled pressure on the local currency, the Kwacha, which has remained volatile in recent past.
“Should Malawi not be able to redress this pattern, the balance of payments position would be in peril, and Malawi’s macroeconomic fundamentals would be significantly affected, with the knock-on effects on an already impoverished population,” Navaro.
Key, according to Navaro, would be attract, protect and nurture foreign direct investment and industrialisation to Malawi.
However, the government feels the AfCFTA would constitute a definite part of the solution to closing the trade imbalance.
Director of Trade Clement Kumbemba said the strategy outlines markets and opportunities for Malawian products, value chains’ profitability, bottlenecks and solutions among others.
He rated the strategy as a roadmap to realising maximum benefits from the pact.
He added that ministries, government departments and agencies will also use the strategy to look at how they can address the challenges facing the manufacturing sector.
“The issue of energy problems will soon be a thing of the past because of the many energy projects government has lined up and the issues of transport and raw materials including adding value will also be addressed through government projects,” he said.
Even though Malawi ratified the pact early this year, the Malawi Confederation of Chambers of Commerce and Industry said Malawi stands to benefit less because of challenges such as energy, transport and a struggling manufacturing industry.
The pact is set to be implemented by countries that have ratified it from July 1, 2021.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.