A latest Malawi Business Climate Survey by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) indicates that business activities slowed down in 2019.
This is largely attributed to the political impasse after the May 21 elections.
But business operations were also constrained by several bottlenecks including energy woes, high cost of finance, excessive government borrowing, high corruption levels and poor quality and high cost of telecommunications services.
In the year under review, Malawi saw stability in key economic indicators including inflation, which remained within the single digit band for a greater part, stability in exchange rate and forex availability.
In its report, the chamber says the obstacles, however, outpaced the registered gains.
“Economic gains made in macroeconomic management such as single digit inflation rates, declining interest rates, stable exchange rate availability of foreign exchange and other economic variables, were watered down …,” reads part of the reported issued yesterday.
The industry captains fear that economic growth, as measured by the rate of growth of Gross Domestic Product (GDP), would in turn remain subdued in the short to medium terms.
It was projected that the economy would grow by 5 percent in 2019.
Figures show that in 2012, GDP growth was 2.1 percent but climbed to 6.3 percent in 2013. In 2013, the economy grew by 6 percent but the growth rate dwindled to 3.1 percent in 2015 whereas in 2016 the growth rate was 2.1 percent.
In 2017 the growth rate was 5.1 percent, while in 2018 it was 4.1 percent.
“These paltry GDP growth rates are ominously insignificant and have no impact whatsoever on poverty eradication on the people of Malawi.
“The growth rates do reflect lack of meaningful creation of wealth by the private sector owing to persistent insurmountable obstacles to doing business whose solutions are not forthcoming,” MCCCI says in the report.
Commenting on the energy challenges, MCCCI says it sees lack of seriousness from authorities, hence, failure by the private sector to respond to the positive development in the macroeconomic management.
In its outlook for 2020 and beyond, the chamber fears that this year may be another difficult year.
“MCCCI thus forecast the business environment to be just as challenging in 2020, especially in the first quarter.
“Due to this depressed scenario, the performance of the private sector will likely continue to be negatively affected unless authorities appreciated the serious impact of these challenges,” MCCCI says.
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