Manufacturing set to grow by 3.5% in 2019

post was last updated: March 22, 2019

By Taonga Sabola:

KAPONDAMGAGA

The country’s manufacturing sector is expected to grow by 3.5 percent in 2019, partly due to the anticipated strong growth in agriculture, the Reserve Bank of Malawi (RBM) has predicted.

The projected growth is 0.3 percentage points shy of the 3.8 percent forecast for 2018.

It is, however, 1.5 percentage points higher than the 2 percent realised in 2017.

Analysts have argued that impoverished Malawi needs a robust manufacturing sector to add value to the agriculture products and create the much-needed jobs.

In its Fourth Quarter 2018 Economic Review, RBM says manufacturing would have been higher in 2018 if not for weak agricultural production and the persistence of cheap, smuggled products which created unfair competition with locally produced products.

“Further, the frequent power outages impacted negatively on the profitability of companies despite the cost remaining unchanged.

“In the medium term, finalisation of the Malawi- Mozambique power interconnection project will translate to more growth in the sector,” RBM says.

Agriculture authorities are this year expecting a robust performance of the sector buoyed by good rains though the floods that hit most of the maize producing districts in the Southern Region between March 3 and 7 pose a serious threat to the prospects.

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) President, Prince Kapondamgaga, noted last year that addressing issues of low production in agriculture, which could feed into manufacturing, could be a good starting point to turn Malawi’s manufacturing dream into reality.

Kapondamgaga said low productivity means very little left for commercial purposes after domestic consumption.

He said low productivity levels arise from the fact that the vast majority of agricultural activities in Malawi are undertaken at subsistence levels and on very small pieces of land.

According to Kapondamgaga, because agriculture is mainly a private sector undertaking, the government should spell out a policy framework that would provide an incentive for organised farmers to invest in the sector and promote agro-processing and value-addition rather than production of primary commodities.

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