Private sector key to prosperity drive

Post was last updated: November 29, 2017

At a time it is critical to maintain gains that have been registered in some key fundamentals, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said the country has no choice but to support the growth of the private sector in order to improve the outlook of its economic performance.

The proposition is coming at a time electricity supply has become a major constraint to industrial activity, while posing as a disincentive to investment.

MCCCI President, Karl Chokotho, said the private sector is the only hope for the country to meet its revenue targets as resources from development partners continue to dwindle.

“There is little donor money trickling in, yet the targets for both tax and non-tax revenue are increased every year. The only source of such resources is a vibrant private sector,” Chokotho said.

When he became president, Peter Mutharika pledged that his government would restore private sector confidence in the economy and, consequently, strengthen business enterprises to contribute more positively to Malawi’s socio-economic development.

Mutharika said his government recognised the important role the private sector plays as an engine for economic growth and a source of direct revenue and employment.

However, the business environment in Malawi continues to deteriorate and a number of studies undertaken by various authorities have shown that a number of obstacles continue to emerge every year.

But Chokotho said efforts to support private sector development remain critical to the economic development of the country.

“At the moment, with power generation at less than 200 megawatts despite the demand being more than double that, the private sector is struggling to survive, let alone grow. Repercussions of such a business environment are that private investors, both existing and potential, are scared.

“Consequently, there is no creation of employment and reduced revenues, among other consequences,” he said.

In his observation, Chokotho said, while the private sector is highlighted as the engine of growth in all economic policy documents of the Malawi Government such as the National Industrial Policy, the National Trade Policy, the National Export Strategy and the Malawi Growth and Development Strategy, the necessary business environment for such private sector to deliver on its potential is not created.

“Government’s capacity to create jobs is limited by how much it can raise to pay the employees. The sure source of employment is, therefore, the private sector.

“As such, the private sector has to be given [a chance to play] its rightful role to deliver on its economic potential. But to do that, the government will have to be serious with implementation of its many, not so bad, policies. Government will have to be interested in the future of Malawi, not [just] in short-term benefits that accrue to a few individuals. That way, the role of the private sector will be pronounced and recognised properly,” Chokotho said.

The private sector in the country has been shrinking in the recent past, and the low economic growth pattern experienced in Malawi is considered one of the factors behind private sector shrinkage.

Manufacturing has, on average, grown by about four percent in the last five years and has, on average, been contributing about 9.4 percent to the country’s Gross Domestic Product, according to economic reports issued by the Ministry of Finance, Economic Planning and Development.

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