BY WILLIAM KUMWEMBE:
A recent report by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has shown that Malawi’s economy is still highly integrated to the Southern Africa Development Community (Sadc) region and the European Union (EU) for trade than it is to the Common Market to the Eastern and Southern Africa (Comesa).
The report, however, shows that the trade gap remains wide as Malawi has failed to make strides in growing its export base, a situation commentators have described as retrogressive.
Despite the Comesa region having more countries than Sadc, Malawi’s top export destinations and import sources are still within the Sadc region and the EU.
In its Second Quarter Economic Review, MCCCI recommends that Malawi should diversify its trading partners to remain competitive.
Statistics given in the report show that, in 2017, imports from the EU stood at 5.5 percent of Gross Domestic Product (GDP).
The share of Malawi’s trade with the Sadc region was 20.7 percent of the GDP in 2017, a decline from 20.96 percent of GDP generated in the previous year.
The report further shows that, in Sadc, Malawi trades more with South Africa, Mozambique and Zimbabwe than other members.
South Africa dominates the share of Malawi trade, accounting for 57.9 percent of all imports from the 14 member Sadc block, with its imports accounting for 7.7 percent of GDP.
The report further shows that the share of imports from South Africa has always been larger than the share of imports from both Comesa and EU countries.
On the other side, imports from Comesa only accounted for 3.8 percent of the GDP in 2017 while share of trade stood at 8.2 percent of GDP.
According to the report, the trade-to-GDP ratio for Malawi indicates that Malawi has a higher level of integration to some regions than others.
“…the nation will be more susceptible to conditions affecting its imports since more international trade is generated through imports and less through exports,” reads the report in part.
It says economic developments that affect the level of trade in Sadc and the EU would, therefore, have a greater impact on the economy of Malawi than developments prevailing in the Comesa region.
In an interview Monday, Professor of Finance and Corporate Strategy at the University of Malawi’s The Polytechnic, James Kamwachali Khomba, said the country should review its position on the global market and become competitive.
“Concentration is on Sadc, mainly because we are importing almost everything and eventually, failing to produce. The local manufacturing component is shrinking and this is greatly affecting our competitiveness,” Khomba said.