Malawi’s taste for imports hurting economy The country's import bill hit $2.8 billion in 2014 against $1.3 billion in export earnings

Malawi

Malawi

BLANTYRE, Malawi (AA) – A growing appetite for imported foreign products among Malawian consumers is raising concerns about the trend’s possible impact on the national economy.

“We want Malawians to embrace the ‘Best Buy Malawi’ campaign, where we urge locals to buy locally made products because imports are hurting our economy,” Industry and Trade Minister Joseph Mwanamvekha told The Anadolu Agency.

He voiced concern about the increasing consumption of imported goods among his compatriots.

“I get worried when companies even import fish instead of value-adding to local types of fish, especially Chambo,” he said, referring to Malawi’s most popular home-grown fish.

The “Best Buy Malawi” campaign, which was first launched decades ago, was revived by President Peter Mutharika when he came to power in June of last year following a deluge of foreign products into the local market.

Over the past year, imports – of both goods and services – have been twice as much as the country’s exports, revealing a strong local appetite for foreign commodities.

According to official data from the Reserve Bank of Malawi, the country’s import bill hit $2.8 billion in 2014 against $1.3 billion in export earnings.

Exports are expected to grow this year to $1.6 billion (roughly 754 billion Malawi kwacha), while imports are projected to jump to $3.3 billion (some 1.6 trillion Malawi kwacha).

This, observers say, will put more pressure on the local currency and negatively affect the country’s trade deficit and balance of payments.

Although the government launched a national export strategy in 2012 and re-instituted the “Best Buy Malawi” campaign, Malawians continue to import goods and services – including many that could be locally produced.

Generally, along with motor vehicles and electronic gadgets that are not manufactured locally, traders import almost everything, including tomatoes and table eggs.

-Better-

Many Malawians believe imported products are of better quality.

“Imported goods are of high quality and affordable,” Olipa Manda, a cross-border trader, told AA.

“Most people love imported items. That’s why we have so many people going to South Africa or Tanzania to import clothes for sale,” she added.

Shadreck Chigwenembe, a local businessman in Blantyre, Malawi’s second largest city and the country’s financial and commercial center, noted the high demand for Chinese products in particular.

“When we import from South Africa, the price is three times that of the same product from China,” he told AA.

“So my customers prefer Chinese goods because they’re affordable,” Chigwenembe explained.

“A television set from China is sold here at $65 [about 35,000 Malawi kwacha], compared to $200 for a South African set,” he said.

Chigwenembe and his business partner have shops in Blantyre, Chikhwawa and Limbe, all of which sell Chinese products.

“If you go to shops that sell original products, you will not find a lot of people,” he said. “But here we make good sales on a good day.”

Chigwenembe explained that businesspeople preferred Chinese products because they also cost less to import compared to importing goods from South Africa, Malawi’s regional trade partner.

Malawi imports about 40 percent of its commodities from the southern African giant.

“It is easy to import [from China]. We have some Chinese people in Lilongwe who import on our behalf,” Chigwenembe told AA.

“We collect these items from a container in Lilongwe,” he explained. “I don’t spend much and I don’t deal with tax authorities to clear my merchandise.”

-Challenges-

Aubrey Mchulu, a local business journalist, says for Malawi to do well in international trade, it must improve its business climate, which is currently marred by obstacles such as an unreliable water and power supply, high lending rates, poor infrastructure and excessive red tape.

He told AA that, due to the unreliable power and water supply, businesses were forced to incur extra costs by purchasing standby generators and water tanks.

In the end, production costs go up which are then passed on to consumers through higher prices for goods and services.

“To favorably compete on the international scene, we must demonstrate that our production costs are lower,” said Mchulu.

“For instance, if a good-quality shirt made in Malawi is the equivalent of 2,000 Malawi kwacha [roughly $4] cheaper than those made in China or Thailand, we would be in business,” he added.

Mchulu suggested that patriotic support for locally made products was also needed to avoid an unnecessary drain on the country’s foreign exchange reserves.

On the ground, however, would-be buyers are looking for what they can afford.

“It’s better to have a cheap shoe than no shoes at all,” Maggie Bandula told AA at the Blantyre flea market, where numerous Chinese products are found.

“Local shoes are very expensive, while Chinese ones are less than $2,” she said.

© 2015, Moses Michael-Phiri. All rights reserved. – The views expressed here are purely those of the author and not necessarily those of the publishers. – Newstime Africa content cannot be reproduced in any form – electronic or print – without prior consent of the Publishers. Copyright infringement will be pursued and perpetrators prosecuted.

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