Malawi Trade Performance Reviews (TPR)

Intra-SADC Trade Performance Review 2006: Chapter 2: Malawi

Year of publication: 
2006
Author(s): 
Lawrence Mapemba, independent consultant
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Malawi’s trade balance has been worsening in recent years. Even though the value of its exports has increased over time, Malawi’s imports have been increasing in value much more sizeably than have its the exports. The Malawian economy has not been innovative enough to move away from a specialisation in the production and exportation of primary agricultural products. Since the colonial era, and more than thirty years after independence, Malawi has relied on agriculture and the exportation of primary agricultural products, like tobacco and tea, for the bulk of its export revenue earnings.
 
 Like any other country, the Malawian economy’s demand for processed products, machinery, vehicles and other manufactured products has resulted in the country’s imports surpassing the value of its exports. Even as a primarily agricultural economy, Malawi has regularly failed to produce enough food for its own population and has been forced to import food. As a land-locked country, coupled with its low levels of education and a lack of endowments of large quantities of valuable natural resources, Malawi may look at the agricultural sector as a source of economic growth in the medium term. In the long term, Malawi needs to diversify in order to survive in the global economy.
 
The current government should move quickly to develop the Shire-Zambezi waterway, as this may reduce transportation costs and ease its access to seaports through which its imports and exports travel. Promoting the development of high-quality export products and diversifying its exports will allow Malawi to take full advantage of the waterway project.

Trade Performance Review 2005: Malawi

Year of publication: 
2005
Author(s): 
Kelvin Banda
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Malawi's trade balance with the rest of the world has been sharply worsening since 1999 when the only positive balance was registered. The positive balance in 1999 was on account of a generally good agricultural season for most of the traditional export crops. However, the situation could not be sustained despite the continued depreciation of the Malawi Kwacha (MK) against the USA Dollar over those years and consequent increase in export earnings. The trade balance was worsened by a sharp increase in imports for two main reasons. Malawian importers took advantage of the depreciating South African Rand to import more goods and commodities while also taking advantage of the trade liberalisation policies adopted by Malawi. Hence the Malawi economy was slowly turning into a market place of finished imported goods. On the domestic side, agricultural inputs became expensive due to the depreciation of the Kwacha that made agricultural imports expensive for farmers hence imports grew faster than exports at 62.3% to 21.4% during the period, respectively.

                                                                                                                                                                                                                                                  This translated into a worsening trade balance with South Africa from 1999 to 2003. During this period Malawi's exports and imports to South Africa accounted for 10.9% and 39.9% of total exports and imports to the rest of the world, respectively.  Malawi's trade balance with the rest of SADC countries has not been satisfactory over the period under review either. Malawi registered positive balances in 1999 and in 2001 against negative balances in 2000, 2002 and 2003. These variations were largely due to inconsistent agricultural output because of variable weather patterns - changes which leave Malawi vulnerable as its agriculture is basically rain-fed. This negatively affected exports of major commodities, while at the same time the country imported relief maize on a massive scale following poor food crop harvests. This worsened the trade balance as imports grew faster than exports at an average of 115.4% compared to 26.5%. As a share of total exports and imports, exports to and imports from SADC accounted for 18.1% and 12.8%, respectively, during the period 1999 to 2003. It is evident that Malawi's imports from SA alone were higher than those from the rest of SADC.

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