Thursday, 4 December 2014

MCCI says Manufacturing Industry is the way to go

The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) say the country can move forward economically if it adopt and priotise Industrialization and Manufacturing sector.

MCCCI has come clear that Malawi economy to succeed like China, Malasia among others it will have to be driven by the manufacturing sector, as it produces high value exportable goods, and maintains sustainable meaningful employment.


“Currently the critical challenge is that the private sector is not growing particularly the key sector of manufacturing. We need to emphasize on manufacturing because manufacturing has different characteristics.” Said Mr. Chancellor Kaferapanjira MCCI Chief Executive Officer

“Every country that has made progress in terms of economic development has done so because of manufacturing sector. When you have factory you have sustainable jobs, a lot of linkages within the economy and you produce products that have value added and the prices of manufacturing goods are unlikely to be volatile like prices in agriculture. So manufacturing should be number one priority for Malawi to move forward.” He said

“The Malawi Investment and Trade Center has indicated that per capita GDP, in other words income per person in Malawi is below those of other countries. The major reason is that the exports that we are exporting out of this country are raw materials and are subject to face volatility.”

“Manufacturing has consistently contributed just around 10 percent to GDP over the past two decades, and the outlook is not promising either. Yet for the Malawi economy to succeed it will have to be driven by the manufacturing sector, as it produces high value exportable goods, and maintains sustainable meaningful employment.”

Kaferapanjira also said government needs to correct some inconsistent policies that may discourage industrialization by giving an example of raw materials for making soap (soap noodles) that attract duty at 25 percent and V.A.T at 16.5 percent while, imported finished soap does not attract duty and V.A.T.

He added that laws like Special Crops Act, Assent to Land Bill, The Companies Act, are not consistent with investment needs of the country and must therefore be reviewed. The Land Bill must also be accented to.

Kaferapanjira also asked government to address current costs and access to finance. He said lending rates in banks are high and banks usually target sectors or projects with high rates of return over a short period of time. He added that such challenges are also affecting Small Medium Enterprises (SMEs) in addition to lack of necessary skills because of lack of adequate SME support on business information and support.

He also urged government to consider providing export guarantee insurance.

Meanwhile President Peter Mutharika on Wednesday evening at Kamuzu Palace in Lilongwe during the launch of Projects Compendium and National Dialogue on Private Sector Development assured business community that his government will facilitate the access to finance for Malawians, particular long term loans.

“I know that banks are reluctant to lend money to Malawian entrepreneurs because of high default rates and inefficient enforcement mechanisms. Therefore, this Government will fast-track the operationalization of the Credit Reference Bureaus through an amendment of the relevant Act. Reform the secured transactions regime through the operationalization of the Personal Property Securities Act and the Collateral Registry, and the establishment of a National Identification and Registration System.”

Furthermore, he said “To address long term financing constraints, the Government, through the Reserve Bank of Malawi, will establish a Development Bank that will fund projects that have a potential to bring structural transformation to this country.” And added, “We will further support the Export Development Fund (EDF) by guaranteeing its US Dollar line of credit”

He added that the unpredictability of policies has been identified as one of the major obstacles by some segments of the private sector his administration will ensure transparency and avoid disruptive policy reversals.

“This will entail review of certain laws that are riddled with discretion and replace them with predictable provisions.” He said

He also assured that government will advocate for the enactment of all land-related Bills that were submitted to parliament, in order to strengthen the rights of all land holders and allow for a more transparent and efficient land market. Furthermore, he said government will improve land management and administration and with support from its development partners, will undertake a land profiling study of the whole county in order to identify available land for investment.



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