Industrial output has jumped by 8.8 percent, but some manufacturing firms have witnessed a decline in some segments, figures from the Ministry of Finance and Economic Affairs show.
The Malawi Government Annual Economic Report 2024 compiled by the Ministry of Finance and Economic Affairs shows that industrial output grew by 8.8 percent between 2021 and 2022 while output for the manufacturing sector rose by 5.9 percent.
However, there was a general decline in output in three out of five segments of the manufacturing sector, according to the report.
Reads the report in part: “A 72.9 percent increase was registered for the manufacture of tobacco products and the manufacturing of rubber and plastic products increased by 7.8 percent.
“The manufacturing of tobacco products alone contributed 65.3 percentage points to the annual growth rate and volume of production in Malawi.”
Meanwhile, output in the manufacture of food products dropped by 14 percent from the 2021 levels while the manufacture of beverages and chemicals and chemical products dropped by 35.6 percent and 29.3 percent, respectively.
The drop in output, attributed to the scarcity of foreign exchange and fuel, threatened to derail the country’s efforts to spur economic transformation through Industrialisation.
Reacting to the report, economist Bond Mtembezeka said the limited access to credit extended to the private sector, which has historically been skewed against the manufacturing sector, might have prevented the manufacturing sector from accessing credit during acute forex scarcity.
He said: “Manufacturers import raw materials and to do that they also rely on the lines of credit.
“If foreign exchange is scarce, they can’t import as much and by implication, cannot acquire as much credit.”
On the manufacturing sector’s capacity to boost economic growth, Mtembezeka said it is hard to achieve that goal when some of the segments in the manufacturing sector are in a state of decline.
On his part, economic analyst Dalitso Kubalasa urged local authorities to ensure that there is more financing going to the manufacturing and agricultural sectors to revitalize the ailing economy.
The Ministry of Finance and Economic Affairs is in the process of developing Special Economic Zones to attract investors to critical sectors of the economy having enacted Special Economic Zones Bill last year.
The manufacturing sector is grow in 2024 and 2025 at 4.4 percent and 4.6 percent, respectively.
Source: Malawi Nation online