Business confidence remains at low levels

A report by the World Bank says most players in the business sector are still unsatisfied with the business conditions prevailing in the country and the bank has warned that this may lead to a decline in investment and growth.

In its third edition of the Malawi Economic Monitor, the World Bank blames the situation on the extended period of macroeconomic instability characterised by high interest and inflation rates that undermines the profitability of new investments.

The World Bank has also identified weather shocks, unreliable power supply and delayed payments and issuance of zero coupon bonds as being among the constraints making the business environment even more challenging.

“The level of investor confidence remains subdued. Even prior to the advent of the weather shocks, the level of confidence of Malawi’s private sector was already low as a result of the extended period of macroeconomic instability in recent years characterised by high interest rates and inflation rates that undermine the profitability of new investments. The high level of exchange rate volatility has also sapped confidence,” said World Bank in the report.

The World Bank says the constraints have impacted most on Malawi’s manufacturing hub in Blantyre where it says the cost of doing business has become significantly higher.

But the World Bank says it remains key for the government to make every effort to lay the foundations for a growth recovery.

An earlier survey done by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) showed that in 2015 alone, business confidence plunged by 34 points to stand at 65 points.

MCCCI said the results were a clear indication that the business environment in the country is deteoriating. But government, through Minister of Industry, Trade and Tourism, Joseph Mwanamvekha has since reaffirmed government’s commitment to create a conducive environment for businesses in the country to thrive.

In an earlier interview, Mwanamvekha said government is aiming at creating sustainable businesses. He said his ministry is currently working on various programmes to benefit the private sector.