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| Foreign investors shun agriculture |
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by
Ephraim Munthali, 28 January 2004
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16:13:23
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Agriculture attracts less foreign investment than manufacturing, wholesale and retail trading despite being the mainstay of Malawi’s economy, a survey on foreign investment has revealed.
Presenting the findings on foreign assets and liabilities, flows and assets, National Statistical Office (NSO) in Blantyre on Wednesday, deputy commissioner Mercy Kanyuka said foreign investment in agriculture is decreasing.
The survey, carried out since March 2003, reveals that in 2000, only 13.4 percent of total foreign investments went to agriculture and dropped to 13.1 in 2001.
But wholesale and retail trading accounted for 32.2 percent in 2000 and rose to 3.1 percent in 2001 of the total foreign investment.
Manufacturing got 32.8 percent of foreign investment in 2000 but the figure dropped to 30 percent in 2001.
“There was a sectoral shift in predominance of investment between manufacturing and wholesale trading sectors between 2000 and 2001,” explained Kanyuka.
Official figures indicate that in 2000, agricultural commodities contributed 86 percent of Malawi’s total exports while in 2001 the sector put in 83 percent.
During the same years, agriculture contributed 41 percent to the Gross Domestic Product (GDP) and 39 percent respectively.
Manufacturing on the other hand contributed 11.6 percent to the GDP in 2001 while figures for wholesale and retailing were not available.
The survey revealed between 2000 and 2001, Balance of Payment and international investment into the country increased from US$300 million in 2000 to US$370 million in 2001.
This accounted for 20.2 percent of GDP in 2001, of which 17.9 percent was Foreign Direct Investment (FDI), according to Kanyuka.
“This points to the fact that FDI is an important source of private investment in Malawi,” said Kanyuka.
Commenting on the state of affairs, Malawi Stock Exchange (MSE) operations manager John Kamanga said too much investor interest in wholesale and retailing is “dangerous” because it is turning Malawi into a trading centre of other nations since Malawi is not producing much itself.
“This is alarming because it means that Malawi is becoming more of a vendor than a producer,” said Kamanga.
But Reserve Bank of Malawi (RBM) Economic Services general manager Wilson Banda said vending is not that bad because it indicates a growth in the informal sector.
“This economy is not creating jobs so there is no problem with vending because it enables people to earn a living,” said Banda.
Sadwick Mtonakutha of the Ministry of Economic Planning and Development warned that encouraging trading without production will put pressure on the exchange rate.
“Government should regulate the imports of certain products, especially those that relate to sectors that are targeted for growth like what is done in the poultry industry,” he said.
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