malawi loan to spur trade - Matambo

The P81million credit line recently extended to drought-stricken Malawi will boost trade and benefit the private sector, Finance Minister Kenneth Matambo said. Botswana has announced a decision to extend a US$10 million loan payable in 10 years with interest at market value – to the Southern African country. “We are currently negotiating with commercial banks to loan Malawi with interest, while government will act as a guarantor,” Matambo said.

President Ian Khama and his Malawian counterpart Joyce Banda sealed the deal recently during the latter’s state visit. Matambo was optimistic that commercial banks would benefit, as they will be able to generate profit through loans with interest. “The benefits will further trickle down to the private sector directly because the loan is under a condition that Malawi buys goods in Botswana.” Malawi is predominantly an agricultural economy with a rural population of about 90 percent.

Botswana expects to sell livestock vaccines to the landlocked famine stricken country. Botswana is also expected to export fuel and livestock (cattle) to the former British colony. “Even farmers here will be able to sell cattle to Malawi, thus securing a new market,” said an upbeat minister. Khama also committed his government to import beans and other legumes from Malawi. He said Botswana would assess the extent of the imports from Malawi.
 Trade between Botswana and Malawi remains unimpressive. Botswana exports automotive and forklift batteries and salt to Malawi. These are manufactured by Chloride Oxide Botswana. There is also potential to increase exports of products such as footwear, floor tiles, PVC pipes, water taps, towels and protective clothing. Statistics Botswana reveals that Botswana’s imports from Malawi have been growing over the years. Between 2010 and 2012 imports grew from P7 million to P22 million.

Exports to Malawi have been declining from P18 million to P13 million under the same period. Botswana Confederation of Commerce Industry and Manpower (BOCCIM) Chief Executive Officer (CEO) Maria Machailo-Ellis is optimistic that trade between the two countries will increase. She was excited that a line of credit would be extended to Malawi to finance Joint Venture investments by Botswana businesses in Malawi covering the agricultural, trade and tourism sectors. She said this would benefit the two economies and grow intra SADC trade. Malawi ranks among the world’s least developed countries. Agriculture accounts for 37 percent of GDP and 85 percent of export revenues. The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations.

Malawi faces strong challenges: to spur exports, to improve educational and health facilities, to face up to environmental problems of deforestation and erosion, and to deal with the rapidly growing problem of HIV/AIDS in Africa. (Additional reporting from Wikipedia/economy/Malawi).