Reserve Bank of Malawi (RBM) says the country is exporting $1 billion worth of products; but importing $3 billion of goods creating a deficit of $2 billion which is huge and must be corrected through industrialization.
Speaking during the 2022 Monetary policy conference, Central bank Governor Dr. Wilson Banda fears if this is not addressed, then governments sustainable jobs agenda cannot easily be achieved.
“We are importing about $3 billion worth of goods and services and exporting about a billion, so we have got a trade gap of about $2 billion. Going forward, we need to find ways of increasing our export revenue generation and this would naturally mean that we need to invest more in agriculture, in mining and in other sectors which have got a potential to generate foreign currency”
He further stated on the need to do more in utilizing the Export development fund (EDF) and urged other players on the market to join the efforts in generating forex.
With agriculture being Malawi’s resource endowment, the RBM boss says this could be a starting point to go into mega farms in high value export crops such as soya and ginger which must be done on a large scale through irrigation.
Whilst observing that tobacco, tea and sugar have been leading exports for Malawi for many years, he stated they have run their race hence the need to bring in other commodities.
As part of its export diversifying base, the bank is buying gold from most parts of the country in Machinga, Lilongwe and Nkhotakota and hinted on the need to move into mining for Malawi to tick.
“Yes we are buying gold but we need to go into large scale mining because what we’re currently buying is small scale alluvial gold and we need to ramp up production of those and buy large quantities of gold that would make a difference.
”So over the past year, yes we have accumulated some gold; we have some gold even in the Reserve bank right now; a thing that wasn’t there before. Now we have gold but we need to increase our purchases of gold and that is going to expand our foreign currency earning capacity”