By Burnett Munthali
Minister of Trade and Industry, Simplex Chitchola, expressed concern on Monday, February 13, 2023 over the continued increase in importation of resources.
During his tour at Mwanza Boarder’s one stop center on this day the Minister observed that more trucks loaded with goods were entering Malawi than those leaving the country.
He emphasized that his priority as Minister was to champion industrialization for Malawi to generate more export revenue towards economic growth.
Importing
There are many reasons why import is important. Imports and exports are the components of international trade. If the value of a country’s imports exceeds the value of its exports, the country has a negative balance of trade, also known as a trade deficit.
Import is important to the economy. Moreover, imports increase consumer choice, and help keep prices low raising the purchasing power for consumers. Imports also provide high quality inputs for businesses helping companies and their. employees become or remain highly competitive in both domestic and foreign markets.
However, there are many disadvantages of importing. Foreign exchange risk. There is the danger that there will be a sudden large change in the currency exchange rate. Piracy risk. Even if rare, this possibility must be considered. Political risk. There are many scenarios where this may be a hindrance. Legal risk. Cultural risk.
Exporting
Is Malawi ready to export? Exporting outside Malawi can change business. Like any fundamental change to the way you trade, there are risks as well as benefits this country should consider. Malawi should weigh them up before starting to move into overseas markets.
Of course, there are many advantages for exporting. Malawi could significantly expand its markets, leaving the country less dependent on any single one. Greater production can lead to larger economies of scale and better margins. Research and development budget could work harder as the nation can change existing products to suit new markets.
There are also disadvantages to exporting. Unless Malawi is careful, the country can lose focus on its home markets and existing customers. Malawi’s administration costs may rise as the country may have to deal with export regulations when trading outside the African continent. Malawi will be managing more remote relationships, sometimes thousands of miles away.
In overseas markets, Malawi may lose some of the control that it is used to at home. The country will need to think of its new market differently to the home market. There will be different customers with their own reasons for buying Malawian products.
Better Profit
Everyone is looking for lots of profit in the business. To achieve such an objective, all companies are regularly putting efforts and work hard by which they can make lots of money. All companies want to choose the business opportunity where they can maximize the profit-making rate and avail of several benefits. If we talk about the profit, then we have to take a look on several factors such as – product or goods costing.
In case you pick the option of importing, then you have to choose a country where you can get goods at lower manufacturing cost. It can be possible with lower wages, material costs, and fees. All these things can help you in paying attention to various factors and experience multiple benefits of choosing import business.
Disadvantages- Currency Risk
All countries have to maintain their foreign exchange flow to regulate the currency and its status in the world’s economy. In case a country starts importing things too much higher as compared to the exports, then its currency starts facing issues. Here, the currency rate starts declining in the international market, and other currencies start holding a dominating position. All these things are not good for a developing or under-developed nation like Malawi. It can break a country’s economic backbone.
It is also the main reason that’s why governmental authorities of all countries are promoting export more as compared to the imports. Here, you can say, importing goods can be beneficial for a company from the business and profit point of view, but when it comes to the country, then it does not.
Domestic Resources
Some companies are importing competitions or substitutes for domestic products. Due to all these things, locally made products of your country’s market may get a bad hit.
An appeal
These are key facts regarding import business. Here, you can overview both benefits and drawbacks of choosing it. Now it depends on your choice, which one you want to consider. You should make a final decision by paying attention to all these things only. In case you have an interest in starting an import business, then you should research and read more.
All in all, for export to take place, Malawians must establish industries in order to produce and manufacture what they want to export outside the country without which the economy won’t improve.
We need more industries now than ever before in order for our economy to move from where it is to a middle income economy and beyond. Enough of dreaming and talking without any action. Malawi must start doing things in order to move forward.
