Corruption, access to finance, tax rates and inflation are key obstacles to doing business in the country, a new World Economic Forum’s (WEF) Global Competitiveness Report has said.
The report, which assesses 137 economies, ranks Malawi on position 132 and has indicated inadequate supply of infrastructure, inefficient government bureaucracy, policy instability and inadequately educated workforce as other problematic factors for doing business in Malawi.
The report shows that corruption, access to finance and tax rates with a score of 19.7, 13.0 and 12.5, respectively.
Compared to the previous year, Malawi was ranked 134 out of 138 economies with access to finance (14.2), high inflation rate (12.6) and corruption (11.2) as the most problematic factors to doing business in the country.
Ministry of Industry, Trade and Tourism spokesperson Wiskes Nkombezi recently said government has instituted measures aimed at addressing the bottlenecks that impede the country on doing business.
“The [on-going Civil Service Reforms Programme] are intended to remove and deal with these systemic bottlenecks. Government wants to address the skills gaps. Government is taking care of the issues raised,” he said.
In recent months, Malawi’s cost of borrowing has been going down following the reduction of the policy rate due to the positive performance in the macro-economic fundamentals including a reduction in inflation rate, now in single digits at 9.3 as of August 2017.
But the country continues to perform poorly in fighting corruption, slipping eight steps from 112 in 2012 to 120 out of 176 economies, with a score of 30, on the 2016 Transparency International (TI) Corruption Perception Index (CPI) rankings.
The poor ranking has potential to keep away potential investors and development partners who use the corruption perception index as a basis for estimating the levels of risks for business and investments in a country.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) president Karl Chokotho is on record having said that it is sad to note that despite registering massive cases of corruption since 2013, the private sector has not seen any meaningful implementation of government policies meant to support it.
“When corruption is on the rise and government behaves as if nothing is wrong, companies lose confidence in government policies because they do not speak to actions. As a result, the businesses take a back seat and do not feel that it is worthwhile continuing talking to government about the need to change policies because government is not listening,” he said.
Minister of Finance, Economic Planning and Development Goodall Gondwe is on record having admitted that the 2013 cashgate where K24 billion could not be accounted for has had a long-lasting impact on the country’s economy saying government has put in place right conditions for recovery.