Analysts count the cost of demos on Malawi's economy

A looted Spar shop in Lilongwe

The post-election protests which have now become commonplace are a cause for worry to the country’s economic players and experts.

Executive secretary for Chamber of Small and Medium business Associations James Chiutsi noted that most businesses thrive in certainties and whenever there are uncertainties, they feel the pinch.

He indicated that in the current scenario, people are not free to buy raw materials so too with consumers who are skeptical on going out to buy goods which consequently leads to negative growth.

Chiutsi makes an appeal to those involved ensure that the standoff is quickly resolved.  

“Authorities have a duty to ensure that there is certainty otherwise we are headed for doom,” he cautioned.

Economics Association of Malawi (ECAMA)’s Maleka Thula agreed that political instability has a negative impact on the economy as it makes people uncertain at to when it will end thereby affecting performance of business transactions.

This he noted is bad as players in the industry need to be assured that their business premises will not be targeted from the scuffles which may arise from the demos.

“When they’re not guaranteed that their property will be protected it’s difficult for them to open their business premises.

“It’s even difficult for foreign direct investors to start their businesses in the country,” he explained.

Thula
Thula: Investors need their property to be guaranteed

The ECAMA official stated that this in the long run, reduces investor’s confidence leading to a negative impact on a country’s Gross Domestic Product.

“Foreign Direct Investors can only investwhere property rights will be safeguarded as they can’t take a risk in a country where there is political instability,” he said.

Another expert with audit firm BDO Wilson Gondwe said in a globalised world at a single click of a button, any image is shared all over the world.

He noted that with the demonstrations broadcast all over the world, they would create an image of a country that is about to burst.

Gondwe
Gondwe: A economy that is already fragile can't recover from the demos

“An economy that is already fragile will not recover with such a tendency.

“This does little to restore investor confidence in our country. Society will rebel as they see their standard of living decrease and cost of living rise,” the expert lamented.

He expressed worry that in Malawi the mass mobilization that always descends on Mzuzu has a detrimental impact on certain businesses which are forced close their doors due to the demos, and are often hijacked by criminals who break in and loot shops.

Demos
A scene in Lilongwe depicting the aftermath of the post-election protests

With the country already highly indebted, and the lowest household savings rate at a percentage of GDP, he is of the view this could worsen especially considering that the majority have no assets.

The economist backed the move to shift the International Trade Fair from 20th to 30th June and will be held from August 5 to 16.

He described the development as good arguing that the damage would have been too much.

“It won't change anything on the investor’s side.

“But the move was ideal to protect the goods to be displayed. Also, turnout would have been low considering that everyone would have been skeptical to attend” noted Gondwe.

While the post-election demonstrations have tended to be largely peaceful, they have in some instances turned ugly as protestors have looted and burnt offices/