Trade Policy Review of Malawi. Delivered by the UK on 9th October 2024.
Chair, let me begin by offering a warm welcome to the delegation from Malawi, my gratitude to colleagues from the WTO Secretariat for their report, to you Chair, as ever, and to Ambassador Theodore for her insightful comments.
Bilateral Relationship
The UK shares a close bilateral and trading relationship with Malawi, including a deep historical relationship with Scotland, and we were pleased to see recognition of the importance of our economic ties laid out in the reports.
As one of the top five investors into Malawi's economy, we want British businesses to be able to continue to invest to benefit both our economies. This desire informs the UK's role as a supportive and reliable partner in promoting inclusive economic growth in Malawi.
Report Analysis
Chair, the UK is aware of the external economic challenges faced by Malawi in recent years: COVID-19, inflationary pressures from Russia's invasion of Ukraine and natural disasters.
The secretariat's report highlights some positive developments in Malawi's economy, including domestic trade policy reforms, increased focus on infrastructure development, and strong performance within the construction industry, which registered a growth rate of 8.2% in 2023. Malawi's trade in services also increased from 113.9 million USD in 2016 to 474.6 million USD in 2023. However, the report also highlights some of the key challenges that continue to hold back growth through trade, related to both enforcement of rules but also, critically, macro-economic stability.
At the end of 2023, Malawi secured an IMF Extended Credit Facility programme. We believe that this programme provides Malawi with the best opportunity to address its difficulties with debt, foreign exchange, inflation and fiscal sustainability and ultimately put in place the conditions for high, export-led growth. We encourage Malawi to take full advantage of this opportunity.
We are pleased to hear about the impact that the Enhanced Integrated Framework is having on the ground in Malawi, including support to review the first National Export Strategy. The UK believes strongly in providing aid for trade to support Least Developed Countries (LDCs) to integrate into the multilateral trading system, and to participate fully at the WTO.
Development Relationship
The UK has budgeted £51 million of Official Development Assistance for Malawi in 2024/25. An important focus of this economic development support is to help Malawi grow and diversify its exports. Though our Malawi Trade and Investment Programme (MTIP), we aim to help Malawi stimulate its growth by promoting higher value export sectors, cutting time and costs of trade and logistics, and raising international and domestic investment in new exports.
As an LDC, Malawi continues to benefit from the UK's new Developing Countries Trading Scheme, providing tariff- and quota-free access to the UK market for all products except arms and ammunition, alongside simplified, flexible and more generous rules of origin to make it easier to access the UK market.
Improvements to Business Environment
Chair, for Malawi to take full advantage of these benefits and unleash faster growth and exports, a priority must be to tackle the major challenges in the business environment. Alongside taking measures to improve macroeconomic stability and currency convertibility, the report rightly draws attention to the need to improve access to electricity and other export-critical infrastructure.
We emphasise the benefits that a stable legal and regulatory environment could bring to Malawi's economy. For instance, one issue UK businesses have faced recently is the revised Control of Goods Act (COGA), which has added 11 additional products to the 24 which already fall under the same Act.
The requirements created by the Act for licences during import and export create more cumbersome procedures for many crop exports. This hinders Malawi's agricultural exports, which make up 90% of total merchandise exports.
We urge the government to renew its commitments to transparency and predictability, including through the consultation process stipulated in the COGA. This, we believe, would produce a business environment conducive to stable growth in formal trade, that supports Malawi's critical forex shortages.
WTO
Of course, Chair, the rules-based multilateral trading system which the WTO enables is one of the most important facilitators of a positive business environment. So, the UK welcomes the continued commitment Malawi has shown to the multilateral trading system. We were pleased to see outlined in the in the Malawi 2063 Agenda the key role global trade is set to play in promoting growth to reduce poverty.
We welcome Malawi's participation in the Investment Facilitation for Development Initiative. Further, we would really welcome and encourage Malawi's participation in related plurilateral negotiations, whether they be on Services Domestic Regulation, or the E-commerce Joint Initiative
And as our Ambassador co-chairs the Informal Working Group on Trade and Gender, it would be remiss of the UK not to welcome Malawi's efforts to advance women's economic empowerment and promote women's entrepreneurship. We welcome hearing more about Malawi's experiences in this area at the IWG in the future. Malawi's integration of these issues in the Trade Policy Review, guided by the SheTrades Outlook tool developed by the ITC and the UK, marks a pivotal step towards tracking and driving progress on trade and gender.
On a similar note, let me commend Malawi, and more specifically, Her Excellency, Ambassador Bwanali-Mussa, for the work she is doing in her current role as Chair of the Working Group on Trade, Debt and Finance; a body which has been revitalised and seen new levels of engagement under Her Excellency's leadership.
AfCFTA
The UK has been glad to see Malawi's commitment to another multilateral fora: the African Continental Free Trade Area (AfCFTA).
The African Union's most ambitious regional economic integration initiative has the potential to be a game-changer for Africa's inclusive economic growth, driving industrialisation, generating jobs and delivering inclusive prosperity across the continent. As well as delivering increased prosperity for Africa, if fully implemented it could also generate creating new trade and investment opportunities for businesses, for example by reducing the complexity and cost for businesses operating in multiple countries.
We were therefore glad to see that Malawi's tariff offer has been accepted, and commend Malawi for actively participating in Phase 1 negotiations, developing a strategy for implementation of the AfCFTA Agreement, and undertaking preparations for the Phase II negotiations.
Conclusion
To conclude Chair, I would like to thank Malawi for the huge amount of work which we know goes into a Trade Policy Review, and for their informative answers to the UK's Advanced Written Questions, which we look forward to looking at in more detail later today. Thank you.
