TRALAC - Trade Law Centre

Turning Export Opportunities Into Business

Friday, 17 September 2004

Source: Malawi Standard (Blantyre)

Malawi has realized about U$200 million, approximately (K2 billion) in foreign exchange earnings from textile and garments exports under the African Growth Opportunity Act (AGOA) for the past one and a half years, officials have said.

The Malawi Garments, Textile and Leather Industrial Council Chairperson, Kentilal Desai however said in an interview that this is not to their anticipation.

He noted that the foreign exchange earned is not that much because the industry imports most of the raw materials including polyester and fabrics.

"AGOA was a credit to Malawi just about one and a half years ago and there has been tremendous growth from American export market. Some of the companies have achieved 200 percent export growth in AGOA market and it has given bloodline to some industries that were sick," the chairperson said.

"If the raw material is available next door, we can make ourselves competitive on the world market. Malawi has all the ingredients to produce good products at competitive price only as long as the required assistance and resources are made available for the industry," he observed.

Desai challenged that the textile and garments industry would become the major forex spinner and employer with the availability of the resources.

Desai asked for government and donor intervention to revamp the industry that has potential but lacks resources.

He further observed that Malawi exports less into AGOA as compared to other countries like Lesotho, Swaziland, Kenya and Uganda hence the need to attract investors.

Africa exports less than one percent under AGOA, according to Desai.

"The markets are available under various trade protocols and agreements. We have the ingredients, all that we need is to attract investors at local, regional and international level, but the question is how?

"We still have a long way to go to satisfy AGOA. We need huge investments because our exports into AGOA are very small," said Desai.

He urged the government to put in place a conducive environment, like lowering interest rates that banks charge on loans and loan drafts.

The chairperson urged the government to provide tax incentives to companies that would create jobs to Malawians, and make the tax system affordable.

Desai pointed out that there is no way an industry can be competitive by borrowing from a bank only to suffer interest rates.

He recalled that interest rates went as high as 55 percent, even the current 35 percent is not competitive.

We need interest rates to fall between 15 and 10 percent so that industry can expand.

He noted that interest rates attract inflation which in turn affects the workforce as their earnings are eaten up by inflation.

"The employee is not happy with his earnings and this has a direct impact on production because the worker has no stable mind. If a worker is not comfortable, he cannot be competitive.

How do you expect an employee who has walked two-three kilometers to work effectively on the machine?" he asked.

He said the newly formed Textile Garments and Textile Industrial Council would prioritize concerns of employees such as issues of housing, health and sanitation for workers among others.

There are about 10 active textile and garments industries in Malawi with a workforce of about 10, 000 people, according to Desai.



“AGOA Latest AGOA Trade Data on AGOA.info


Click here to view a sector profile of Malawi’s bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.


Other regularly updated trade statistics on AGOA.info include:

  • AGOA-beneficiary Countries’ AGOA and GSP Trade Aggregates

  • AGOA Trade by Industry Sector

  • Apparel Trade under AGOA’s Wearing Apparel Provisions

  • Latest Apparel Quotas under AGOA

  • Bilateral Trade Data for all AGOA-eligible countries individually.