[{"bbox": [146, 151, 1083, 284], "category": "Text", "text": "value chains. Malawi's trade and current account are thus structurally imbalanced, with imports accounting on average more than twice the country's exports. Although there is a myriad of constraints to exporting, particularly important is the lack of access to conformity assessment support services, which would allow local firms to certify that their products meet the standards demanded in regional and international markets through third party, recognised accredited services."}, {"bbox": [146, 296, 1083, 483], "category": "Text", "text": "The cost of capital in Malawi is very high, with interest rates above 30% even for the largest corporate clients. This is partly due to the high volumes of lending to the Government, which increases the rates and reduces the availability of credit for other potential borrowers (crowding out). Furthermore, the financial sector is dominated by two large players, which enables collusion (see below). The largest banks enjoy high levels of profitability, supported by large holdings of lucrative treasury bills and their narrow focus on the large corporate sector. Finally, the Reserve Bank of Malawi having opted for a tight monetary policy in the context of rising inflation continues to increase the policy rate."}, {"bbox": [146, 494, 1083, 972], "category": "Text", "text": "In sectors where a few large firms have captured economic opportunities there is often a high degree of market concentration and many signals of extensive collusion operating through industry associations exchanging information, inter-firm agreements and lobbying government to distort notionally developmental policies for private benefit. Most of the critical sectors are thus dominated by cartels and other forms of competition constraining practices and structures. This is evident in construction industries, mobile telephony, retail, insurances and agricultural value chains. Lack of competition is leading to increased prices for key goods and services, which has a knock-on effect for small businesses and stifling innovation. The current competition framework does not give the Competition and Fair Trading Commission (CFTC) effective tools to create a competitive interface with other regulatory bodies in the economy, rendering the CFTC ineffective in its role in promoting competitive business practices and contributing to improving the business environment. Moreover, CFTC imposed fines, which are much too low⁵ to prevent anti-competitive practices. Additionally, political sensitivities exist in the competition landscape as private entities either are owned by politicians or have the ability to influence political support to promote anticompetitive business practices. Finally, there is lack of formal competition training in Malawi's tertiary education curricula as well as limited competition jurisprudence in Malawi, with relatively dismal training on competition done to judges and technical staff in the judiciary. According to CFTC, there is currently only one judge who is trained accordingly and therefore understands and can adjudicate in competition cases."}, {"bbox": [146, 984, 1083, 1329], "category": "Text", "text": "Another key challenge lies in the degradation of diminishing natural resources that are unsupported by sustainable business models. Malawi's natural resources base is subject to increasing pressure as a result of high population growth, unsustainable agricultural practices, poverty and a lack of environmental awareness. The result is increased degradation of the environment, with significant loss of soil fertility, soil erosion, serious deforestation, water depletion, pollution and loss of biodiversity. The private sector predominantly uses linear business models, but could play a major role in transitioning the economy and contribute to more sustainable development. This could be achieved through adopting greening business models that are environmentally and socially inclusive, which could lead to profitable ventures. Adoption of circular business models such as promotion of biogas technology, e-waste management, promoting green manufacturing and eco-industrial zones and green standards and labelling in the tourism industry go a long way in contributing towards sustainable development. Yet the authorities are still to develop a robust framework of relevant fiscal and financial incentives to initiate and support the green economic transition of the private sector."}, {"bbox": [146, 1341, 1083, 1524], "category": "Text", "text": "While the Government is keen on developing private sector led growth through an enabling environment, many bottlenecks remain. It is therefore pertinent to address some of the key challenges and enhance private sector productivity by among others, providing affordable access to finance with conducive repayment conditions to companies, supporting conformity assessments to facilitate acceptability of Malawi's exports to regional and international markets, supporting the country's investment promotion and facilitation efforts, and encouraging competitive ad fair trading practices in business."}, {"bbox": [146, 1589, 584, 1612], "category": "Footnote", "text": "⁵ Most of the time fines amounted to circa EUR 500."}, {"bbox": [977, 1681, 1082, 1705], "category": "Page-footer", "text": "Page 6 of 24"}]