Despite the country`s economy being recently deemed to be on the right track by the International Monetary Fund (IMF), local companies continue to post low profits thus cutting their workforce.
The business sector has suffered a major setback with a number of companies retrenching workers so as to cut costs amidst compromised level of productivity.
In the latest development, 22 employees of Paladin Africa have been laid off.
This follows other companies, Opportunity International Bank of Malawi (OIBM), FDH Bank, and Malawi Institute of Journalism (MIJ), who retrenched workers. Against this background, Malawi`s economy is feeling the pinch with increasing unemployment rate.
In an interview with Malawi24 on Tuesday, economic expert Joshua Mbewe said the effects of poor rains and drought are still hitting the country as assessed by IMF.
He argued that the economy is healing hence the need to maintain the performance in line with the assessment.
“The assessment by IMF was that we are on right track and that means as a country we need to maintain the strengths which have taken us there and bear good fruits along the way,” he said
Meanwhile financial institutions in the country are going through harsh climate mainly characterized by low profits. This indicates that business is not ticking for the institutions, albeit others having a smooth going.
Mbewe said failure to make targeted profits can also be alluded to failure of some financial bodies to withstand competition.
“Though the economy is not ticking but some companies such as those in the banking sector are posting profits in billions, those failing we cannot only attach them to the issue of poor economic growth as that could also be due to failing to withstand the competition within the banking sector.”
Malawi`s economy has been tipped to recover with this season`s bumper maize harvests across the country.
The economy fell below 3 percent in 2016 due to poor climatic conditions in the three previous years. It is expected to grow in the range of 4-5 percent this year.
IMF has been advising the government on how to manage the economy. Minister of Finance Goodall Gondwe admitted the importance of such advice last week, which he said Lilongwe will continue to take heed of.