Investment climate of Malawi
Malawi’s real gross domestic product (GDP) grew by 5.7% in 2014, but slowed down to 2.9% and 2.5% in 2015 and 2016 respectively due to two consecutive years of drought that negatively affected the performance of agriculture which accounts for about a third of the country’s GDP. Inflation was projected to decline to 18.1% in 2016, but remaining above the government’s initial 12% target.
Why invest in Malawi?
- Malawi Investment and Trade Centre provides one stop centre;
- Malawi provides a stable political climate for doing business;
- Malawi offers liberalised economy;
- The country has highly educated, skilled, hard-working, honest and trainable English speaking labour.
- It provides access to free trade areas and trade agreements covering Comesa, SADC, EU and USA markets through AGOA.
- The country has untapped wealth in agriculture, energy, mining, manufacturing, infrastructure, services, ICT and Tourism
Arthur Peter Mutharika, the brother to late Bingu wa Mutharika who died while serving as president, won the presidential election in May 2014. He defeated the incumbent President Joyce Banda. Malawi continues to enjoy a stable and democratic government since the end of the one party regime in 1993.
According to the population census of 2008, the population of Malawi was 13.1 million people with annual growth rate of 2.8%. The population was projected to reach 16.6 million people with annual growth rate 3.32% in 2016.
Two million people or 15.3 percent of the population resided in the urban areas in 2008. The country is among the least urbanised countries in Africa , but with a 3.8% urban growth rate that is higher than the overall population growth rate of 2.8%. The country is facing a challenge in meeting the demand for housing and other urban infrastructure for the increasing urban population.
Doing business in Malawi
The highlights of World Bank score of doing business in Malawi are summarised as follows;
|Topics||World Bank 2017 Rank||World Bank 2016 Rank||Change in Rank|
|Starting a Business||150||160||
|Dealing with Construction Permits||65||62||-3|
|Protecting Minority Investors||132||129||-3|
|Trading across Borders||118||115||-3|
The government is the in process of creating conducive environment for doing business.
Transfers of foreign currency have to follow the Exchange Control Regulations and the Exchange Control Act of the country. In February 2017 Reserve Bank of Malawi indicated that foreign reserves stood at US$ 629 million equivalent to 3.01 import cover.
Malawi has an independent court system that derives its procedures from English Common Law. The court system tends to be overburden due to lack of resources. The court system in Malawi accepts and enforces foreign court judgments that are registered in accordance with established legal procedure. Malawi has legislation that offers adequate protection for property and contractual rights. Malawi is a member of the International Centre for Settlement of Investment Disputes (ICSID), and accepts binding international arbitration of investment disputes between foreign investors and the state if specified in a written contract.
Key development challenges
- Addressing Malawi’s food security needs resulting from adverse weather conditions and weak global demand for Malawi’s agricultural produce.
- Addressing poverty and inequality that are remain high in Malawi.
- Addressing a scarcity of skilled human resources, provision of health care, and managing population growth.
Malawi ranked 120 least corrupt nation out of 175 countries and scored 31 points out of 100 on the 2016 Corruption Perceptions Index reported by Transparency International
Most visits to Malawi are trouble-free, but you should take reasonable precautions to protect yourself from unforeseen security exposures.
Unemployment and skilled labour
The 2013 Malawi Labour Force Survey (MLFS) indicates that unemployment rate among all economically active population in Malawi based on the ILO broad definition, is at 21 percent. The unemployment rate is higher among females, at 26 percent, than among males at 14 percent. In urban areas, the unemployment rate is 28 percent and the corresponding rate is 19 percent in rural areas. The 2013 MLFS also shows that 27 percent of the employed population in Malawi is underemployed. Underemployment is most prevalent in rural areas compared to urban areas.
Attitude to Foreign Direct Investment
Malawi is open to foreign investment and foreign investors are generally granted national treatment. Malawi Investment Promotion Agency (MIPA) is mandated by government to promote, attract, encourage facilitate and support local and foreign investment in Malawi.The Malawi constitution protects investment irrespective of ownership. The government encourages both domestic and foreign investment in most sectors of the economy without major restrictions on ownership, size of investment, source of funds, or the destination of the final product.
Restrictions on Foreign investment
There are some limitations on foreign control. One restriction in the mining industry is that small-scale prospecting and mining operations are reserved for Malawians and foreigners who have resided in Malawi for a minimum of four years. Malawi Stock Exchange regulations limit participation of an individual foreign portfolio investor to a maximum of 10% of any class or category of security under the program and limit maximum total foreign investment in any portfolio to 49%. Malawian nationals are offered preferential treatment, including discounted share prices and subsidized credit. Subsidized credit carries a precondition that the shares or assets be retained for at least two years.
Intellectual Property (IP) Rights.
Malawi is a member of the convention establishing the multilateral investment guarantee agency, the World Intellectual Property Organization (WIPO), the Berne Convention, and the Universal Copyright Convention. The Copyright Society of Malawi (COSOMA), established in1992, administers the 1989 Copyright Act, which protects copyrights and “neighbouring” rights in Malawi. The Registrar General administers the Patent and Trademarks Act, which protects industrial intellectual property rights in Malawi. A public registry of patents and patent licenses is kept. Patents must be registered through an agent. Trademarks are registered publicly following advertisement and a period of no objection. WTO rules allow Malawi, as a less developed country, to delay full implementation of the Trade-Related Aspects of Intellectual Property Rights (TRIPs) agreement until 2016.
Limestone, uranium (potential), coal, bauxite, phosphates, graphite, granite, black granite, aquamarine, tourmaline, rubies, sapphires, rare earths.
Investment Climate in Malawi has been summarized to include the following
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