EU calls for reforms to attract foreign investors
The European Union (EU) says its new approach to supporting Malawi focuses on inducing economic productivity by addressing key economic bottlenecks to attract foreign direct investment (FDI).
The EU Ambassador Rune Skinnebach said in an interview on Tuesday that the country still has policy issues that affect the investment environment, making it less attractive to investors.
He said the EU’s consultations with the private sector found that access to finance, energy and skilled labour remain top issues that affect businesses and need to be addressed.
Said Skinnebach: “We need to rethink development cooperation and to do that, in Malawi context, what is required is private sector and investment-led growth.
“To facilitate that growth, we have consulted a number of public and private sector partners to see what the main challenges are.”
Speaking on Malawi’s investment climate and how it can attract FDI, he said the current macroeconomic environment and some policies need to improve before investors flock to Malawi, citing foreign exchange issues, legal frameworks on land access and crops policy, among others.
“In short, Malawi needs to focus on adjusting the frameworks that it can afford to adjust, so the legal framework, the visa framework and possibly also the revenue framework on how Malawi can become more attractive to investors than the neighbouring countries,” said Skinnebach.
Minister of Finance and Economic Affairs Simplex Chithyola-Banda said the increased donor confidence and financing of key infrastructure areas could help improve the investment climate and attract more foreign investors while reforms to improve the investment climate were being made.
Malawi Investment and Trade Centre (Mitc) data shows that the country attracted new foreign direct investments worth $371.6 million (about K650 billion) with tourism taking up much of it at $206 million (K360 billion) while manufacturing came second with $149 million (K260 billion).
Mitc chief executive officer Paul Kwengwere said there are a number of initiatives aimed at improving the ease of doing business.
He cited the development of Magwero Industrial Park in Lilongwe and several incentives under the Special Economic Zone framework as efforts that will culminate in attracting more private investment.
The United States Department of State latest Investment Climate Statement for Malawi indicated that the country is eager to attract FDI with opportunities in agriculture, mining, health, transportation, information technology and energy sectors.
Reads the statement in part: “Despite the long wait times, there are no restrictions on remittances of foreign investment funds if the capital and loans initially came from foreign sources and were registered with the Reserve Bank of Malawi.”
