Mitc outlines incentives for agriculture investors
Malawi Investment and Trade Centre (Mitc) has urged local farmers and investors to use available incentives to stimulate investment in the agro-processing sector.
Mitc chief executive officer Paul Kwengwere said the incentives are designed to reduce business costs and make Malawi a more attractive destination for investors.
His comments follow sentiments by some small and medium enterprises in the agriculture sector at the 2024 Malawi Agricultural Productivity and Commercialisation Conference in Lilongwe.
The agribusiness ventures said there are no incentives in agro-processing and irrigation, which they said is undermining the growth of the agricultural sector, a key pillar of the Malawi 2063, the country’s long-term development plan and its First 10-Year Implementation Plan (MIP-1).
But Kwengwere said Mitc offers a range of custom and excise benefits, including duty-free and value added tax (VAT)-free importation of PVC pipes, asbestos pipes, galvanised pipes, sprinklers, drainers and control valves.
Additionally, he said businesses can claim capital expenditures related to the construction of dams, dykes and land preparation.
Said Kwengwere: “Growers of tea, coffee, tobacco, sugar, cocoa and other approved crops can now claim all incentives available to manufacturers.
“This includes preferential tax treatment and reduced import costs for capital goods and building materials.”
Agricultural development policy expert Tamani Nkhono-Mvula believes the incentives, if implemented successfully, have the potential to drive investment to the sector and catalyse growth in other sectors.
He, however, said it is important to look beyond the incentives and understand the bottlenecks that have held back the sector and limited its capacity to diversify as well as commercialise.
He said: “For example, interest rates are very high. The cost of financing is also very high. Our landing costs are also high because Malawi is landlocked. These factors limit the competitiveness of local products in countries with lower-cost financing options and access to ports.
“We should also not forget the energy costs. If we are venturing into commercial farming, we need cheaper and reliable energy sources.”
Mitc has also introduced a special scheme for priority industries in agro-processing.
Under Malawi’s trade regime, priority industries receive benefits such as zero percent corporate tax for up to 10 years and exemptions from duties on imported capital goods and building materials.
To qualify, companies must meet certain criteria, including a minimum investment capital of $500 000 (about K875 million) for 100 percent local shareholding, and $5 million (K8.75 billion) foreign shareholding. Priority industries must also achieve at least 35 percent value addition.
Mitc’s new incentives offer significant potential to boost Malawi’s agro-processing sector. While challenges remain, these measures could attract investment, drive growth and diversify the economy.
