Forex crisis dampens investment prospects
The continued shortage of foreign exchange has started dampening Malawi’s potential to woo investors with the 2023 Absa Africa Financial Markets Index showing the country is not the best investment destination.
The 2023 Absa Africa Financial Markets Index shows that for three years running, Malawi’s investment attractiveness has been static at position 14 out of 28 economies with a score of 49.
The index further shows that access to foreign exchange, with a score of 43 has continued to haunt Malawi alongside market depth at 28.
On the contrary, Malawi’s neighbours Zambia at 55, South Africa at 88 and Tanzania at 55 are
doing well in terms of attracting investment while Zimbabwe at 43 and Mozambique at 37 are trailing Malawi.
Speaking in an interview yesterday, Malawi Confederation of Chambers of Commerce and Industry president Lekani Katandula said that developing appropriate remedial measures to help spar investments from both local and foreign investors will require deliberate measures.
He said: “We need some soul-searching to find the reasons that make our neighbours more attractive to investors compared to our position.
“We can then develop appropriate remedial measures to help spur investments from both local and foreign investors. This will require deliberate measures otherwise we will continue to lose out to our neighbours.”
In an earlier interview, Minister of Finance and Economic Affairs Simplex Chithyola Banda conceded that for the past four years, Malawi has been going through a lot of economic challenges, scaring away potential investors.
He admitted that the scarcity of forex and shortage of fuel are also some of the major challenges that make investment to slow.
“Ministry of Finance and Economic Affairs, Ministry of Trade and Industry, Reserve Bank of Malawi and other ministries, department and agencies have put up strategies to monitor exports to expand the export base and increase foreign earnings,” said Chithyola Banda.
He said government is also working towards value- addition of the country’s goods to earn more foreign exchange.
Data from the 2021 Malawi Foreign Private Capital Survey jointly published by the National Statistical Office, the Reserve Bank of Malawi and the Malawi Investment and Trade Centre from April 25 to May 20 2022 showed that due to Covid-19, total pledged new foreign direct investment declined by 85.8 percent to $174.8 million (about K206 billion) in 2021 from $1 231.1 million in 2020 (about K1.5 trillion).
The Absa Africa Financial Markets Index is a useful tool for assessing the investment attractiveness of African countries.
The index has become a benchmark for the investment community to gauge African countries’ market infrastructure and is used by policy makers across the continent
