Govt struggles to sign investment treaties

Government’s efforts to woo foreign investors are being weighed down by lack of bilateral investments treaties (BITs) with statistics exposing regretful state of affairs, Weekend Nation can reveal.

Out of the seven countries Malawi signed up the BITs with, only Italy is among the top 10 world’s largest economy by gross domestic product (GDP).

Further, of the signed BITs only three are in force and these are Italy, The Netherlands and Egypt while government is yet to effect the treaties with Brazil, Zimbabwe, Malaysia and Republic of Taiwan.

Malawi signed up the International Convention for the Settlement of Investment Disputes (The Washington Convention) on August 23 1996 to attract investment but it has only entered into BITs with Brazil, Italy, The Netherlands, Zimbabwe, Malaysia, Egypt and the Republic of Taiwan to date.

BITs are agreements establishing the terms and conditions for private investment by nationals and companies of one country in another country.

On the other hand, the ICSID is a treaty designed to take account of the special characteristics of international investment disputes and the parties involved, maintaining a careful balance between the interests of investors and host States that entered into force on October 14 1966. It has 165 member States comprising 158 contracting States and seven signatory States.

Governance and policy analyst Mavuto Bamusi in an interview believed government’s failure to put in force the BITs and sign up more treaties is as a result of misplaced priorities.

“BITs are personalised and captured by a few political and business elites who use treaties as channels for amassing personal self wealth. Malawi is only good at signing treaties and bad at implementation. There is inadequate follow up on the BITs after signing,” he observed.

On why government does not have bilateral investment treaties with the world’s largest economies, Bamusi said this was primarily because the country has not invested adequate capacities for negotiating investment treaties with top destination countries.

He also observed that the country’s diplomats in the said countries are mostly appointees placed on political, nepotistic and patronage basis, a development that makes it hard to engage in economic diplomacy by “a bunch of political stooges masquerading as diplomats.”

But in a paper he presented at the Catholic University of Malawi (Cunima) in April this year titled, ‘The Interface between Law, Governance and Development in Malawi,’ Attorney General (AG) Thabo Chakaka-Nyirenda observed that the problem was lack of distinction between investment and trade.

“What has been accepted as investment in the country is not investment but trade,” he noted.

In an interview last week, the AG emphasised that while the country offers a favourable investment environment for foreign investors there was little orno understanding of investment resulting in confusing a trader with an investor.

“As a result we tend to ignore negotiating investment treaties with strategic countries. We also tend not to follow up on issues.”

On his part, economic and investment analyst Fredrick Changaya observed that the less investment treaties the country signed up impact on the country’s investment as participation in global economy is restrained.

While agreeing with the AG on lack of distinction between investment and trade, Changaya observed lack of enforcement of the distinction as another key challenge.

There are no minimum share capital requirements in Malawi. However, government put a minimum investment capital of $50 000 which is a prerequisite for a Malawi Investment Trade Centre (Mitc) investment certificate.

There was no response from the Ministry of Trade and Industry as both the Minister Simplex Chithyola Banda and spokesperson Mayeso Msokera did not attend to our inquiry.

But asked why there is low investment, Mitc assistant public relations officer Nellie Manonga attributed the situation to natural disasters such as cyclones and Covid-19, saying countries were just recovering, “hence investors are more inward looking”.

“Furthermore, the cycolens have disturbed the economic fundamentals, making the economy unstable and less attractive,” she said.