Land Bill no threat to investment—expert
Tea and coffee estates will soon start remitting rentals to government if the President assents to the Land Bill (2013).
The bill, which the National Assembly passed during the last sitting, proposes the conversion of freehold land owned by non-Malawians to leasehold land unless such persons take up Malawi citizenship within seven years.
Freehold land confers title and ownership forever and government does not collect ground rentals as is the case with leasehold land.
“Freehold land acquired by a person who is not a citizen of Malawi prior to the enactment of this Act shall be converted to leasehold interest unless the person currently in possession of such land have acquired Malawian citizenship in accordance with the Malawi Citizenship Act within a period of seven years after commencement of this Act,” reads the bill in part.
The new law will mainly affect tea, coffee and tobacco estates in the Southern Region as most of them operate on freehold land acquired by early European settlers in the 19th Century.
Most tobacco estates in the Central and Northern regions are on leasehold land of between 21 years and 33 years and pay ground rates to government every year.
Some business experts contended that the bill will discourage foreign direct investment (FDI), but lawyer Gracian Banda disputed that assertion at a validation meeting the Centre for Environmental Policy and Advocacy (Cepa) and LandNet Malawi jointly organised in Lilongwe recently.
Banda, who is also Cepa director for legal services, argued: “The fear that conversion of freehold to leasehold land would discourage investors is baseless. If the fear has substance, why do countries that do not have freehold land such as Zambia and Mozambique enjoy more FDI than Malawi?”
He said the new law is good as government will now be able to generate revenue from tea and coffee estates which have for a long time been operating without remitting rentals to the Ministry of Lands.
LandNet has gone further to recommend that all freehold land irrespective of the nationality of the titleholders should be abolished and converted to leasehold land.
Intermittent water and power supply, over regulation of businesses, tedious bureaucracy, low literacy levels, corruption, poor infrastructure, governance and human rights challenges, instability of the local currency and high taxes are some of the factors that affect FDI.
These are highlighted as bottlenecks that discourage investors and cause Malawi to perform miserably on both the World Bank Ease of Doing Business and Mo Ibrahim Index.
Read more about the Land Bill (2013)
