Malawi attracts K44bn in FDI
Malawi received $129 million (K44 billion) worth of Foreign Direct Investment (FDI) in 2012, about 2.4 percent of all investments that flowed into southern Africa.
According to the United Nations Conference on Trade and Investment (Unctad) World Investment Report 2013, this indicates that the country needs to work on policies to attract investment, create employment and wealth.
The Unctad report subtitled, ‘Global Value Chains: Investment and Trade for Development’ indicates that since 2007, FDI into Malawi fell before rising to the current level.
In 2007, FDI inflows stood at $124 million (K42.7 billion) and rose to $195 million (K67 billion) in 2008 and eventually slumped to $49 million in 2009. It thereafter picked to $97 million (K17 billion) in 2010, before jumping to $129 in 2011 and 2012.
The report further indicates that southern Africa countries—Angola, Botswana, Lesotho, Malawi, Mozambique, Namibia, South Africa, Swaziland, Zambia and Angola—attracted $5.4 billion FDI in 2012.
Angola had a negative FDI of $6.9 billion, Botswana $293 million, Lesotho $172 million, Mozambique $5.2 billion, Namibia $357 million, South Africa $4.6 billion, Swaziland $90 million, Zambia $1.1 billion and Zimbabwe $400 million.
The report indicates that Malawi’s FDI outflows in 2007 stood at $14 million (K5 billion), $19 million (K6.5 billion) in 2008, $42 million (K14 billion) in 2010, $50 million (K17 billion) in 2011 and 2012.
Reacting to the report on Friday, University of Malawi’s Chancellor College economics professor Ben Kaluwa said Malawi has the natural resources, but needs to improve its doing-business environment.
“Huge investments into some of countries were mainly in extractive industries. For instance, Mozambique has huge deposits of coal which attracted huge investments. We have the incentives for investment, but we need to reduce bureaucracy and maintain a competitive environment,” he said.
Government has, in the 2013/14 budget put in place incentives to attract investments in mining, agriculture, tourism and energy.
In construction industry, government removed taxes on crane lorries, concrete mixer lorries, mobile drilling derricks and track- laying tractors for the construction industry to boost productivity
Government has reintroduced a provision under the Customs and Excise Tariffs Order to allow for exemption of taxes on importation of specialised mining and exploration machinery and equipment to encourage exploration and mining activities in the country.
As a way of encouraging investment in the energy sector, government has extended to all investors free import duty on electricity generation and distributing equipment.
The Unctad report notes that total FDI into Africa rose five percent to $50 billion.
In 2012, the report says FDI inflows were driven partly by investments in the extractive sector in countries such as the Democratic Republic of the Congo (DRC), Mauritania, Mozambique and Uganda.
