Malawi Govt bureaucracy frustrates FDI inflow

Malawi Government has acknowledged that persisting bureaucratic tendencies within its system are frustrating the country’s potential to attract foreign direct investment (FDI).

Minister of Industry and Trade admitted in an interview on Monday, on the sidelines of his tour at the Balaka-based Malawi Cotton Company, a Chinese investment currently involved in cotton ginning.

But Bande was quick to state that the Joyce Banda administration has put in place various economic reforms to reverse the situation and help create a conducive business environment for both foreign and local investors.

Business News sought the minister’s comment on the 2012 government annual economic report which has cited bureaucracies in government as one major key constraint to FDI inflow into Malawi in the year 2011.

According to the annual report, some investor have been let down by government due to lengthy procedures to enable them to be legally established.

“Indeed there are bureaucracies that hinder growth of investment and that frustrate investment,” said Bande.

The minister recalled that it also transpired during the recent economic dialogue in Mangochi that bureaucracies within government institutions are letting down potential investors into the Malawi economy.

“You do not need to kneel down to an official to get the results. It’s straight forward. And there are penalties if you don’t do your job as a government official,” he warned.

The minister cited the passing of Business Registration Bill, the Malawi Bureau of Standards Bill and the merging of the now defunct Malawi Investment Promotion Agency (Mipa) and the Malawi Export Promotion Council (Mepc) as part of reforms aimed to promote investment.

Bande also said such reforms will continue to be undertaken by government which has earmarked over 40 economic laws to be improved out of which 32 have been redrafted while a few are being implemented.

Last year, government facilitated about $633 million worth of FDI inflow into the country which was up from $115 million facilitated in 2010, according to the government annual economic report.

But such an increase was despite potential investors being wary of the availability of foreign currency and fuel which consequently made the importation of raw materials and inputs almost impossible as it was hard to convince investors to come and commit their resources in Malawi under these circumstances.

However, the annual economic report has since painted a rosy picture on prospects for FDI inflow in 2012 and the medium term saying it is expected that the FDI inflow will take an upward trend due to opportunities in various sectors of the economy such as mining, agriculture and agro-processing.