Malawi misses out on FDI potential

Malawi is yet to fully utilise its foreign direct investment (FDI) potential, making it one of the least attractive destinations for foreign capital, an economist has said.

University of Malawi’s Chancellor College economics professor Ben Kaluwa said this in an interview on Sunday in the context of a 2019 United Nations Conference on Trade and Development (Unctad) World Investment Report 2019, which has ranked Malawi as one of the countries with lowest levels of FDI in the region.

Mulanje Mountain is one of the country’s tourist attractions

The report shows that in 2018, the country raked in $102 million (about K75 billion) in FDIs, an increase from $90 million (about K67 billion) in 2017, but a decline from 2016s $116 million (about K86 billion) and $510 million (about K377 billion) in 2015.

Compared to its neighbours, Malawi lags behind South Africa ($5 334 million), Mozambique ($2 711 million), Zimbabwe

($745 million), Zambia ($569 million), Botswana ($229 million) and Namibia ($169 million), but is ahead of Lesotho ($39 million) and Eswatini, formerly Swaziland at ($25 million).

Kaluwa called for scaling up efforts in marketing the country’s potential investors.

He said: “There is a lot that Malawi can do with very marginal effort like in the tourism and hospitality industry as well as manufacturing.

“Other countries don’t have the resources that we have in Malawi such as mountains and the fresh water lake yet they outperform us.”

Malawi Investment and Trade Centre (Mitc) figures show that the country’s total FDI stock is estimated to stand at $1.15 billion or 17 percent of gross domestic product (GDP).

The figures show that the agricultural sector attracts the most FDI, primarily from South Africa, Germany and the United States.

Experts say FDI is one way of compensating for the lack of domestic investment, and can help kick-start the process of economic development as well as create jobs, increase productivity and reduce importation.

An analysis of the country’s investment policies by United Nations Economic Commission for Africa shows that the  policies are dedicated to trade liberalisation, promotion and facilitation with a few investment conditions to promote sector-specific liberalisation.

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