Malawi should realistically open for business
Former president Peter Mutharika was among 16 African leaders who attended the inaugural United Kingdom-Africa Investment Forum in London in January 2020.
The day-long forum provided the United Kingdom (UK) a platform to unveil its new strategy for development in Africa ahead of its withdrawal from the European Union (EU) on January 31 2020. From the London forum, Britain also signed 11 trade agreements with the 21 invited African states.
In recent years, such forums have become commonplace. Besides the UK, the United States of America, the EU, India, Russia and China periodically host such forums with African countries at high-level to discuss trade and investment opportunities.
On June 27 this year, President Lazarus Chakwera left for Beijing to attend the Third China-Africa Economic and Trade Expo (Caete) from June 29 to July 2 2023 in Changsha, Hunan Province. It was held under the theme ‘Common development for a shared future’.
Literature on Caete showed that this year’s expo was focusing on “nine programmes” for China-Africa cooperation covering medical and health, poverty reduction and agricultural development, trade promotion, investment promotion, digital innovation, green development, capacity building, cultural and people-to-people exchange and peace and security.
From the outline, it looked a mouth-watering offering and, indeed, a minefield of golden opportunities. Naturally, like every patriotic Malawian, my prayer is for my country to seal as many valuable deals as possible.
But then, such excitement and expectation have often been subdued by our penchant for more talk that has translated to less action on the ground.
In my January 23 2020 write-up titled ‘Time to realistically open Malawi for business’, I bemoaned our failure to seize such opportunities to attract foreign direct investment (FDI), the net inflows as the value of inward direct investment made by non-resident investors in the reporting economy, including reinvested earnings and intra-company loans, net of repatriation of capital and repayment of loans.
During the UK-Africa Investment Forum, it was learnt that British businesses had signed deals worth $7.8 billion and counting with African countries, but we were not privy to how much of the multi-billion dollar investment cake was destined for mother Malawi. Prior to the London forum, the Malawi Investment and Trade Centre (Mitc) indicated that it prepared 18 “bankable projects” for marketing. Perhaps, it is time to make a follow up.
For many years, Malawi has promoted itself as a good destination for FDI largely because it enjoys peace and stability. But peace in itself is not a major catalyst, so it appears. Peace and stability should be blended with an economic environment that stimulates doing business to survive the battle for FDI.
FDI flows to Malawi have been fluctuating in the recent past, peaking at $959 million in 2018 before averaging $50 million between 2019 and 2022, according to United Nations Commission on Trade and Development data.
The report cited the agricultural sector as the most FDI-attractive with investors primarily from South Africa, Germany and the United States. It is followed by energy and mining.
Malawi Government earmarked mining as a key sector of the economy with potential to contribute to economic growth and job creation. But investors are yet to roll out in earnest due to delays to finalise negotiations on mining development agreements.
To its credit, Mitc has been aggressive in preparing investment compendiums of bankable projects in various sectors, including energy, mining, agriculture, manufacturing, media and communications and infrastructure development. But it needs more politicalwill and walking-the-talk in terms of creating an enabling environment.
Bureaucracy is one bug frustrating investment besides utilities, notably electricity and infrastructure in form of good road network.
In his speech during the Malawi Investment Summit in Lilongwe in May this year, the President acknowledged governance dysfunctions within public institutions and external shocks. Hopefully, there will be some action to change things.
What is clear is that there is a slowdown in FDI flows and the outlook is not promising with a significant number of big economies projected to enter into a recession.
Malawi, more than any of the countries that participated at the Third Caete, needs FDI deals the most.
By FDI, I am talking about meaningful investments, not mere trading by some ‘illegal’ immigrants. To meaningfully recover, Malawi needs to stimulate the business environment to improve competitiveness.
President Chakwera is on record as having said Malawi is poised to become the next biggest investment destination. My wish is for him to go beyond the podium talk and ensure efforts on the ground support this desire.
It is a fact that the economic impact of Covid-19, natural disasters, unsustainable debt, power generation and the Russia-Ukraine conflict have hampered efforts to improve the economic environment. But then, other economies within the region and beyond have picked up the pieces and moved on.
Trade and investment, not aid, are what this country needs to develop. My prayer is that this time around, at the Third Caete forum, Malawi will go beyond presentation of “a compendium of bankable projects” and attract real investors instead. When that is done, Malawi will officially be open for business for real.
