Mitc downplays forex crisis impact on FDI

Malawi Investment and Trade Centre (Mitc) has downplayed the impact of the forex crisis on foreign direct investment (FDI), saying the investment climate is recovering, with the investment pledges more than doubling within a year.

Mitc chief executive officer Paul Kwengwere said this in a written response on Monday in reaction to the 2023 Absa Africa Financial Markets Index, which showed that for three years running, Malawi’s investment attractiveness has been static largely due to foreign exchange shortage, which has affected the country’s rating as a good investment destination.

Data provided by Mitc shows that in 2022, Malawi registered investment pledges amounting to $2 billion (about K2.4 trillion), which is more than double the pledges the country got in 2021 amounting to $800 million (about K944 billion).

During the review period, $189 million (about K223 billion) of the investment pledges translated to actual investments, a rise from the previous year’s $129 million (about K152 billion), but still shy of the $252 (about K297 billion) recorded in 2020.

But Kwengwere said shortage of forex will not “really lead to investors shunning the country”, because most investors will not only depend on the Malawi market, but the external market as well. 

He said: “This means that their productivity leads to forex generation, unless all their inputs are also imported.

“Malawi’s majority of investors are those that utilise Malawi’s resources such as agricultural products, minerals and tourist attractions. In this regard, we have seen Malawi doing extremely well during the past year.”

The 2023 Absa Africa Financial Markets Index further showed that access to foreign exchange, with a score of 43, has continued to haunt Malawi alongside market depth at 28.

On the contrary, Malawi’s neighbours Zambia at 55, South Africa at 88 and Tanzania at 55 are doing well in terms of attracting investment while Zimbabwe at 43 and Mozambique at 37 are trailing Malawi.

Speaking at a Malawi Investment Summit held on the sidelines of the United Nations General Assembly in New York last month, President Lazarus Chakwera presented Malawi as one of the most attractive destinations for FDI.

He said the investments government has attracted implemented in recent years will create a conducive environment for FDI.