Opportunities and challenges to invest and do business in Malawi – Invest Africa KPMG Television Show

Invest Africa

At the end of February, Malawi was featured on KPMG’s Invest Africa. This was broadcast following the nationwide strike that saw a 61% pay hike for the lowest paid civil servants in Malawi.

To discuss the opportunities and challenges of Malawi as a business and investment destination Simon Schaefer, senior analyst at Frontier Advisory, Abel Myburgh, associate director at Africa Desk, BDO, and Samantha Louis, regional director at the Chartered Institute of Management Accountants, joined Invest Africa’s host Alishia Seckam.

Seckam points out the current situation that most Malawians are familiar with, although whether or not progress is being made is disputed across the nation,

For not it’s still a very challenging environment […] work in progress that we are seeing unfold in that territory.

It would have been more interesting to hear from both foreign and national investors and from Malawian analysts. Nevertheless, we have decided to save you time by highlighting some of the main points below.

The videos are available online and have been embedded below.

  • Economic Reforms: The current account deficit (widen to 845 million USD in 2011/2012, from a deficit of 548 million USD in 2009) widened last year due to the the shallow export base and overvaluation of the Kwacha against the USD, which saw an upsurge in import demand. Since taking office in April 2012, Joyce Banda has instituted a number of economic reforms that have restored credibility to the Malawian monetary policy environment, such as the devaluation of the Kwacha and a market determined exchange rate, along with introducing austerity measures, lauded by the international community (editor’s note: she faces growing criticism at home).
  • Restoring credibility: Commitment of donors to Malawi is a positive start in restoring credibility to Malawi’s monetary policy environment, however, economies do not swing up in 6 months despite Joyce Banda’s promise that this would be the case given the economic reforms
  • Current situation: Despite economic reforms, the business environment has deteriorated this fiscal year. It is not clear at this stage after only 10 months if Joyce Banda’s reforms will bear fruit although devaluation of the Kwacha and setting a market determined exchange rate will be good in the long-term as export goods will be more attractive to export markets. First, however, the country will continue to experience rising inflation. Malawi is dependent on its agricultural sector, which accounts for one-third of GDP and generates 90% of export revenue. Tobacco accounts for more than half of its exports. Malawi is ranked 157 out of 185 countries on World Bank’s Doing Business Index.
  • Biggest challenge is to diversify the economy so that it is not entirely dependent on the agricultural sector’s exports. There is opportunity to diversify within the agricultural sector, through manufacturing of raw products such as tea and tobacco. There is also need to mitigate against the risk of foreign exchange shortages in the short term and decrease dependence on foreign aid in the long term.
  • Opportunities for investors: Investors should build around current industries, such as introducing agricultural processing instead of exporting goods as raw products. 
  • Incentives for investors: Across the region, there is a “race to the bottom” for the best incentives, but without the infrastructure in place the incentives are not attractive for investors. Management of incentives (such as 15% tax for companies operating in priority industries) is key so that investors deliver the intended results and do not only take advantage of the business environment. Malawi does not offer any special incentives to foreign investors. Instead, incentives have to be discussed between investors and government, this leaves room for corruption, but gives the government the opportunity to attract the investors it wants to work with.
  • Infrastructure is a problem area in Malawi, particularly the poor supply of electricity, which puts a strain on prices charged. The transportation infrastructure makes it expensive and difficult to take products to market and export. Maintenance is key. The upgrading of airports in Lilongwe and Blantyre with Chinese assistance will improve transportation bottlenecks (editor’s note: the railway project financed by the mining company Vale SA will also help improve regional and international trade by connect Malawi to Nacala port). Furthermore, increases in fuel prices makes doing business more expensive (editor’s note: in fact, the price of fuel went up yesterday)
  • Education: There is a need to for well-trained and trustworthy government officials and for ensuring the skills are available in country to reduce costs of doing business (editor’s note: we recently discussed the need for improving skills along the mineral value chain in Malawi).
  • Balancing foreign and local interests: Many investors “moving in to export”, but they can repackage products for local low-income market. Where investors are exporting they need to make sure that they are paying fair wages in country to ensure a lasting, valuable legacy. The government has made moves to protect infant industries by prevent foreign traders from operating in rural areas. Malawi’s relationship with China is not unique int he continent. Chinese investment is not without conditions. Important that this should not deter other investors.

Part 1

Part 2

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44 responses to “Opportunities and challenges to invest and do business in Malawi – Invest Africa KPMG Television Show

  1. Pingback: “Malawi is open for business” – President of Malawi addresses Scottish Parliament [video] | Mining in Malawi·

  2. Pingback: Developments in Malawi’s Energy Sector: Malawi and Mozambique sign Power Interconnection Agreement | Mining in Malawi·

  3. Pingback: Energy Agreements with Chinese Companies may ease electricity shortages in Malawi | Mining in Malawi·

  4. I belong to Pakistan at the age of 59 in good health and wealth.
    I am interested to start a small business in Malawi or may work with a business man as a business partner with my investment?
    Interesting parties may contact me through my email?

  5. I am a businessman in South Africa mainly in industrial lifting equipment, supplies, repairs etc, as well as pneumatic tools and equipment. Looking to do business in Malawi. Also electrical contracting(line building) and supplies.
    Interested parties can contact through email.

  6. I’m a lndian to looking start a small business in Malawi or may work with a businessman as a partner. Intrested parties may contact me by email .

    • I had a look @ Mzimba, Champira can you advice what type of business one can venture into, I will be in ,Malawi in Jan 2016 too make market analysis and partnership meetings.I am in SA @the moment.

  7. Hi Everyone. My name is Andre Ellis from Johannesburg South Africa. Is there a need for IP Video Surveillance (CCTV) and Access Control solutions in Malawi?

  8. Hi there my name is stanley lekoloana iam a 34 years old gentleman from south africa.i just need an information about investing in mining there in malawi.i need to know how much do i need to have for start and which procedures do i follow.i will be very glad if u can respond me with a positive way and iam ready to invest.i will appreciate it very much to receive yo response.regards
    Stanley.

  9. I have a big land which can be used to built offices, warehouse or a factory in the heart of Blantyre,those interested call 265999584831 or email:arthurdvn@gmail.com.

  10. I have a cottage by the beach in nkhotakota which can accommodate 14 people and am selling it anyone interested to invest in nkhotakota it’s 25km FROM DWANGWA SUGAR factory

  11. I am a young Malawian and a very small scale businessman trading in plumbing & other building materials under the registered name “Buildersland”. Those wishing to partner, write me on mdalayusuf@gmail.com

  12. I am a young Malawian man doing a very small scale business in the name of Buildersland. Most of the products I sell are plumbing materials. However my initial objective was to expand the business to the selling of almost every building material such as electrical, tiling, roofing materials, just to cite a few. My biggest challenge however is capital; hence my intention to partner with any interested business person.

    E-mail: mdalayusuf@gmail.com

  13. I am a Malawian currently in SA want to start a business of supplying things in hospitals,companies,and house hold stuff.pleas if there is anyone who can partner with me if interested pleas call me on 0837726355 or email

  14. Pingback: Malawi Investment Forum 2016: Opportunities in Mining and Energy | Mining in Malawi·

  15. I have small business of any commodity and wish to have Partnership from across the world who can wish to do it in Malawi u can call on 0992503252

  16. am a young lady,a Malawian citizen.I wish to start a business of selling farm products. I wish to ask if there is anyone who have farm produce like rice,beans or maize and is willing to be my supplier to email me on
    crlnphiri@gmail.com

  17. Hi looking for a partner to boost capital in my agricultural produce processing company, in Malawi. if interested please let’s link up for more details.

  18. hi…i would like to get into residential construction in malawi…any suggestions?
    Sani..Australia.

  19. i am malawiam i want to start business in malawi , looking for a patner to do business in lilongwe currently in south africa, looking forwad to you respond , contact 0730385133 on whatsup

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