The piece “Ministry of Industry and Trade Ups Investment Promotion Drive” featured below was initially published in Malawi’s Mining & Trade Review Issue Number 35 that is circulating in March 2016.
The full edition is available for download here. This monthly publication is edited by Marcel Chimwala.
Question & Answer: Ministry ups investment promotion drive
Though the Malawi Government has engaged an extra gear to attract investment into mining and other economic sectors, there are still a number of bottlenecks that are stifling investment in the country including flooding of imports to choke the local industry. In this question and answer interview Mining & Trade Review engaged Spokesperson for the Ministry of Industry and Trade, Wiskes Nkombezi, to find out the progress on the government’s investment drive and how the investment hurdles are being addressed. Excerpts:
What activities are you undertaking this year to support investment in mining as one of the potential sectors?
This year the Ministry will be hosting the 2ndMalawi Investment Forum on 10 and 11 October 2016. We hope domestic investors will have the chance to partner with foreign investors on mining ventures.
The Ministry in conjunction with Malawi Investment and Trade Centre (MITC) will be organizing a private sector networking forum where big financiers will meet the private sector in March 2016. We hope potential investors from the Mining sector will take advantage of the forum to court potential financiers for their mining ventures.
The Ministry will continue with business reforms to make sure mining companies in particular and all companies in general operate in a conducive business environment
How can you assure international mining investors that Malawi is a good investment destination?
Malawi is the best investment destination for mining investors for the following reasons;
- It is one of the most peaceful countries in Africa (second most by other accounts) with a political stability and stable democratic Government.
- There is security of life and property for investors
- With the One-stop-service Centre at MITC, processing of permits and licences for investors is so efficient
- There is free repatriation of profits, dividends and royalties
- Malawi’s Constitution guarantees protection of assets for foreign investors
- Malawi is also a member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank whose mission is to promote foreign direct investment (FDI) into developing countries to help support economic growth, reduce poverty, and improve people’s lives in all types of countries including those with fragile economies.
- Malawi is also a signatory to the International Centre for the Settlement of Investment Disputes (ICSID) and a member of the African Trade Insurance Agency of COMESA.
- Malawi has an enabling legal and regulatory framework for all investors. Geo-physical data on mining opportunities is also readily available now.
- Malawi is also a beneficiary of AGOA, EBA and a member of COMESA, SADC and has preferential market access for her products to India, China, Canada and Japan.
- It has an English-speaking and skilled labour force ready to help investor in their ventures.
- Malawi is endowed with immerse natural resources that can be exploited.
Last year Malawi held an investment forum, is Malawi receiving any benefits after investing in hosting the high profile event?
Yes, we have seen many investors flocking to the country to enquire about investment opportunities. Investment pledges from many companies have been granted investment certificates in 2015. We have also seen many coming to Malawi to establish their operations, suffice to say that different investments have different gestation periods.
Would you explain what reforms is the government undertaking to ensure that Malawi’s business environment is attractive to investors?
Government is doing all it can to create an enabling and competitive environment for private Sector to increase domestic and foreign investment. This is being done through review of the Legal and Regulatory Frameworks, Government is reviewing all obsolete economic laws. For instance, the Ministry reviewed the Metrology Bill, the Credit Reference Act and Insolvency Act. I hope you are aware that Government through the Ministry of Natural Resources, Energy and Mining will soon be tabling the Mining and Minerals Act to replace the old one.
Government has operationalization of the Personal Property Security Registry (commonly known as the Collateral Registry) under the Personal Property Security Act (PPSA). The Collateral Registry was operationalized and is domiciled at the Office of the Registrar General. The Collateral Registry will increase the volume of long term credit, improve protection for lenders and borrowers; and develop the country’s financial markets through improving secured transactions and demonstrating tangible and sustained benefits of secured lending reforms.
Government has implemented the new system which enables businessmen register their businesses with the Registrar General’s Office online. The system started working in September 2015.
Government will also continue improving the One Stop Service Centre at the Malawi Investment and Trade Centre (MITC) to facilitate more investment, streamline and simplify business set-up processes such as company registration, granting of immigration permits, taxation and land acquisition issues.
Government will continue work program on Trade Facilitation in line with the Trade Facilitation Agreement of the World Trade Organization. A concept paper on Trade Facilitation Fund has also been developed.
Government will accelerate implementation of the Standards, Quality Assurance and Metrology (SQAM) Infrastructure Development Project estimated at K12. Billion.The project aims to ensure that the Malawi Bureau of Standards (MBS) keeps pace with the demands on the international market with a purpose built infrastructure and state-of-the-art technologies for conformity assessments and testing. The new equipment will also ensure that the MBS is capable of offering services that the local industry do obtain from abroad hence this will help to save foreign exchange and time.
Government will finalize development of a Trade Portal at the Ministry with support from the World Bank. A Trade Portal is a specialized Website containing all regulatory trade related information for import, export and transit established. Government will also implement National Single Window and One-Stop-Border Posts at all its major border posts starting with Mchinji-Mwami and Songwe-Kasumulu Border Posts.
Government will soon approve a new Trade Policy, National Industrial Policy and Micro, Small and Medium Enterprises Policy.
There will be a lot of legal and regulatory reforms aimed at making Malawi the investment destination of choice in this region.
Your ministry has been marketing projects contained in the compendium that was launched by President Peter Mutharika. What is the response from both local and international investors?
The response has been extremely good, the demand for the compendium was phenomenal and we have many investors picking investments contained in the compendium.
One of your roles as a Ministry is to facilitate exports. How are you engaging productive sectors such as mining, agriculture and manufacturing to ensure that they produce more export proceeds for the country?
The Ministry has been facilitating the seal of export contracts in agriculture products mainly, pulses, cotton, groundnuts and sugar. Other products included pharmaceuticals and plastics products. In order to Increase the volume of exports of non-traditional goods, the Ministry through the Malawi Investment and Trade Centre facilitated exports of various non-traditional products to different countries. These non-traditional products include products such as banana pulp and mango pulp (from Malawi Mangoes).
The Ministry further continued the implementation of the National Export Strategy (NES). In terms of dialogue the Ministry continues to engage the private sector in constructive dialogue under the Public Private Dialogue (PPD) Forum the latest of which was held on 10th February, 2016.
On manufacturing, I understand many companies especially multinationals such as Unilever and Lafarge opt to import products from sister companies other than manufacturing locally because the cost of production in Malawi is high. What are you doing to reduce the cost of production for companies in Malawi?
To say many companies are opting for that will be an over-statement. Actually if you go to Lafarge now you will see production. However, they might have had a few hitches that made them import cement to complement their local production.
It should also be noted that some of the problems that companies face are due to archaic laws, policies and infrastructure for utilities such as ICT, electricity and water.
Government is working on resolving all the bottlenecks that hamper the private sector in its operations. It is worth noting that the reforms that Government has embarked on will not only improve the ease of doing business but reduce the cost of doing business in Malawi as well. You may also have noted that relevant authorities are working on improving issues of energy, water and ICT.
What are your targets on facilitation of trade and investment in Malawi taking into account priority sectors such as mining? So far are you fulfilling these targets?
The leadership of this country had placed the target of doubling exports in the medium term. It is a target that is challenging but very achievable. With the right investments Malawi will achieve this and it needs the hard work of all Malawians. That is the more reason Government has intensified promotion of both domestic and foreign investment that can enable Malawi produce more goods and services for exports. There are good examples on how investment can do this. Malawi Mangoes is a classic example. It had a great year in 2015 in terms of performance. You should also remember that that Uranium mining jumped the queue to be the second biggest export after tobacco and made mining’s contribution to the GDP jump from 5% to around 11%. So with the reforms Government is undertaking and the aggressive investment promotion Malawi will achieve its trade targets.
What are you doing to encourage value-addition of products in Malawi; are there any incentives for the same?
The Ministry is implementing the Competitiveness and Job Creation Support Project (CJCSP) which is fostering value addition by providing matching grants to agricultural cooperatives to enhance their competitiveness and move them up in the value chain.
Government has also been implementing Export Processing Zones and Industrial Rebate Scheme to incentivize value-addition and exportation.
The Ministry is also implementing the One Village One Product programme which provides soft loans for value-adding equipment and facilities to cooperatives. These cooperatives are also provided with training in agro processing and business management, the Ministry also facilitates access to markets for the ensuing value added products.
The Ministry through the National Export Strategy is facilitating the building of a productive base of the economy and encourages value addition. Under The NES there are three prioritized export oriented clusters that will be developed to drive exports through value addition. These clusters are;Oilseed products, sugar cane products, and also manufacturing. This will encourage exports of value added products like cooking oil, soaps confectionaries, sugar syrups, and beverages.
But there is caution to be taken, production of value-added products is not only the function of Government incentives. It also takes the mind of a hardworking innovator to do that. It is important for entrepreneurs and businesses to remember that Government is there just to facilitate.
There are complaints from local investors, especially in coal and cement production that the influx of cheap imports on the market is choking their businesses. Are you addressing this issue?
There is need to understand what makes these products cheap. What is problematic is smuggled products on the markets. Smugglers endanger clean competition by avoiding taxes and in so doing they undercut law-abiding businesses. This threatens industrial growth. As such smuggling is a threat to economic growth and the law makes smuggling an offence.
The Ministry of Industry and Trade abhors smuggling due to the injury it causes to revenue collection, industrial growth, fair competition on the domestic market and consumer welfare. The Ministry, therefore, has committed itself to fight smuggling and give strong support to all stakeholders such as Malawi Revenue Authority (MRA), the Malawi Police Service (MPS) in this fight. The Ministry would also wish to call upon all stakeholders to join hands in this fight.
We would particularly like to call upon members of the community in all border districts to join hands with Government in the fight against smuggling. Smuggling must be fought everywhere in all its forms.