- Category: Business Review
- Written by INNOCENT HELEMA
Malawi needs to improve its legislation on doing business to attract foreign direct investment (FDI), Ernst & Young (EY) country managing partner Shiraz Yusuf has said.
Yusuf was commenting on EY’s report entitled Africa by Numbers, Assessing Market Attractiveness in Africa released recently.
He said Malawi should make itself as attractive as possible compared to neighbouring countries of Zambia, Mozambique and Tanzania.
The report, which assesses market attractiveness in Africa, ranked Malawi as a moderate risk and a moderate opportunity economy.
Malawi, according to the report, is on position 12 on risk and 25 out of 54 countries in Africa on market opportunity index.
The risk index is based on such factors as governance, democracy, institutional environment, corruption, ease of doing business, financial and capital market.
Mauritius, Botswana, South Africa, Rwanda, Namibia, Ghana, Tunisia, Zambia, Kenya and others are on top of the risk index.
Nigeria, South Africa, Egypt, Angola, Ethiopia, Tanzania, Mozambique, South Sudan and Zambia are topping the list in Africa on market opportunity index.
To come up with the market opportunity profile, EY considers the population size of the country, population of the largest city, current GDP, GDP growth trends and gross capital formation.
While denying that Malawi is a poor destination for FDI, Yusuf stressed that Malawi needs to work on its mining and tourism sectors to be competitive.
“Zambia, Tanzania and Mozambique are growing economically because of mining and tourism. Malawi needs to work on improving legislation in these sectors for it to grow. [Malawi] needs to have an open sky policy so that flights can get directly to tourism destinations such as Lake Malawi,” he said.
Yusuf added that the country’s hotels must provide high standard services to compete with those in neighbouring countries.
He said it is expensive and inconveniencing for tourists to fly to Lilongwe and then drive for five or so hours to a tourist destination.
“This contrasts sharply with neighbouring countries of Zambia and Tanzania where one flies direct to one’s destination,” he said.
In the World Bank 2013 ease of doing business, Malawi also slipped six steps from 151 to 157, showing that it is expensive to do business in the country compared to others in the world.
Analysts have so far pointed out that Malawi needs to harmonise its business laws and simplify requirements throughout the life cycle of a business from starting a business to winding up.