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Malawi attracts less investments in Africa

Malawi remains among countries in Africa attracting insignificant Foreign Direct Investment (FDI), thereby missing out on the top 15 African countries wooing investors, figures compiled by audit and business advisory firm EY show.

The 2021 Africa Attractiveness Report shows that despite Malawi and other countries in Africa reforming to attract FDI, the country still sits below the 50 percent mark on the ease of doing business.

The report, an annual analysis by the EY on the FDI market in Africa, notes that investors are moving away from oil exploration and mining to new age sectors, including information and communications technology, retail and business services.

It said there is need for countries such as Malawi to  reposition and diversify.

Reads the report in part: “Countries need to improve governance, continue with political reforms, enhance transparency, diversify its economy, invest in infrastructure and proactively seek inbound investment to create more employment opportunities for its people.”

According to the report, the bulk of investments in southern Africa were concentrated in South Africa owing to its diversified economy, followed by neighbouring Tanzania, Zambia and Mozambique.

In an interview yesterday, Malawi University of Business and Applied Sciences associate professor of economics Betchani Tchereni observed that making Malawi a destination for investors requires softening the processes for any investor to enter the Malawi market.

He said in Malawi, an investor needs to fulfil a number of requirements to establish a business which is cumbersome and derails investment. 

He said: “We need to bring these processes under one roof and digitise them for efficiency.

“In addition, we must create proper infrastructure quickly enough. For instance, the Sena railway line to facilitate movement of goods.”  

In an e-mail response, Malawi Investment and Trade Centre (Mitc) investment promotion manager Modie Chanza said the agency continues to woo investments into the country

She said: “Mitc operates a one-stop-service centre and provides after-care services to investors that want to establish or are operating their businesses in Malawi.

“Mitc is working with the Ministry of Lands in securing land parcels that can be availed to investors.”

Meanwhile, data from Mitc shows that in Malawi, most of FDI has been directed to the energy sector followed by manufacturing and mining sectors.

Over the past five years, leading sources of FDI to Malawi have been Australia, China, India, the Republic of Korea, South Africa, the United Arab Emirates, the United Kingdom and Northern Ireland.

Last year, Malawi’s FDI registered an 88 percent decline to $98 million (about K7.74 billion), according to the United Nations Conference on Trade and Development largely due to the impact of the Covid-19 pandemic.

Globally, FDI inflows collapsed in 2020, falling 42 percent from $1.5 trillion in 2019 to an estimated $859 billion.

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