Malawi attracted $50 million (K51.6 billion) worth of Foreign Direct Investment (FDI) in 2021, an 11 percent increase from the previous year’s $45 million (about K46.3 billion), according to a United Nations report.
The United Nations Conference on Trade and Development (Unctad) 2022 World Investment Report released on Friday shows that at $50 million, Malawi attracted less than one percent of the global FDI estimated at $1.6 trillion.
Despite the strong global growth in FDIs, the report shows that investment flows to Africa at $83 billion (K85.66 trillion) in 2021, which is double the amount reported in 2020 accounted for only 5.2 percent of global FDI, up from 4.1 percent in 2020.
The report indicates that Malawi lagged behind its neighbours Mozambique, which attracted $5.1 billion, Zimbabwe attracted $166 million while South Africa attracted $40.8 billion in FDI.
In an interview on Monday, Catholic University of Malawi economics lecturer Hopkins Kawaye said most of the FDI into the neighbouring countries was expected due to the nature of their economies.
He said Malawi misses out on economic growth and job creation due to lower FDI levels.
Economic statistician Alick Nyasulu also observed that issues of investments will always hinge on a favourable climate such as a viable financial sector with limited controls, non-discretionary tax policies, ease to repatriate profits, cost and reliability of utilities, an efficient legal system and government bureaucracy amongst others.
“These have been wanting for a while and we still remain relatively an unattractive to our peers in the region,” he said.
Malawi has over the years been performing poorly on ease of doing business and global competitiveness.
Recently published World Bank figures show that Malawi’s FDI net inflows as a percentage of gross domestic product (GDP) have fallen.
As a percentage of GDP, FDIs have dropped from 9.9 percent or K881 billion in 2014 to 0.4 percent or K36 billion in 2020.
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