Business Unpacked

Walk the business climate talk

Everyone seeks and loves to live in a good environment. Businesses are no exception to this. Investors always look at a number of factors relating to their businesses before they decide where to put their money or expand existing investments.

Traditionally, investors look at the business laws, security, transport network, infrastructure and utilities such as water, electricity and telecommunications.

This week, two reports or surveys have painted a gloomy picture of our business environment. Firstly, it was the 2012 Mo Ibrahim Index of African Governance (IIAG), sponsored by Mo Ibrahim Foundation (MIF), which collects data from all African countries (except Sudan and South Sudan) that is used to assess governance, delivery of public services and goods on the continent.

Despite scoring 56 percent on overall governance and earning itself position seven out of 12 countries in southern Africa, Malawi performed poorly on the sustainable economic opportunity category. This poor show confirms concerns from local market analysts that Malawi is not an attractive destination for investment due to overregulation and high costs of doing businesses, among other things.

Secondly, we learnt that Malawi this year has slipped six places to 157 from 151 last year on the World Bank’s Ease of Doing Business. This was after registering a decline by 28 steps on paying taxes, three points on protecting investors, registering property and trading across borders. However, Malawi improved on enforcing contracts and resolving insolvency by one step.

And in its study last December, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) mentioned unreliable power supply as the biggest hurdle of doing business in the country. The Malawi Business Climate Survey said erratic power supply, with a score of 9.7 out of 10, has seen most companies suffer through high cost of production as they have had to seek alternative sources such as standby generators.

It is worth acknowledging that there are some positive strides towards improving the business environment. However, the sad reality is that our efforts seem to be falling short of the minimum standards. It is important to appreciate that competition for resources and investment is stiff; hence, the need for us, as a nation, to clear the bottlenecks making our country unattractive to investors.

For example, government recently announced that it is reviewing 40 business laws to enhance and align them with international standards. This is good news as the review is widely expected to ensure that both local and foreign businesses go about their businesses with ease and reducing running costs. Some of the laws under review include those relating to licensing, standards and company incorporation.

What is needed is action on the ground, not mere talk. Existing and prospective investors should see the business environment improving. Time should come when manufacturers, for example, concentrate on their core businesses instead of investing in water storage and power generation. If they do, it should be as a back-up but not as the common occurrence as it is the case today.

None of the shortfalls are new. The issues have always been raised year in and year out. Let’s spring into action now or be left out in the hunt for new investors.

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