Malawi—Doing business in the right way

Malawi—Doing business in the right way

Malawian pluckers work their way through tea plants field at the Makandi Tea Estate factory on April 18, 2015,
in Thyolo, Malawi. Tobacco and tea are among of Malawi’s main exports.

Malawi has certainly promising economic prospects and major opportunities to offer, in particular in the areas of telecommunications, agriculture and food processing, transport, tourism, and energy.

The Ministry of Industry and Trade has expressed optimism that the current reforms will push Malawi into the top 100 ranking on the World Bank’s Doing Business Index in the next two years.

According to 2009 Enterprise Surveys, the top 3 obstacles to run a business in Malawi are: access to finance, transportation, and practices of the informal sector. To overcome those challenges, in 2015 the Government launched campaign to push the country’s to attract foreign investors after noting that the poor environment especially on land acquisition, utility connectivity, legal environment and business permits issuance, among others pushed several prospective investors to the neighboring countries. Several reforms have been employed to improve the situation, among them the setting up of the One Stop Center at the MITC where investors can get a full assistance how to establish their businesses.

Malawi has a great market to be explored. Export of products such as coffee, tea, groundnuts, macadamia and tobacco, but also of textile articles, rubber and woven appeal are great opportunities for foreign investors. Malawi government has also embarked on investing in agro-processing through Green Belt Initiative project that seeks to irrigate over 100,000 hectors to improve agriculture products and value added. There are number of incentives in the industry and there are already some companies that have already started producing products under this arrangement such as Malawi Mango factory.

Fair Trade artisans in Malawi, Umoja Crafts means “union of women” in Swahili and is a social enterprise by women at the Dzaleka Refugee Camp.

One of the organizations that are interested in trade projects with Malawi is Trade Facilitation of Canada (TFO Canada), a non-profit organization funded by Canadian Government that confronts the challenge of global poverty by promoting sustainable economic development. This is possible through export information, advice and contact in Africa and other parts of developing world.

There are already many successfully accomplished projects run under TFO, such as preserving culture through development in textiles in Ethiopia; strengthening trade of Peruvian mangos; empowerment of Indonesian women exporters. However, despite the fact that TFO Canada provides with variety of assistance many countries failed to exploit available opportunities.

Malawi lost trade opportunity to utilize $20bn offered by Canada through Canadian Market Access Initiative due to the limitation in production capacity and standards.

To increase an export to Canada, a three-day seminar took place in Lilongwe (Malawi) for Malawian business people in November 2015. The seminar was organized by TFO Canada to make business people aware how to explore business offers in Canada.

The main challenge to overcome is that producers in Malawi do not have a capacity to produce enough to satisfy the Canadian consumers. Malawian Ministry of Industry and Trade, therefore, came up with several solutions to tackle this issue. One of them is the National Export Strategy (NES) 2013-2018. The NES provides clearly prioritized and phased plans of action in four key areas.

Implementation of the NES will be driven by the Government, in close collaboration with the private sector, civil society, farmer organizations and women and youth groups.

NES four key areas

  1. The first area is developing priority export clusters that can complement the exports of traditional products such as tobacco and tea.
  2. Second are plans to improve the enabling environment for private sector growth through enhancing the productive base of the economy.
  3. Third are plans to develop key institutions that are key for sustainable growth.
  4. Fourth are plans on how Malawi can address its current skills gap in the productive economy-this is critical for job creation and economic empowerment.

Did you know?

2015 the World Bank’s index of ‘Ease of Doing Business’ has seen Malawi rising 10 places to 141 this is due to a number of positive reforms that have been taking place in Malawi.

Countries such as Japan, have been also taking an active role in facilitating an expansion of business in Malawi through grant aid and technical assistance.

Countries such as Japan, have been also taking an active role in facilitating an expansion of business in Malawi through grant aid and technical assistance. The Government of Japan and the Embassy of Japan to Malawi supports the development of Malawi across a wide range of areas including agriculture, infrastructure development, environment and climate change management, health, education, and water supply and sanitation. Such assistant can be considered as another solution to create an attractive business environment not only for Canada but for many other countries willing to import Malawian products. Another efforts to enhance Africa’s, and Malawian, development is under the Tokyo International Conference on African Development (TICAD) process. This renewed vigor has resulted in Japan resorting to tailor its support towards alleviating poverty through economic growth. Private investment is critical to economic growth and is therefore indispensable for the development of African countries including Malawi. In this regard, it is imperative for Malawi to communicate its attractiveness as an investment destination.

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