- September 7, 2016
Located on the Great Rift Valley in Central Africa, and one of Africa’s smallest nations, Malawi is heartily known as ‘The Warm Heart of Africa’ and is swiftly budding as one of the last unexplored treasures of the continent. Malawi is not only the Warm Heart of Africa, but also the genuinely friendly, safe and in many ways undiscovered heart of Africa – an exclusive destination that is just that little bit different from its better – known neighbors. It is a landlocked country that was formerly known as Nyasaland. It is bordered by Zambia to the northwest, Tanzania to the northeast, and Mozambique on the east, south and west.
Immense Investment Opportunities
The Warm Heart of Africa has immense investment opportunities for investors in its lap. It exhibits many of the characteristics that emerging market investors look for. These opportunities have been categorized by sector:
Agriculture and Agro-Processing
Commercial estate farming offers wide scope for long-term investment in agriculture. Most of the traditional agricultural export crops of tobacco, tea, coffee and cotton are exported in a semi-processed state. Opportunities exist for investment into value addition in these sub-sectors and in other agricultural sub-sectors of chilies, macadamia nuts, cut flowers and beans.
Malawi has been a cotton growing country since the colonial era. Specific mention should be made of the cotton sector where investment opportunities include: cotton growing; cotton ginning; spinning, weaving and knitting. Investment opportunities exist in commercial cultivation of cotton through initiatives like contract farming, village adoption, cooperatives and associations etc.
Tea Production and Processing
Malawi is the pioneer of tea growing in Africa and is the second most important export crop for Malawi contributing some 7.9% of total export earnings. Tea is exported to European, Asian and American markets.
Arabica Coffee Production and Processing
Arabica coffee is the fourth most important export crop in Malawi. Exports are made to European markets, Asia markets and American markets.
With the country’s efforts to diversify the economy from agriculture, a lot of opportunities exist in the manufacturing sector and these are:
Manufacture of Textiles Accessories.
There is considerable scope for investment in the manufacture of accessories such as zippers, buttons, and fastening which are currently imported.
The Malawi garment industry is very young with about 8 garment companies operating under the export processing zones status. More companies are required to fully utilize the country’s resources and to more fully capitalize on new trade opportunities arising from the African Growth Opportunity Act (AGOA) initiative offered to Malawi by the United States Government.
Phosphate Fertilizer Manufacturing
Phosphate fertilizers constitute 20 percent (40,000 tons) of the total imports. Domestic fertilizer production in Malawi would reduce the price of fertilizer and therefore encourage the distribution of fertilizer to the more remote areas of the rural population.
Rubber Products Manufacturing
Malawi has rubber trees for the production of latex rubber at the rate of 1,300 tons per annum. 10% of the total tonnage is used locally for tyre re-treading, paint and mattress manufacturing.
Among semi-precious stones found in Malawi are Aquamarine, Amethyst, and Tourmaline while precious varieties include rubies and sapphires.
Minerals include Uranium, strontianite, Phosphate, Iron Sulphides, Gypsum, Coal , Limestone, Basnaesite, Pyroclore, Bauxite, Titanium sands, Kyanite, Graphite, Corundum among others.
An opportunity exists to invest in mining and processing of these minerals. Other attractive opportunities also exist in a gems and jewelry plant with the proposed objective of buying, processing and selling locally found gemstones on international markets, as well as manufacturing jewelry items.
A number of bilateral and multilateral trade agreements includes the African Free Trade Zone, the Common Market for Eastern and Southern Africa (COMESA), the Southern Africa Development Community (SADC) Trade Protocol, bilateral trade agreements between Malawi and Zimbabwe, Malawi and South Africa, Malawi and Botswana, Malawi and Mozambique, Malawi and China, Malawi and India, and Malawi and Malaysia the Cotonou Agreement between the European Union (EU) and African Caribbean Pacific (ACP) countries, and the United States-African Growth Opportunity Act (US-AGOA) initiative for concessional exports to the US market.
Benchmarking Investment Climate in Malawi
Credit Access: There is no discrimination in terms of access to credit in Malawi. Borrowing and lending affairs stay in the hands of banks and their clients.
Transportation System: In spite of being a land locked country, Malawi has a first-class road network and railway services, which join Malawian importers and exporters to the significant ports of Beira and Nacala in Mozambique.
Safekeeping Investment: In terms of physical property and property rights protection, Malawi is a signatory of the International Convention for Settlement of Investment Disputes (ICSID); and Multilateral Investment Guarantee Agency (MIGA), a World Bank institution that operates as an insurance organization, which offers compensation to multilateral investment losses.
Import/Export Policy: There is no favoritism a propos the set of laws leading imports and exports.
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