Investment prospects for Malawi have reached $1.5 billion for the 2024-25 financial year, with the manufacturing sector emerging as the primary driver of growth, the Malawi Investment and Trade Centre (MITC) has revealed.
This represents a 74 percent jump in investment pledges when compared to the $862 million pledges registered in the 2023-24 financial year.
Furthermore, the figure is 53 percent shy of the record $2.3 billion investment pledges recorded in the 2022-23 financial year.
In an interview with The Times Business, MITC Chief Executive Officer Paul Kwengwere said the manufacturing sector accounts for 50 percent of registered investments, followed by mining at 28 percent and energy at 21 percent.
He highlighted notable projects that have progressed from registration to implementation such as Portland Cement’s lime mining and clinker production facility in Balaka District and the Energy Storage Africa’s BESS Solar Project in Nkhoma, Lilongwe.
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Kwengwere further said in the agriculture sector Innoselia has expanded its greenhouse production of horticulture products, including tomatoes and green peppers, with successful exports to South Africa.
“The Portland Cement project is particularly significant as it addresses our import substitution needs, reducing our dependence on clinker imports from Zambia for cement production. We’ve also seen progress in new sectors, such as MIG Holdings’ medicinal cannabis production in Mbabvi, Lilongwe,” Kwengwere said.
However, he acknowledged that the economic environment has presented challenges, particularly for foreign investors concerned about profit repatriation.
“Malawi’s international rankings in this area have posed some hurdles. In response, we’ve prioritized facilitating domestic investors who have shown remarkable resilience and understanding of the local operating environment,” Kwengwere added.
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In its 2024 Investment Climate Statement for Malawi, the United States (US) notes that the nation is one of the poorest countries in the world and can be challenging to operate a sophisticated, large-scale business.
It further highlights that there are inadequate roads, electricity, communications, water supply, and healthcare infrastructure, scarcity of skilled and semi-skilled labour.
“Political risk in Malawi is manageable, and tribal, religious, regional, ethnic, or racial tensions are minimal, but decision-making on development and land use can be fragmented and difficult. Malawi’s legal system is generally unbiased but notoriously slow.
“Investors have the right to establish, acquire, and dispose of interests in business enterprises, but the Government enacted amendments to the land laws in 2022 that include clauses negatively affecting foreign ownership and investment in land-based enterprises. Corruption remains a major problem at all levels. The scarcity of forex poses a serious challenge and negatively affects investors’ repatriation of earnings,” the US investment climate assessment reads.
It adds: “The persistent effects of continued scarcity of forex, El Niño-induced weather conditions exacerbating food security concerns, and a highly uncertain global economic and geopolitical environment are expected to continue to fuel inflation and subdue economic growth.”
Commenting on the development, economist Marvin Banda said considering that we are nearly in the last knockings of the 24/25 Financial Year and the country has registered this level of investment pledges yet Gross Domestic Product (GDP) growth rate projections for the year are projected at a meagre 1.8, it means nearly nothing for the average Malawian.
He said the manufacturing sector has to catalytic for further economic growth in other sectors.
“Malawi being an agri-based economy would require manufacturing to aim to foster the transitory process into irrigation systems. The manufacturing industry would require an intensity in providing affordable tools for farmers to graduate from rain-fed mechanism that are not conducive for economic growth.
“The investment pledges are heavy for projects that focusing on building materials which are not going to reach most of the citizenry and it comes as no surprise that even though there has been substantial investment in the past 4 years, the misalignment with the country’s needs have translated to sluggish GDP growth rates in spite of continued efforts to improve investment in manufacturing.
“This is a typical example of fragmentation of growth policies that have riddled our economy since the launch of MW2063. While there has been some effort to venture in horticultural products, these should be first sold on the domestic market to reduce the reliance of imports of goods with high turnover ratios that diminish our import cover,” Banda said.
