The latest African Attractiveness Index (AAI) report by Ernst and Young has shown that Malawi is not among the continent’s 25 most attractive destinations in as far as foreign direct investment is concerned.
This is despite reforms Capital Hill has been putting in place over the past two years aimed at easing doing business in the country.
EY AAI 2017 released on Wednesday, measures the FDI attractiveness of 46 African countries constructed on the basis of six broad pillars that act as key determinants for choosing a location to invest.
Morocco tops the list of attractive FDI destination, followed by Kenya and South Africa. However, South Africa remains the continent’s leading FDI destination, when measured by project numbers.
Neighbours Tanzania, Zambia and Mozambique occupy positions five, 16 and 22 respectively.
Within each pillar of the index, a set of key indicators have been included with specific weightings to arrive at the overall pillar rank and score.
The first two pillars — macroeconomic resilience and market size — are considered shorter-term factors, and account for 40 percent of the total weighting; the other four pillars are longer-term factors, and account for 60 percent of the total weighting.
Industry and Trade Minister, Joseph Mwanamvekha, could not be reached for comment Thursday.
But in a recent interview, Mwanamvekha said Capital Hill is committed to making Malawi an attractive destination for investors.
According to EY in 2016 Africa attracted 676 FDI projects, a 12.3 percent decline from the previous year, and FDI job creation numbers declined 13.1 percent. However, capital investment rose 31.9 percent.
The surge in capital investment was primarily driven by capital intensive projects in two sectors, namely real estate, hospitality and construction (RHC), and transport and logistics.
The continent’s share of global FDI capital flows increased to 11.4percent from 9.4 percent in 2015. This made Africa the second-fastest growing FDI destination by capital.
EY Africa CEO, Ajen Sita, said investor sentiment toward Africa is likely to remain some what softer over the next few years.
“This has far less to do with Africa’s fundamentals than it does with a world characterised by heightened geopolitical uncertainty and greater risk aversion.
“Investors with an existing presence in Africa remain positive about the continent’s longer-term investment attractiveness, but they are also cautious and discerning,” Sita said.