Doing Business in Malawi

On Friday 6th September, KPMG (in collaboration with Africa Exchange and in association with the Trade Fairs Department of the SA German Chamber of Commerce) hosted the Malawi Country Focus seminar at our Johannesburg offices.  The seminar involved conversation with key guests from senior leadership positions in Africa to discuss Malawi’s present, pending and future projects, as well as the cost of doing business in Malawi, government reform, the financial sector, and tax incentives.

Promising prospects for investment

With promising economic prospects and major opportunities in the telecommunications, agricultural, tourism, finance and manufacturing sectors, Malawi is an investment destination of note. The government encourages both domestic and foreign investment in most sectors of the economy without restrictions on ownership, size of investment, source of funds, or the destination of the final product.

There is no government screening of foreign investment in Malawi. Apart from the privatisation programme, the government’s overall economic and industrial policy does not have discriminatory effects on foreign investors. Since industrial licensing in Malawi applies to both domestic and foreign investment, and is only restricted to a short list of products, it does not limit competition, protect domestic interests, or discriminate against foreign investors at any stage of investment. Restrictions are based on environmental, health, and national security concerns.

Factors influencing foreign investment

The Malawian government has increased efforts to promote foreign investment; there are however, a number of factors limiting such investment, e.g.:

  • high transportation costs
  • inadequate power and water supplies
  • cumbersome bureaucracy (especially for imports and exports)
  • difficulty in accessing foreign exchange
  • lack of skilled labour
  • government market interventions

Right to private ownership and establishment

The government encourages both domestic and foreign investors to establish and own business enterprises in most sectors of the economy. All investors have the right to establish, acquire, and dispose of interests in business enterprises. There are some restrictions to land ownership by foreigners. Sale of land to foreigners is approved only after no Malawian has shown interest to match the price offered by the foreigner. However, land acquired as part of a business establishment is not subject to this rule. In principle, public enterprises compete equally with private entities with respect to access to markets, credit and other business operations.

For a more comprehensive overview of Doing Business in Malawi, read and download our Malawi Country Snapshot for Q2, 2013.

David Okwara

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