On wooing investors to Malawi

There is a lot of hype over the issue of wooing investors to Malawi. I followed our president’s exploits in the United States and I saw the reports on the promises made by potential investors, that they will come to Malawi and invest in this, and invest in that.

Without sounding too negative, and at the very familiar risk of praise-singers accusing me of speaking and of seeing only the negative, I still feel compelled by what I see as the reality on that ground to remind the government that in trying to attract investors, Malawi is competing with other countries in the region, and investors have to choose on the basis of competitive advantage.

There there are three important policy areas that need to be addressed before any investor can consider Malawi seriously as a market.

1. Energy
Unless the government prioritises solving the energy problems, especially the persistent blackouts, no investor worth the name will take Malawi as a serious investment destination. An investor will first consider the energy question and will soon find that Mozambique, Zimbabwe, Tanzania, and other nearby countries present much more attractive options. If we are seriously trying to woo investors, we must do all we can to address our pathetic power supply situation. This must be addressed NOW, as a matter of absolute urgency.

2. Telecommunications
Malawi is by far one of the most expensive countries in Africa and in the world when it comes to the cost of telephones, internet and other telecommunication services. Mobile phone services are extremely unreliable while at the same time being unjustifiably expensive. Internet services are provided mostly via wifi internet service providers such as Skyband and Globe, who charge whatever they want for very slow and unreliable services. Proper DSN broadband is almost nonexistent, and other telecommunication services are very far behind our neighbours and competitor countries in reliability, efficiency and cost. An investor will consider this item as crucial in making a decision whether to invest in Malawi or to move on to its neighbours.

3. Malawi as a Market
Because of the economic stagnancy, inflation, and lack of popular spending power, Malawi is not an attractive market for investors. This can be demonstrated by the many companies that have tried to opened their businesses here, and quickly closed their doors and disappeared once their tax break periods were over. An investor wants to invest in a country where a) the populace has enough spending power that will translate demand into profits, or b), a country that whose foreign trade rules and regulations will allow him to produce a product, export it and make a profit that justifies the investment. These factors are affected by Malawi’s downward economic spiral, and the tendency to have in government leaders that do not have any idea how to address these matters. As a result, Malawians have no spending power to create an authentic market for most investors, and Malawi’s export rules are forbidding and needing large bribes for an investor to make any sense of his investment.

Now we keep hearing news and optimistic songs about wooing investors and yet we have not heard any declaration from our leaders as to how they plan to solve these challenges. Could it be that all we are hearing is empty propaganda rhetoric, a matter of form without substance?