Malawi Nusiness Environment
A typical Business in Malawi has to pay 26 taxes, consuming a total time of 175 Hours to fully prepare and pay taxes. The Total tax rate on businesses in Malawi is 34.7 (% of commercial profits), being the #144 highest business tax rate in the world. The Total tax rate is the sum of the following taxes:

Whether we owe it to our collective gullibility or forgetfulness as a people and as a nation, or simply to a sense of helplessness and hopelessness regarding our plight, the truth of the matter is that one politician after another has taken us for a ride year after year promising development and delivering nothing but retrogression.One of the most poignant examples of this political bullshitting is about attracting foreign investors to invest in Malawi. When our presidents and financial ministers come back from their lavish and wasteful trips abroad they always claim that these costly trips were justified because while abroad, be it in the United States in the United Kingdom, they signed foreign investment deals worth billions of dollars. These deals, so they claim, will definitely develop Malawi beyond recognition.

I am yet to see even one investment that was a direct result of any of those trips.

Returning from the United States with is arm in a sling not too long ago, the president’s mouthpieces and even president Mutharika himself downplayed his illness by claiming that he quite simply had to extend his stay in the USA because he was signing investment deals with important potential investors. The value of the investment being thrown around at that time was in the region of $200 million.

Two weeks ago, Mutharika and crew were at it again after returning from the United Kingdom, and again huge amounts of dollars coming with foreign investors were being prophesied by DPP praise-singers. Investments that apparently will be a direct benefit of the president’s squandering of taxpayer Kwachas on yet another expensive trip abroad.

The truth is that after more than three years of Mutharika, and yes, even two years of Joyce Banda when the same foreign investor mirage was being thrown around, we have not seen any foreign investment in this country.

Poor Money transfer system
Malawi forex exchange

As a matter of fact, what we have seen since the dawn of the democratic dispensation in 1994 is the fast exodus from Malawi of many that were our serious investors. Investors like BP, Stagecoach, and all closed shop because they realised that this once promising country was declining fast.They found that on top of collapsing infrastructure and worsening corruption, they were also failing to externalise their profits due to lack of forex.

Others like renowned tea companies Naming’omba tea estates (Chris Barrow) and Comforzi tea estates all sold their investments and fled due to poor economic infrastructure.

It seems to me that although the staple discussion of Malawians is politics, many that talk politics and promote this political candidate or that political party quite simply do not really know what they should expect and demand from their favourite politicians if they want political gains to translate into economic profits for Malawi.

There are three things that are critical for attracting foreign investment: 1) political stability, 2) infrastructure and 3) a viable market.

Most investments in Malawi have failed because of poor infrastructure especially when compared to other Sub- Sahara African Countries.

In addition to the three important factors mentioned above, telecommunications, road networks and road conditions, utilities (water, electricity and gas) and public service delivery efficiency are also very crucial.

Many investors that have been excited by the beauty of Malawi quickly turn their back on the idea of investing here when they discover that the investment climate quite simply does not exist.

Let me tell you what I know from my experience working in the government.

In 2010,investor X wanted to put up a state of the art golf course at Cape Maclear, including a five star hotel and a massive tourism development. The aim was to use the Lake Malawi National Park, which is an international Heritage, to attract international golfers and tourists. The investment failed because the government could not guarantee or commit to the provision ofreliable of electricity, and good telecommunication facilities.

Also in 2010, investor Y wanted to put up state of the art fish farms in Mangochi and Chikwawa for exports. The investment would earn Malawi the much-needed forex and provide hundreds of jobs in the lower shire region.  The investment failed because ESCOM could not deliver electricity at the capacity the company wanted to operate. Telecommunication facilities were also found wanting. The company lamented the absence of high speed internet, and Malawi’s exorbitant phone charges, being one of the most expensive in the Sub-Sahara region, made the investment nonviable.

In 2008, Investor Z wanted to put up a two-lane motorway from Chitipa to Nsanje. The investor would put toll charges for a number of years and then donate the motorway to the government after that period. The investor pulled out due to corruption and needless bureaucratic bumbling.

In 2011, Investor L was determined to put up a clothing factory in Mpemba. These would be top-branded designs for the export market, again earning the government the much needed forex. Once again the much excited investor fled and started negotiating with the government of neighbouring Zambia when he discovered that electricity in Malawi was too unreliable, and if he were to use standby generators for all the time there would be no electricity, then the venture would no longer be viable.

What every Malawian, and especially those leading and aspiring to lead this country need to know is that talk of attracting foreign investors will be simply wet dreams in the minds of political aspirants if a proper investment climate is not first fostered. From the 1960s to the 1980, first president Hastings Kamuzu Banda did his best to lay the foundations for an infrastructure that could foster development through foreign investment. Malawi has a public service delivery system that was working efficiently. There was a reliable airline; railway transportation system and roads were being built. Electricity was sufficient for the population and the economic state of the nation at the time.

These were the foundations upon which subsequent leaders needed to build upon to continue maintaining an investment environment attractive to foreign investors. Instead, what we saw was a steady and almost deliberate demolition of the foundations that Kamuzu laid only for them to be replaced by greed and corruption, with each leader looking to make sure they had a private tarmac road leading to their private mansion after leaving office.

Investment infrastructural elements that are very poor in Malawiare in many cases stronger and better in neighbouring countries. Basic things like 24 hour availability of Electricity, and water, reliable telecommunication systems, reliable road networks, availability of forex for investors to be able to import raw materials, and solid public security in to assure investors that their investment is safe are all better in Mozambique, Tanzania and Zambia.

Allan Ntata
Allan Ntata

Before we applaud empty statements from Peter Mutharika and all others that promise the influx of foreign investors to Malawi, I believe we need to first clean our house to make it more attractive to the visitors. Instead of spending vast amounts of money on trips that never really bring any investors, why not first spend vast amounts of money fixing electricity problems and consolidating our telecommunications to make them cheaper and more reliable?

The question that must be asked of our politicians and leaders is simply this: Why would an investor choose to invest in Malawi over these other African countries where investment facilities are better and more reliable?

 

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