investment promotion arm ends 2008 on a high note

2008 was a particularly successful year for the Malawi Investment Promotion Agency as the government investment promotion arm won the 2008 Investment Agency of the Year Award organized by Africa Investor, a specialist investment communications firm that advises governments, international organizations and businesses on communication strategies for capital market and foreign direct investments in Africa. The Africa Investor works to raise Africa’s investment profile by showcasing genuine examples of outstanding investment leadership and success

The award underlines the fact that a lot more factors affect investment decisions in addition to the ease and cost of doing business. According to World Bank Group survey findings that assessed the cost of doing business in 175 countries and ranks each country’s performance against other, Malawi’s business environment has been deteriorating.  On the basis of 10 indicators Malawi was ranked 96 out of 155 in 2006, 110 out of 175 in 2007 and 127 out of 178 in 2008.

While a smart and predictable investment climate is critical to developing a vibrant private sector in Africa, capable of creating jobs, trading within the continent and domestically producing competitive high quality goods and services, the award is an encouragement to the Malawi Investment Promotion Agency that despite the perceived negative business environment, Malawi is still considered by investors as a potential investment destination.

The Investment Promotion Agency of the year Award is given to outstanding government investment promotion agencies, private and multilateral organizations involved in investment promotion. MIPA scored highly on four out of five criteria listed below:

• Investments including value of projects brought in through the networks of the investment promotion Agency. see appendix for details)Information on how investment has increased over the past three years through the efforts of the Investment Promotion Agency - MIPA has an on-line data base that captures investment information from as far back as 1999). This information is readily available on request and is also posted on the website in summarized form

• Efforts to promote FDI, communication and promotional activities. - With funding from the UNDP Growing sustainable business project, MIPA was able to undertake a number of local and foreign promotion efforts. New promotional materials were also produced. These include the Investors guide, CD versions of the promotional kit and publication of the Trade and Investors magazine and updating the website – www.malawi-invest.net

• Activities related to reducing bureaucracy and facilitating investment process for foreign investment and in particular, promotion of the idea of the “one stop shop” - MIPA did not score very well on this criterion. Ideally, MIPA is supposed to operate as a one-stop shop through the investment approval committee. This is not the case now since key licences required by investors are not processed by MIPA. These include Business Residence permits, employment permits, land applications, mining licences and tourism concessions to just mention a few.  These are done by responsible ministries and MIPA has no control over the processes. In neighbouring countries such as Tanzania, the Investment Promotion Agency has desk officers from key departments and investor applications are done under one roof.     

• Follow-up on investment projects and guidance offered during the investment process - MIPA has an investor service section that monitors investors during and after the process of setting up their businesses. Problems encountered by investors are referred to appropriate institutions if they cannot he handled my MIPA. For instance, investors qualifying for investment incentives are assisted to get relevant documentation from the Malawi Revenue Authority.

PROSPECTS FOR 2009

The Malawi Investment Promotion Agency plans to facilitate increased local investment this New Year, especially with the continued support from the United Nations Development Programme (UNDP). This year, MIPA will implement yet another UNDP - funded project sorely targeting the small and medium enterprises country wide. The project is called Strengthening the SME Sector and it will jointly be implemented by MIPA, Ministry of Industry and Trade and the Bankers Association of Malawi.  The three institutions will implement different activities to reach the goals of the project which include:

• Increasing the business management skills of SMEs

• Increasing financial management skills and access to external finance

• Improving the attitude towards entrepreneurship in Malawi and

• Enhancing access to information for SMEs. The project will start with an initial sum of USD 600,000.

APPENDIX

SUMMARY OF MIPA-FACILITATED INVESTMENT (2006- 2008)

MIPA recorded highest levels of investment pledges in 2006 at US 185,299, 177.99. 52 new companies registered with MIPA pledging 4012 new jobs

In 2007 MIPA registered 66 new companies that pledged to create 15829 new jobs and the total expected investment was US 92,059,821.00

In 2008 (up to November) MIPA facilitated 69 new investments worth USD 143,247,050.00 and 25908 new jobs are expected

Origin of Investors and Sectoral Distribution

Asia leads as the main source of foreign direct investment into Malawi in 2008 with 27 new companies. Local companies also invested in the economy (17 new companies) followed by South Africa, Tanzania and Zimbabwe. Presented below is a tabulated overview of MIPA facilitated investment in 2008