Malawi, in the African context, has so far been characterized by relative domestic stability. Still, high hopes that the 2020 elections would bring positive change in the fight against corruption, nepotism, and public funds mismanagement have been let down. Population growth and insufficient agricultural productivity provoke deforestation and soil erosion. This causes the country to be vulnerable to floods and food crises. Conversely, global warming related reduction in water resources negatively affects irrigation, which is necessary to boost food production.
Agricultural low productivity, caused by fragmentation of land ownership and backward agricultural techniques, goes hand in hand with insufficient infrastructure. A third of the population relies on food aid, with the country hostage to the effects of climate change. Maize is the main crop, while tobacco is the main export item. The deposits of bauxite, asbestos, uranium, graphite and uranium and some precious stones deposits are still under-exploited. The manufacturing is equally underdeveloped. The government retains partial control of the economy through quasi-governmental organizations and shares in large companies. A multi-sectoral privatisation programme has been launched, managed by a Commission.
High transport costs and logistical difficulties place Italian companies at a relative competitive disadvantage compared to other trading partners in the region. In addition, insufficient generation of electricity causes intermittent black outs and infrastructure and communication networks are still inadequate.
So far, Italian investment has been marginal. Entrepreneurs established in the country have been active in the tourism, agricultural, trade, services and construction sectors. The sugar and biofuels sectors offer interesting prospects which deserve careful consideration. Though small, the Italian entrepreneurial presence is traditionally appreciated for its flexibility and ability. Our companies are seen as viable alternatives to other foreign partners.
Market opportunities may exist for companies producing agricultural equipment, primary food processing, electric generators and hydraulic pumps, telecommunications equipment, and motor vehicles.
DOING BUSINESS IN MALAWI
The Malawi Investment and Trade Center exists to promote and develop Malawian exports, to attract and nurture foreign and domestic direct investment, and to lobby for a conducive business climate in Malawi.
The Malawian authorities actively encourage foreign investment in most sectors of the economy. To this end, there are no restrictions on ownership, size, sources of financial income, and final products destination.
There are special economic zones with export incentives. Import-related duties vary according to products and countries of origin. More lenient visa-issuing provisions, like those that allow citizens from certain EU countries (including Italy) and the USA free entry to the country, have been recently adopted. Though their aim is attracting both tourists and entrepreneurs, they are not likely to have significant impact. The bilateral Investment Promotion and Protection Agreement between Italy and Malawi entered into force on 21/03/2012.
The March 2022 approval of the “Lands Act” limits the possibility for foreigners to own land, if they’re not in a partnership with a Malawian citizen. This decision definitely brings about disadvantages for foreign investors. Additionally, inadequate infrastructure and bureaucracy represent major obstacles to international trade and foreign investment.