FDI in Malawi

In 2012, Malawi managed to attract Foreign Direct Investment worth US$1.2 billion representing 22 percent of the FDI flows to Southern Africa. With reference to Malawi Investment and Trade Centre records for investment pledges for the year 2012, FDI significantly rose by 18 percent from US$987,458,231 recorded for 2011 to US$1,161,432,000. This is a reflection of the improved business environment which attracted more investors from within and outside Africa. This upward trend commencing from 2011 was a diversion from the collapsing investment figures traced from 2008 to 2010. Infrastructure and Energy sectors shared 62 percent and 33 percent of the 2012 total investment respectively with tourism, services and agro-processing having minimal contribution. Concerning the origin of the investors, China and the United Kingdom shared 46 percent equally while the rest of the investors which include South Africa, India, Pakistan and local investors, were less than 4 percent of the total investors. Despite the hike in FDI in 2012, the year’s employment levels (at 4,366) were relatively lower than those of 2011 (at 12,847).

Prospects for FDI in 2012 & the Medium Term

Foreign Direct Investment in 2013 is expected to show a positive growth from the current trend that is benefiting from the investment friendly economic reforms. The current government has liberalized the exchange rate and devalued the Kwacha which should ensure availability of foreign exchange for investment. Restored good relations with the donor community are also expected to boost confidence in investors. The Economic Recovery Plan is expected to put Malawi’s economy back on track which subsequently should make investing in Malawi more secure. Furthermore, the One-Stop investment facilitation anticipated to commence this year is a likely determinant to increased investment.