Malawi: Investing

FDI in Figures

FDI flows to Malawi have been fluctuating in the recent past, peaking at USD 959 million in 2018 and averaging USD 50 million between 2019-21. According to UNCTAD's 2022 World Investment Report, FDI inflows stood at USD 50 million in 2021, while the total stock of foreign investment reached USD 1.59 billion, around 13.1% of the country’s GDP: the ratio has been decreasing in the last five years and it is relatively low compared to other African countries.
The agricultural sector attracts the most FDI - primarily from South Africa, Germany and the United States – followed by energy and mining. In recent years, there has been an increased interest in renewable energy projects, particularly in the solar and hydropower sectors. The exploration of rare earth elements near Lake Malawi could also attract new investments in the mining sector: for example, the Kaniyka niobium project – worth USD 250 million - will be the first niobium-mining project in Africa (Coface). There is also hope that an oil field would be discovered in the region. Other sectors that offer investment opportunities include agro-processing, manufacturing and tourism.

Malawi is eager to receive foreign investments and foreign investors are generally granted the same treatment as nationals, as the Malawian constitution protects investment irrespective of nationality. However, while not discriminatory to foreigners, investments in the country involve multiple, and sometimes time-consuming, administrative procedures, which may include obtaining a business license, a tax registration number, and a land permit. There is no government policy to screen foreign direct investment; however, FDIs need to be registered with the Malawi Investment Trade Centre and the minimum investment threshold to be eligible for a Business Residence Permit is USD 50,000. Furthermore, foreign investment is permitted in all sectors of the economy except those that may pose a danger to health, the environment, or national security. The government is also trying to attract investments through bilateral cooperation, as shown by events like the Malawi-China Investment Forum and the Malawi-Japan Investment Forum. On the other hand, Malawi's landlocked geographical location and the inadequate condition of its infrastructure are barriers to foreign direct investment. The business climate also suffers due to a lack of skilled workforce, an underdeveloped financial sector, high transportation costs, unreliable supply of water and electricity, inefficient public institutions and difficulties in accessing credit. Malawi has taken steps to attract foreign investment, including the establishment of the Malawi Investment and Trade Centre (MITC) to promote and facilitate investment in the country. The government has also implemented policies to improve the business environment, such as reducing the time and cost of starting a business and streamlining procedures for obtaining permits and licenses. Malawi ranks 110th out of 180 economies on the 2022 Corruption Perception Index and 133rd out of 176 on the 2023 Index of Economic Freedom.

What to consider if you invest in Malawi

Strong Points

The strong points of the Malawian economy include:
• natural resources (uranium, tea, coffee, tobacco)
no restrictions on remittance of foreign investment funds (including capital, profits, loan repayments and lease repayments)
• rapidly expanding services sector
• resumption of support by financial donors
• preferencial access to several markets: the country is member of the SADC (Southern African Development Community) and the COMESA (Common Market for Eastern and Southern Africa)

Weak Points

The main challenges for foreign investors include:
• an economy dominated by agriculture, vulnerable to weather conditions
• high inflation rates
• Infrastructure shortcomings (water, energy, IT)
• Scarcity of skilled and semi-skilled labor
• Low foreign exchange reserves
• corruption remains a major obstacle to carry out investment in Malawi.
• Increase in extreme poverty
• Diplomatic tensions with Tanzania and Mozambique

Government Measures to Motivate or Restrict FDI

The Government of Malawi offers a wide array of fiscal and non-fiscal incentives which apply equally to domestic and foreign investors and to several sectors including manufacturing, agriculture and mining.
Malawi recently passed a number of laws aimed at improving the investment environment, including:
• Amendment to the Taxation Act 2017, which increases the tax-free bracket for salaried employees (up to USD 41/month) and introduces an additional income tax bracket for high income earners (over USD 4,100/month).
• Amendment to the Value Added Tax Act 2017 which revises penalties and interest for various offenses under the Act and gives tax exemption for certain essential commodities including milk, eggs, and honey.
• Amendment to the Customs and Excise Act 2017 which imposes an excise duty on airtime, television subscriptions, gaming and betting (including lotteries).

Procedures Relative to Foreign Investment

Freedom of Establishment

The Constitution of 1995 guarantees basic freedom to invest, to own property, and to fair compensation in the event of expropriation.
Malawi is eager to attract foreign investment and foreign investors are generally granted national treatment as the Malawian constitution protects investment irrespective of nationality.

Acquisition of Holdings

Investors, both domestic and foreign, may invest in any sector of the economy, with no restrictions on ownership. There are no restrictions on the size of investment, sources of funding, or whether products are destined for export or for the domestic market. However, the Malawi Stock Exchange limits an individual foreign investor to 10% of the shares of any one company during its IPO, with the aggregate of all foreign investors participating in the IPO being limited to 49% of shares. These restrictions only apply to the initial offering and do not apply to any future trading of shares.

Obligation to Declare

Government does not screen foreign direct investments but need to be registered with the Malawi Investment and Trade Center (MITC) and investment capital over USD 50,000 must be registered with the Reserve Bank of Malawi (RBM).

Competent Organisation For the Declaration

Malawi Investment and Trade Center (MITC)
Reserve Bank of Malawi (RBM)

Requests For Specific Authorisations

While not discriminatory to foreign investors, investments in Malawi involves some processes, which may include obtaining a business license, a tax registration number, and a land use permit. Foreigners need a business residence permit (BRP) to carry out any business activity in Malawi. All new land acquisitions are done under leases, with lease terms for foreigners limited to maximum 50 years, compared to 99 years for Malawian citizens. Moreover, foreigners can only secure private land when no citizen has made an offer for the land and the law prohibits land transfer, as a gift, between persons who are not Malawi citizens. During the privatization of government assets, Malawian nationals are offered preferential treatment, including discounted share prices and subsidized credit.

Investment Opportunities

Investment Aid Agency

Malawi Investment and Trade Centre (MITC)

Tenders, Projects and Public Procurement

Online Tenders, Tenders in Malawi
Global Tenders, Government Tenders in Malawi
Tenders Info, Malawi Tenders
Africa Gateway, Malawi Tenders

Other Useful Resources

Malawi Confederation of Chambers of Commerce and Industry
2021 Investment Climate Statements by the U.S. Department of State

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