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.
|Foreign Direct Investment
|FDI Inward Flow (million USD)
|FDI Stock (million USD)
|Number of Greenfield Investments*
|Value of Greenfield Investments (million USD)
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Any Comment About This Content? Report It to Us.
© eexpand, All Rights Reserved.
Latest Update: December 2023