There are three types of entities that can be registered at the office of the Registrar General in Malawi:
Investors establishing their business investments are required to take the following steps:
Depending on the sector, the business will need to be registered with these additional entities:
Before visiting different institutions to register a business entity in Malawi, it is required that investors visit the One Stop Service Centre (OSSC) operated by the Malawi Investment and Trade Centre to get more information on investment. The role of MITC is to facilitate and promote investment and trade. The key services offered by the One Stop Service Centre include:
To promote investments in Malawi, the government gives investment concession to investors on a case by case basis depending on the sector of investment and priority sectors designated by Ministry of Finance, Economic Planning and Developmet.
Relevant institutions | Malawi Investment and Trade Centre Ministry of Industry, Trade and Tourism Ministry of Finance, Economic Planning and Development |
An investor should obtain an Environment Impact Assessment Certificate that is issued by the Department of Environmental Affairs (DEA) under the Ministry of Natural Resources, Energy and Mining.
EIA fees
Current the fees as provided include scrutiny fee of MK 50,000 (US$ 68); and fees for review of a full EIA report are around MK 1.0m – 3.0 m (or US$ 1,362- 4,087) depending upon project cost.
Environmental permits and licences
In addition to obtaining an EIA certificate, an investor is required to obtain a permit/ license depending on the nature of their activity.
Relevant institutions | Environmental Affairs Department, |
Permit/license | Requirements | Act/regulation | Implementing agency |
---|---|---|---|
Water permit | To use and/or abstract water, build dams | Water Resources Act | Water Resource Board/ Water Abstraction Committee |
Effluent discharge consent | To control water pollution | Water Pollution Control Regulation | Environmental Affairs Department |
Air pollution license | To emit any gas or other pollutants into the atmosphere | Environmental Management Act | Environmental Affairs Department |
Waste license | To handle, store, transport, classify or destroy waste other than domestic waste, or operate a waste disposal site | Environmental Management Act | Environmental Affairs Department |
Hazardous waste license | To import or export and transport any hazardous waste in Malawi | Environmental Management Act | Environmental Affairs Department |
Generally, investors reported a very enabling environment for private investment.
However, concerns were raised on fiscal policy regimes such as high taxes on some goods produced by certain investors. The lengthy process of obtaining business licenses from different institutions/offices, coupled with limited window for on line processing of the said licenses, were also raised as concerns.Malawi’s population is estimated at 17.2 million in 2017. Forty six percent is below the age of 15 years.
The education system is guided by the National Education Act and a five year rolling policy and strategic framework known as Education Sector Implementation Plans. The education system comprises early child development (ECD), primary, secondary, vocational and technical, and tertiary education institutions.
Tertiary education is regulated by the National Council for Higher Education (NCHE). There are four public universities and 16 private accredited universities in the country. The tertiary education system has been growing over the past few years with enrollment in public universities increasing from 7,900 in 2008 to 13,000 in 2014.
The four public universities are:
The country also has technical, entrepreneurial, vocational education and training (TEVET) which is provided in government technical colleges across the country targeting secondary school leavers.
Various private and public colleges also provide certificate and diploma levels of training.
Relevant institutions | Ministry of Education, Science and Technology, Ministry of Information National Council for Higher Education |
Of the four public universities, University of Malawi (UNIMA) is the oldest. It was founded in 1965, a few months after Malawi Independence and has four constituent colleges, namely: Chancellor College in Zomba; The Polytechnic in Blantyre, the College of Medicine also in Blantyre, and Kamuzu College of Nursing in Lilongwe.
Chancellor College is the largest among the constituent colleges of the University of Malawi. The college comprises five faculties: The Faculty of Humanities, the Faculty of Law, the Faculty of Science, the Faculty of Social Science, and the Faculty of Education.
The College of Medicine was opened in September 1991 with the aim of training home grown medical doctors to carter for the country’s needs.
Employment is guided by four laws:
The Labour Relations Act, 1996: promotes sound labour relations through the protection and promotion of freedom of association, the encouragement of effective collective bargaining and the promotion of orderly and expeditious dispute settlement, conducive to social justice and economic development.
The Employment Act, 2000: establishes, reinforces, and regulates minimum standards of employment with the purpose of ensuring equity necessary for enhancing industrial peace, accelerate economic growth and social Justice. For instance, it requires employers to set out employee's normal working hours in the employment contract, and defines over time hours for employees, amongst others.
The Workers’ Compensation Act, 2000: provides for compensation for injuries suffered or diseases contracted by workers in the course of their employment or for death resulting from such injuries or diseases; it provides for the establishment and administration of a Workers’ Compensation Fund.
The Occupational Safety, Health and Welfare Act, 1997: makes provision for the regulation of the conditions of employment in workplaces as regards the safety, health and welfare of employees, for the inspection of certain plant and machinery, and the prevention and regulation of accidents occurring to persons employed or to go into the workplaces.
Relevant documents | Employment Act Labour relations Act Workers Compensation Act Occupation Safety, Health and Welfare Acr |
Relevant institutions | Ministry of Labour, Youth, Sports and Manpower Development |
The table below sets wages typically paid by foreign investors.
By comparison, the minimum wage set by the government is MK 25,012 (US$ 35) per month for unskilled labour.
The work week is 5 days, with a maximum of 8 hours per day.
The Table below shows the indicative monthly wages paid by foreign investors in Malawi*.
Unit | Value | Year | Comment | |
---|---|---|---|---|
Senior manager | USD | 3500-5000 | 2017 | per month, plus other benefits |
Middle manager | USD | 2500-3000 | 2017 | per month, plus other benefits |
Graduate entry | USD | 900-1200 | 2017 | Per month |
skilled Technician | USD | 150-300 | 2017 | Per month |
Administrative Assistant | USD | 150-200 | 2017 | Per month |
Unskilled | USD | 80 | 2017 | Per month |
Relevant institutions | Ministry of Labour, Youth, Sports and Manpower Development |
Employers are required by the Employment Act, 2000 to provide annual, sick and maternity leave as described in the table below.
Other benefits, offered to middle and senior management include:
Type of leave | Period on full pay |
---|---|
Annual leave if working 6 days a week | 18 days a year |
Annual leave if working 5 days a week | 15 days a year |
Sick leave | According to length of medical certificate |
Maternity leave | 8 weeks |
Relevant institutions | Ministry of Labour, Youth, Sports and Manpower Development |
The Scheme pays out in the form of pension benefit or death benefit. Members are entitled to receive pension benefits under the following conditions:
From employer | From employee | |
---|---|---|
Minimum contribution | 10% | 5% |
All investors and non-Malawian workers require permits. Permits are issued by the office of the Director General for Malawi Immigration and Citizenship Services under the Ministry of Home Affairs and Internal Security.
The time for approval process for permits is detailed in the table below.
Type of permit | Maximum approval time |
---|---|
Temporary employment permit | 20 working days |
Business resident permit | 40 working days |
Permanent resident permit | 40 working days |
Student permit | 20 working days |
Temporary resident permit | 20 working days |
Extension of visitor permit | 1 working day |
Relevant institutions | Ministry of Home Affairs and Internal Security |
The abundance of the labour pool in Malawi makes labour costs cheap. In the event of limited technical capacity at any level, it is easy to develop the required skills, i.e. labour is easily trainable. Regarding the processing of work/ business permits, there were concerns over the delays in service delivery, such that companies have to visit the Immigration offices several times. However, there are plans for introduction of on-line permit applications and approvals which is expected to improve the processing of permits. The online system is expected to roll out in 2018
Electricity generation capacity is at 319 megawats against demand levels of 324 megawats. About 60 percent is consumed by the industrial and large commercial entities, 25 percent by domestic users, and 15 percent by small commercial producers.
Before the reforms, Malawi used to have one public electricity entity known as Electricity Supply Corporation of Malawi (ESCOM) which was responsible for generation, transmission and distribution to end users.
Currently, there are two major public companies in the electricity industry, namely Electricity Generation Company Malawi Limited (EGENCO) which is responsible for electricity generation created following the enactment of the Electricity (Amendment Act 2016), and ESCOM which retains the electricity transmission and distribution functions.
The new Electricity Amendment Act of 2016 is encouraging private investments in the electricity sector. As such, in the case of solar power, about 70 megawats of solar energy is expected to be produced by Independent Power Producers (IPPs) in the last quarter of 2017.
ESCOM connection charge is MK46,600 (US$63.50), and connection is done within 14 days.
Unit | Value | Year | Comment | |
---|---|---|---|---|
Domestic, pre-paid, single phase supply | MK(USD) | 41.35 (0.06 ) | October, 2016 | Unit charge per KWh per month |
Domestic, post-paid, single phase supply | MK(USD) | 2795.75 (3.81) | October, 2016 | Fixed charges per month |
Domestic, post-paid, single phase supply | MK(USD) | 35.79 (0.05) | October, 2016 | Unit charge per KWh per month |
Domestic, pre-paid, three phase supply | MK(USD) | 64.04 (0.09) | October,2016 | Unit charge per KWh per month |
Domestic, post-paid, three phase supply | MK(USD) | 7987.84 (10.88) | October, 2016 | Fixed charge per month |
Domestic, post-paid, three phase supply | MK(USD) | 57.37 (0.08) | October, 2016 | Unit charge per KWh per month |
Maximum demand- Low Voltage supply (large power for industrial users, supplied at three phase supply and metered at 400 volts) | MK(USD) | 27,950 (38.08) | October, 2016 | Fixed charge per month |
Maximum demand- Low Voltage supply (large power for industrial users, supplied at three phase supply and metered at 400 volts) | MK(USD) | 78.48 (0.11) | October, 2016 | One peak charge per KVA based on customer annual declared demand |
Maximum demand- low voltage supply (large power for industrial users, supplied at three phase supply and metered at 11kv or 33kv | MK(USD) | 27,950.00 (38.08) | October, 2016 | Fixed charge per month |
Maximum demand- low voltage supply (large power for industrial users, supplied at three phase supply and metered at 11kv or 33kv | MK(USD) | 69.88 (0.10) | October, 2016 | On peak unit charge per KWh |
Relevant institutions | ESCOM |
Malawi has vast expanses of water systems. The major ones include: Lake Malawi (28,750 km2),
Lake Malombe (303 km2), Lake Chilwa (683 km2), and Lake Chiuta (130km2).
The country also boasts several small to medium size reservoirs, perennial
rivers as well as groundwater resources hence it is a water abundant country.
The nationwide accessibility to safe water is 87% according to Malawi Demographic and Health Survey of 2015/16. Over 90 percent of households in urban areas and over 83 percent of households in rural areas have access to improved water sources.
Institutional Arrangements in the water sector.
The legal and regulatory structures for water resources management and water services are framed from the Water Resources Act and Water Works Act. These Acts control the institutional and organizational arrangements under which the water sector operates, the pricing and tariff arrangements, the water supply and water-borne sanitation delivery and water resources management practices.
The management of water resources in the country is primarily under the responsibility of the Ministry of Agriculture, Irrigation and Water Development (MoAIWD) for policy-making, supervision and direction. The National Water Resources Authority established under the Water Resources Act of 2013 and Water Boards established under Water Works Act 1995, play various roles in the water resources development, management and service delivery.
Blantyre Water Board provides water to about 85 percent of Blantyre City’s population of 1.4 million for domestic, institutional, commercial and industrial purposes from a daily production of 78,000,000 litres.
There are five water boards:
Blantyre Water Board provides water to about 85 percent of Blantyre City’s population of 1.4 million for domestic, institutional, commercial and industrial purposes from a daily production of 78,000,000 litres.
Lilongwe Water Board provides water to Lilongwe City, the capital of Malawi, with a capacity of is 125,000 cubic meters per day, for a population of about 1,000,000. There are about 65,000 metered customers and more than 600 water Kiosks (communal water selling points) within Lilongwe City.
The cost of water connection is about MK27,000 (US$37.0) for residential areas. For industrial sites, the rates are a bit higher and depend upon the distance to the investment site from where water the nearest water pipes are.
Relevant institutions | Ministry of Agriculture, Irrigation and Water Development |
Water Volume |
15 cubic metres |
50 cubic metres |
100 cubic metres |
Tariff |
0.61 |
0.73 |
0.76 |
Fixed Charge |
0.13 |
0.04 |
0.02 |
Variable Charge |
0.45 |
0.69 |
0.74 |
Other Charge |
0.02 |
0.01 |
0.00 |
The regulatory frameworks for the ICT sector includes: the Communications Act, 1998 which establishes the Malawi Communications Regulatory Authority (MACRA); the Science and Technology Act, 2003, and the Digital Broadcasting Policy, 2013.
Over the years, Malawi has been undertaking major reforms in the ICT sector. They started in the 1990s through separation and commercialization of the then incumbent Telecom operator and Post Office into Malawi Telecom Limited (MTL) and Malawi Postal Corporation (MPC), respectively.
The National ICT Policy, 2013 seeks to encourage the private sector's participation in ICT development to facilitate the roll-out of community-based ICT initiatives, and the National Access to Information Policy, 2014.Unit | Value | Year | Comment | |
---|---|---|---|---|
Mobile data 1 GB | USD | 3 | 2018 | Valid for 7 days |
Mobile data 1 GB | USD | 7 | 2018 | Valid for 30 days |
Mobile data 2 GB | USD | 8 | 2018 | Valid for 30 days |
Mobile data 20GB | USD | 46 | 2018 | Valid for 30 days |
Relevant institutions | Malawi Communication Regulatory Authority |
Road transport remains the major mode of transport in Malawi. It handles more than 70% of the internal freight traffic and 99% of passenger traffic. The general condition of the road network has improved slightly during the past 5 years, and is expected to improve further in the coming years.
The Malawi transport sector is guided by the National Transport Policy which seeks to ensure the provision of a coordinated transport environment that fosters a safe and competitive operation of commercially viable, financially sustainable, and environmentally friendly transport services and enterprises. The scope of the policy covers all modes of transport namely; road, rail, air and marine.
The major thrust of the policy is Government of Malawi’s commitment to increasing private sector participation in the provision, management and operation of transport infrastructure and services.
Relevant institutions | Ministry of Transport and Public Works |
The aviation infrastructure consists of two international airports at Lilongwe and Blantyre, and four domestic airports with paved runways at Likoma, Karonga, Mzuzu, and Club Makokola in Mangochi.
The Government is in the process of expanding Kamuzu International Airport in Lilongwe and Chileka International Airport in Blantyre as part of its efforts to improve the aviation infrastructure.
The following are the transport rates for international and local routes
Unit | Value | Year | Comment | |
---|---|---|---|---|
Johannesburg to Lilongwe | USD | 3,700 | 2018 | 40' container |
Beira to Lilongwe | USD | 3,100-4,000 | 2018 | 40' container |
Beira to Blantyre | USD | 1,920-2,250 | 2018 | 40' container |
Nacala to Blantyre | USD | 3,300 | 2018 | 40' container |
Investors appreciate the efforts to improve the investment environment.
However, electricity blackouts which characterize the supply of electricity energy was cited as the most constraint to private sector investment, as it either raises costs of production through investments in gen sets or simply derails production activities. In addition, the poor conditions of the most of the road, rail and airport, are a hindrance to the private sector operations. This hinders investments in several other sectors.
The poor access to ICT services is also negatively affecting the investments in several other sectors of the economy including banking and registration services.
According to the new Land Act 2016, Malawi has two categories of land, namely:
The new Land Act prohibits granting of freehold to a person, but allows those that are already holding such land titles to continue. The Office of Commissioner of Lands administers and manages land issues such as making grants, leases and other dispositions.
Relevant documents | Physical Planning Act Land bill |
Relevant institutions | Ministry of Land, Housing and Urban Development |
The new Land Act 2016 which has been assented but not yet in force and the National Land Policy, 2002, outline the conditions and procedures for land acquisition by investors. These are as follows:
Relevant institutions | Ministry of Land, Housing and Urban Development Malawi Investment and Trade Centre |
Unit | Value | Year | Comment | |
---|---|---|---|---|
Residential land | US$ | 335 | 2017 | Per ha per year |
Industrial rail serviced land | US$ | 1,700 | 2017 | Per ha per year |
Industrial land | US$ | 2,000 | 2017 | Per ha per year |
Commercial city centre land | US$ | 5,400 | 2017 | Per ha per year |
Commercial land | US$ | 4,000 | 2017 | Per ha per year |
Institutional | US$ | 2, 300 | 2017 | Per ha per year |
An investor who has acquired land and requires a construction permit needs to take the following steps:
Relevant institutions | National Construction Industry Council Ministry of Land, Housing and Urban Development |
The Export Processing Zones (EPZs) regime was established to attract export-orientated industries, by offering them especially favorable investment incentives as compared to the remainder of the manufacturing sector in the country.
The Export Processing Zones Act, came into force in 1995. All companies engaged exclusively in manufacture for export may apply for EPZ status, as Government accords EPZ status only to firms (foreign or domestic) that produce exclusively for export.
There are no specific zones dedicated to export processing in Malawi, rather it is firms which are designated the status of EPZs and are located in areas of choice and convenience to the investor. The Ministry of Industry and Trade administers the Export Processing Zones Regime in Malawi assisted by the EPZ Monitoring and Evaluation Committee as stipulated in the Act.
An Export Enterprise Certificate is valid for a period of five years and may, thereafter, be renewed for successive periods of two years and companies can chose to graduate or not from the scheme. The law requires all exporters to repatriate back to Malawi 100 percent of export proceeds and register the same with the Reserve Bank of Malawi within 6 months of export.
Traditional industries such as tobacco, tea, coffee, and cotton are excluded from the EPZ Regime. Currently, the firms operating under the EPZ status are in three categories of export products namely, (a) natural rubber and wood products; (b) macadamia and coffee; and (c) textile.
Relevant institutions | Ministry of Industry, Trade and Tourism Malawi Investment and Trade Centre |
Generally, there are no serious complaints against environment impact assessment requirements.
Concerns have been raised regarding investors access to customary land for investment purposes, as investors have to deal with rural communities on their own, which is sometimes costly. However, with the establishment of OSSC at Malawi Investment and Trade Centre (MITC) and the new Land Act promising to identify and allocate land to investors through MITC such concerns shall shortly be a thing of the past.
The Malawi tax laws (Taxation Act and VAT Act) require owners of businesses, both individuals and companies, to register for tax purposes with the Malawi Revenue Authority (MRA) regardless of the size of business, nature of business or location.
To register for tax, investors must provide to the Malawi Revenue Authority the following filled documents: business registration certificate, valid ID, articles of association (if limited company).
Registration for taxes is free and can be done at any nearest MRA office. MRA issues a Taxpayer Identification Number (TPIN) on registration which should be used on any correspondence with the Authority.
MRA has introduced innovative platforms aimed at enhancing electronic payment of tax and verification of MRA documentation. These include requiring investors to use Electronic Fiscal Device (EFD) facilities by all registered Value Added Tax (VAT) operators; use of ASYCUDA World, and cargo scanners, among others.
MRA follows the Government fiscal year which runs from 1st July to 30th June. However, there is flexibility in that an investor can notify the Authority on its financial year.
The following are the specific key tax regimes.
Summary of the Key Taxes
Type | Rate |
Corporate income tax | Standard rate of 30%; investment income of pension funds is subject to tax rate. |
Foreign branch tax | 35% |
Personal income tax | The first MWK 30, 000 (US$40.9) income is tax free, thereafter, next MWK is taxed at 15% and excess at 30% |
Value-added tax | 16.5% however, banking and life insurance services are exempted |
Dividends withholding tax | 10% unless reduced under an applicable tax treaty |
Interest withholding tax | 20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty |
Royalties withholding tax | 20% applies to residents; 15% applies to interest payments made to non-residents, unless reduced under an applicable tax treaty |
Relevant institutions | Malawi Revenue Authority |
Category | Tax rate (%) |
---|---|
Standard rate | 30 |
Priority sector | 25 |
Relevant institutions | Malawi Revenue Authority |
Pay As You Earn (PAYE) is a method of collecting Income Tax from employees on their earnings.
The procedures for administration of PAYE are as follows:
Tax Band(Chargeable Income) | Rate |
---|---|
The first K30,000 (US$40.9) | 0% |
The next K5,000 (US$ 6.8) | 15% |
The excess of K25,000 (US$34) | 30% |
VAT is collected by registered businesses at all points in the chain of production and distribution, including manufacturers, wholesalers, retailers and service providers. It is also charged on imported goods and services.
The following are the guidelines on Value Added Tax (VAT) eligibility, registration process and remittance:
There are two components of Excise Tax. There is Import Excise, which is levied on certain importations and is administered by the Customs Division. There is also Domestic Excise, which is levied on certain locally manufactured products and services and is administered by the Domestic Taxes Division.
Details of tax registration process, remittance and prevailing excise tax rates are as follows:
The following are the prevailing domestic excise tax rates:
Commodity /item | Rate |
---|---|
Spirits | 250 percent of the cost of production |
Opaque beer | 30 percent of the cost of production |
Clear beer | 90 percent of the cost of production |
Bottled water | 10 percent of the cost of production |
Air time | 10 percent of the sales |
Gaming | 10 percent of the sales |
Audio tapes | 20 percent of the cost of production |
Cigarettes | 30 USD per 1,000 cigarettes |
Turnover Tax (TOT) is tax levied on gross income from businesses. “Income from business” includes gross receipts, gross earnings, revenues, takings, yields and proceeds.
Turn over tax is levied at 2 percent of the gross receipts of businesses for businesses with an annual turn- over exceeding MK6.0 million.
In Malawi, the turnover tax is applicable on all categories of income except rental income, management fees, professional fees or training fees, income of incorporated companies and any income that is subject to a final Withholding Tax.
The TOT return should be submitted to MRA on or before 20th day of the month following the end of the tax period. For example, a return for the month of May 2017 should be submitted to MRA on or before 20th June 2017.
Fringe Benefit Tax (FBT) is tax paid on the taxable values of fringe benefits being provided by an employer to an employee.
The rate for FBT is 30 percent and all employers except the Government are liable to FBT.
To register, an employer fills Form FBT 1 and gets Form FBT 2 for remittance, and registration should be done 14 days after starting giving fringe benefits to employees.
Customs duty refers to tax payable on imported goods, and is at 30% of the import value. However, when one imports goods from a country or countries that are a party to a bilateral, regional or global trade agreement with Malawi, depending on the terms of the agreement, the goods may enjoy preferential rates of duty.
The preferential duty rates will not apply where the conditions or terms of the agreement are not met in full, such as when an importer is not able to produce a valid Certificate of Origin.
The following are the procedures for paying customs duty, good declaration by investors and any other importers into Malawi:
Withholding Tax is an advance payment of income tax that is deducted from specified payments. A person making the payment deducts the withholding tax.
Any individual, partnership, trust, association, company, club, statutory body, council, Government ministry or department or any religious organization, as long as it makes payments to any person, is eligible to register with MRA and operate Withholding Tax.
Withholding tax is deducted using specified rates, according to the 14th Schedule to the Taxation Act, as follows:
Nature of payment | Rate |
---|---|
Royalties | 20% |
Rent | 15% |
Food stuff Supplies to traders and institutions; | 3% |
other Supplies to traders and institutions; | 3% |
Commission | 20% |
Carriage and haulage | 10% |
Contractors/subcontractors | 4% |
Public entertainment | 20% |
Casual labour exceeding K15,000(US$20.4) | 20% |
services | 20% |
Bank interest exceeding K10, 000 (US$13.6) | 20% |
Fees | 10% |
Tobacco sales | 3% |
Malawi is in process of renegotiating agreements with UK, Denmark, France, Norway, Switzerland, Netherlands, South Africa and Norway.
Relevant institutions | Ministry of Industry, Trade and Tourism |
Investors were positive about the fiscal regime. With the establishment of the Large Taxpayer Officer (LTO) within MRA, big investors appreciate the professional approach being taken by the tax collecting body, unlike the previous times. However, concerns were raised on fiscal policy regimes such as high taxes on some goods produced by certain investors.
The Government has put in place legal measures aimed at assuring investors against expropriation of their assets, as well as instruments for dispute settlement.
International Agreements and Regional Economic Communities
a) Regional Economic Communities (RECs)
Malawi is a member of/ signatory to the trade agreements with the following regional bodies:
b) International Investment Guarantees and Agreements
Malawi is a member of/ signatory to the following:
c) Bilateral Investment and Trade Treaties (BITs)
Malawi has signed 6 BITs as of December 2010.
Relevant institutions | Ministry of Justice and Constitutional Affairs, High Court Commercial Division High Court Commercial Division(Lilongwe) Ministry of Industry, Trade and Tourism |
Malawi’s constitution, Section 44 (4), prohibits deprivation of an individual’s property, including local and foreign investors, without due compensation. The likelihood of direct expropriations has been minimized since the repeal of the Forfeiture Act in 1992.
Section 44: 4 states that “expropriation of property shall be permissible only when done for public utility and only when there has been adequate notification and appropriate compensation, provided that there shall always be a right to appeal to a court of law”.
The constitution further gives powers to the courts of law to “award compensation to any person whose rights or freedoms have been unlawfully denied or violated where it considers it to be appropriate in the circumstances of a particular case”.
Measures that carry expropriation effects are occasionally imposed, and in that event of enforcement, they apply to both local and foreign investors.
There are no restrictions on remittance of foreign investment funds (including investment capital, profits repatriation, repayments for international loans and lease repayments) as long as the capital and loans were obtained from foreign sources and registered with the Reserve Bank of Malawi (RBM) (www.rbm.mw ).
The terms and conditions of international loans, management contracts, licensing and royalty arrangements, and similar transfers require initial RBM approval.
As a member of the WTO Agreement with a component on trade-related aspects of intellectual property rights (TRIPS), Malawi has the legal framework to protect intellectual property. This includes the acts on copyrights, trademarks, registered designs and patents, property protection of genetic engineering products particularly GM crop varieties, creatives works, amongst others.
The key national institutions responsible for enforcement of intellectual property rights (IPR) issues include: the Department of Registrar General under the Ministry of Justice and Constitution Affairs which is responsible for patents, trademarks and designs; the Copyright Society of Malawi under the Ministry of Culture which deal with copyright issues and Ministry of Industry, Trade and Tourism is responsible for trade related aspects of the IPR, and others.
The Malawi Government has drafted an Intellectual Property Right Policy which seeks to consolidate IPR matters through the creation of the Malawi Intellectual Property Office (MIPO), which will be sustained by revenues to be generated from registration fees for patents, copyrights and trademarks.
Some of the legal and regulatory frameworks on intellectual property rights in Malawi include:
Laws
Regulations
Relevant institutions | Ministry of Industry, Trade and Tourism Ministry of Justice and Constitutional Affairs, |
The Competition and Fair Trading Act protects investors from anti-competitive business practices. The Act prohibits conducts that prevent, restrict and distort competition in the market and, therefore, guarantees investors freedom to do business without unnecessary market impediments. The Act is enforced by the Competition and Fair Trading Commission (CFTC) which is an autonomous body with adjudicative powers. Decision of the CFTC may be appealed in the High Court. Investors are also guaranteed protection from cross border anti-competitive business practices through the COMESA Competition Regulations, which regulate conducts that have effect in two or more countries within the COMESA region.
Relevant institutions | Competition and Fair Trading Commission Competition and Fair Trading Commission |
The legal system is established in the Malawi Constitution based on British common law system. The Attorney General, Director of Public Prosecution, Chief Justice, Supreme Court of Appeal judges, High Court judges, and magistrates administer justice in the country.
Relevant institutions | Ministry of Justice and Constitutional Affairs, High Court Commercial Division High Court Commercial Division(Lilongwe) |
Both foreign and domestic investors have equal access to Malawi's legal system, which functions well and is unbiased. Malawi has a Commercial Court established in 2007, being the Commercial Division of the High Court of Malawi. Its establishment has significantly reduced the time it takes to conclude commercial cases, such that by April 2017, the Court reported a 72 percent time reduction, ie from 350 days to 97 days, and there are efforts to reduce the time further.
There is an established mediation process to promote agreements between parties in disputes before court proceedings start. The court system in Malawi accepts and enforces foreign court judgments that are registered locally in accordance with established legal procedure. There are reciprocal agreements among Commonwealth countries to enforce judgments without this registration obligation.
All bankruptcies are governed by the courts under the provision of the consolidated Insolvency Act of 2016. It is based mostly on the Mauritius Insolvency Act 2009, partly the English Insolvency Act 1986 and the cross border provisions on the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Cross-Border Insolvency, and as such, it has taken after a number of internationally accepted best practices in corporate insolvency.
Malawi is a member of international frameworks that protect investments including:
The new Insolvency Act of 2016 encourages alternatives to bankruptcy such as receivership and reorganization and gives secured creditors (rank-ordered based upon investment registration dates), priority over other creditors.
Investors
appreciate the protection provided by the legal and regulatory frameworks to
their investments. However, concerns
were raised on the delays in the processes approving mergers and acquisitions. The approval process at times involves
requiring the investors appearing before different committees which ask the
same questions the investors have already provided in the previous forum.
The Malawi economy has been registering significant economic growth patterns over the past years such that in 2016, the economy grew by 4.5 per cent and is expected to continue growing due to the improvement in the macroeconomic fundamentals such as lower global fuel prices and stable exchange.
The agriculture sector in Malawi is widely recognized as the mainstay of the economy which contributes close to 30 per cent of the national gross domestic product (GDP), such that a strong positive relationship exists between the sector growth rate and that of the national economy. There is strong political commitment to economic diversification and the key growth sectors such as agriculture, industrial development, mining, energy and tourism.
The key sectors of the Malawi economy include: agriculture, forestry and fishery (28 per cent); wholesale and retail trade (16 percent); manufacturing (9 percent); real estate activities (7.6 percent); financial and insurance services (5 percent); among others.
Trade Agreements
Malawi continues to participate actively in bilateral, regional and multilateral trade agreements with a view of benefiting from a wider market access and integrating into the global economy.
Relevant institutions | Ministry of Industry, Trade and Tourism |
There are a number of tax incentives provided for in the Taxation Act. These include annual allowances, initial allowances, investment allowances, transport allowances, export allowances, training allowance and mining allowance.
Annual allowances
Annual allowances are available for qualifying assets on a declining balance basis at the following rates:
Goods/ Service Rates
(i) Industrial buildings, farm improvements & railway lines 5%
(ii) Farm fencing 10%
(iii) Heavy machinery and installations 15%
(v) Light machinery 10%
(vi) Trucks and tractors 33.33%
(vii) Light commercial vehicles 25%
(viii) Motor vehicles 20%
(ix) Commercial Buildings costing more than K100 million 2.5%
Initial allowances
Initial allowances are available on capital expenditure during the year of
acquisition at the following Rates:
Goods/ Services Rates(i) Industrial
buildings, improvements, railway line 10%
(ii) Farm fencing 33.33%
(iii) Machinery 20%
(iv) Automobiles forming part of a commercial hire fleet 20%
Investment allowances
Investment
Allowance shall be given to a taxpayer who is also a manufacturer equal to 100%
of the cost of new and unused (Industrial buildings) plant or machinery and
equal to 40% of the cost of used industrial buildings and plant or machinery.
Transport allowance
An additional
allowance may be granted of 25 percent of the international transport costs
incurred by a taxpayer for his exports whether produced by manufacturing in
bond or otherwise, but other than exports of products specified in the Schedule
to the Export Incentives (Exclusion) Order made under the Export Incentives
Act.
Export allowance
A registered exporter, shall in every financial year during which he exports products of Malawi, be entitled to an income tax allowance of 25 percent of his taxable income derived from his export sales.
A person carrying on mining operations incurs mining expenditure in any year of assessment shall be entitled to an allowance equal to 100 percent of such expenditure in the first year of assessment.
Temporary Importation of Goods
Temporary imported goods are those goods which come to Malawi for a short period (for a maximum of 30 days) and are subsequently re-exported within the specified period.
The goods that may be imported temporarily include vehicles and any other goods. For the vehicles, they are imported temporarily using a document known as “Temporary Importation Permit (TIP).”
Extensions of the period of validity of any TIP may be granted by Flexible Anti-Smuggling Teams (FAST) offices in Blantyre, Lilongwe and Mzuzu only.
Relevant institutions | Malawi Investment and Trade Centre Malawi Revenue Authority |
Malawi has amended its Electricity Act of 2004 to enable restructuring of the power market and allow private sector participation in the power industry.The total installed capacity of the interconnected grid in the country stands at 361MW against a demand of 450MW. The current suppressed electricity demand (if all step loads were supplied with power) stands at 750MW. However, it is projected that the demand will grow to 950 MW in 2020 and 1,200 MW in 2025. If the full potential of the economic power demand growth drivers (mining, manufacturing, processing, domestic use, service sector and irrigation needs) are realized, the total power requirement is estimated at 2,830MW by 2030. Presently, there is a project that is constructing, uprating and upgrading the transmission network to increase its carrying capacity to 1,250 MW by September 2018.
The Government is presently undertaking feasibility studies on three potential hydropower generation sites,namely Fufu, Mpatamanga and Kholombidzo with potential to generate 140MW, 230MW and 100MW respectively. Development of the sites will be tendered out.
Nonetheless, the sector will be offering investment opportunities in:
Details of potential energy investment projects are in Malawi’s Compendium of Investment Projects. See www.mitc.mw
Relevant institutions | Malawi Investment and Trade Centre |
Malawi is endowed with rich natural and cultural heritage that make it one of the most attractive tourist destinations in the world. It is positioned as a country that is: Rich in Contrast, Compact in size and Big in Hospitality. The country is rich in contrast due to beach and water experience, scenic landscapes, diverse wildlife, favourable climate and unique cultural assets. The short distances amongst various tourist attractions make it easy to move from one attraction to another within a short period. The peaceful environment, neighbourly social interaction, tolerant and authentic relationships of locals with visitors and other cultures make it big in hospitality. These attractions are summed up in the following product lines:
EXPERIENCE WATER
Lake Malawi is the Africa’s third largest lake and the eleventh deepest in the world, is home to over 700 species of tropical colourful fish, cichlids, most of which are endemic. Part of the lake is home to the Lake Malawi National Park, the world’s first freshwater marine park and UNESCOs world heritage site
EXPERIENCE NATURE
With beautiful and breathtaking natural scenery from as low as barely above sea level to as high as 3002ft above sea level, Malawi has diversity of landscapes. From tea estates, forest reserves, to streams, waterfalls, mountains and plateaus, one can engage in various activities such as tea tasting, climbing, trekking, mountain biking and bird watching.
EXPERIENCE WILDLIFE
Malawi is Africa’s newest big 5 destination. Its nine national parks and Wildlife reserves offer a unique and intimate game viewing experience. Whether by 4by4, walking and trekking, or boat, Malawi offers undoubtedly a memorable game viewing experiences.
Malawi boasts of having over 650 species of birds and 10% of which cannot be seen in other parts of southern Africa.
EXPERIENCE PEOPLE & CULTURE
Malawi’s people, warm, friendly and welcoming, are by far its greatest asset. The country is home to over 16 million inhabitants, by far one of the densely populated countries this part of Africa, but it is through interaction with the people that leaves one to have a true feel of the warmth of Malawi’s people, hence the slogan, ‘the warm heart of Africa’.
EXPERIENCE MICE (Meetings, Incentives, Conferences and Events)
In recent years, Malawi is also becoming a popular destination for Meetings, Incentives, Conferences and Events locally and internationally.
Under these product lines, the sector offers various opportunities in investment:
Details of potential Tourism Investment Projects are in Malawi’s Compendium of Investment Projects. See www.mitc.mw
Relevant institutions | Ministry of Industry, Trade and Tourism |
In 2016 the agriculture sector grew by 3.2 percent and is expected to register improved growth rate of about 6.9 percent in 2017. Investment opportunities for the agriculture sector include: livestock production, aquaculture, horticulture, agro processing, sugar, honey production, integrated cotton development and cassava production.
Details of potential Agriculture and Agro-processing Investment Projects are in Malawi’s Compendium of Investment Projects.
Manufacturing: Most of the traditional agricultural crops such as tobacco and tea are exported in a semi- processed state. There are huge opportunities for investors to convert most of these agricultural products into high value finished products. Specific opportunities lie in:
Relevant institutions | Ministry of Industry, Trade and Tourism Ministry of Agriculture, Irrigation and Water Development |
The regulator of the financial sector in Malawi is the Reserve Bank of Malawi: see www.rbm.mw
There are about 10 commercial banks operating in Malawi. However, there is still opportunity for additional banks in the sector as the rate of financial inclusion is estimated to be around 20 percent, ie, the adult population with bank accounts.
Malawi’s 10 commercial banks include:
Insurance Companies
The insurance penetration rate in Malawi is among the lowest in the world and in Africa, with the average rate over the last 5 years estimated to be between 2.8% to 3.5%. This is quite low given that the country’s population currently stands at about 17.2 million.
Malawi has different categories of insurance companies. These include:
The investment opportunities in the insurance sector include:
Relevant institutions | Reserve Bank of Malawi Insurance Institute of Malawi |
Malawi has
about 25 micro finance institutions. These include credit cooperatives and
micro finance services set up by non-governmental organizations. See www.rbm.mw or http://www.mamn.mw
for details.
There is a Malawi Microfinance Network (MAMN), being a legally constituted grouping of these microfinance institutions and institutions that are providing microfinance related services in Malawi. Its major objectives are to: develop, promote and regulate microfinance activities so as to ensure good governance as a way of ensuring their sustainability and enhancement of their capacities to stimulate and enhance private sector development and be key players in rural and urban economic and social transformation in Malawi.
Its major activities include: facilitating the exchange of experiences, ideas, innovations, information and technologies in order to strengthen microfinance operations among member institutions, and build capacity within the sector as a whole. The opportunities in this sector include investment in affordable and easily accessible microfinance services, targeting the SMEs.
Forex dealers
Foreign exchange can be obtained from commercial banks or foreign exchange bureau found in cities across the country. However, there are times when these bureau are faced with high demand than supply. There are still investments opportunities in terms of opening more foreign bureau to provide reliable services to the business community.
The real estate sector in Malawi is growing steadily and is one of key growth sectors contributing to GDP is estimated at 7.6 percent, GoM Annual Economic Report (2016). The popular segments of the real estate sector include: housing, offices, and recently farm lands.
In the housing segment, the demand for housing units is driven by the growing annual rate of urbanization estimated at 6.3 percent, as well as economic growth. As such institutions responsible for provision of housing are not able to meet the growing demand, particularly of high quality.
Institutions in the property sector include Malawi Property Investment Company Ltd (MPICO) and the Malawi Housing Cooperation (MHC) Malawi Housing Corporation (MHC). Both MPICO and MHC undertake their investment projects in partnership with local and foreign property investors.
Besides the semi-public institutions, with the liberalization policy Malawi has seen emergence of private real estate agents dealing in selling of housing units, farm land, and plots.
Specifically, the real estate investment opportunities include:
Details of potential Property Investment Projects are in Malawi’s Compendium of Investment Projects. See www.mitc.mw
Relevant institutions | Malawi Housing Corporation MPICO Limited |
The growth sectors for Malawi do indeed have the potential for realizing investors returns to investments. Since, Malawi needs investments in different sectors, there is need for a coordinated investor promotion process to realize the needed competitive advantage in the economy.
Official name | Republic of Malawi | |||
Country area | 118480km2 | |||
Capital city | Lilongwe | |||
Population | 18.3 Million | |||
Administrative regions | 3 | |||
Local currency | Malawi Kwacha | |||
Exchange rate | 734US$ | |||
Official language(s) | English | |||
Other national language(s) | Chichewa | |||
GDP | 6.4 billion US$ | |||
GDP per capita(ppp) | 1182US$ | |||
Real GDP growth | 4.5 percent | |||
Literacy rate | 74% Male | 70 % Female | ||
Fiscal Year | 1st July- 30th June | |||
Normal Working Hours | 7:30 am- 12:00 noon | 1:00 pm- 4:30 pm | ||
Main seaports of entry | Durban | Dar es salaam | Nacala | Beira |
International Airports | Kamuzu International Airport(Lilongwe) | Chileka International Airport(Blantyre) |