President of Malawi, H.E. A. P. Mutharika, explained to United World the changes being undertaken in Malawi and what makes it different from other countries of the continent. Of importance is the potential return on invest in African countries and in particular Malawi, which has positioned itself as an excellent investment location for foreign companies.
Due to the global economic crisis of 2008, whose effects are still palpable today, investors are looking for new horizons to place their investments and this made Africa very attractive thanks to its huge investment opportunities. Africa is now a growing investment destination for both advanced and emerging economies—with a record $80 billion inflow expected this year by the IMF. Key priorities for the continent, and Malawi is no exception, are critical infrastructure, power and agriculture. Please highlight this African momentum and what is your forecast for the next years.
My attending the US-Africa Leaders’ Summit confirmed that the United States doesn’t see Africa as a problem anymore, but as an opportunity. Africa, apart from being the source of economic raw materials, is also a huge market for finished products. Just to give examples: For those investing in Malawi, they have access to the Common Market for Eastern and Southern Africa (COMESA) market, the largest 19 member Free Trade Area with a population of about 390 million.
COMESA launched a Customs Union in the middle of the global economic and financial crisis in 2009. The United States has a Trade and Investment Framework Agreement with COMESA, which has seen US Foreign Direct Investment (FDI) into COMESA countries at $27 billion in 2012 while COMESA FDI into the US stood at $3 billion.
Specific to Malawi, which is also a member of the Southern Africa Development Community (SADC) global investors have discovered the huge investment opportunities in the sectors of agriculture, power or tourism. Their interest in Africa is mostly in agriculture, which is obviously very important to us and we expect a lot of investments there to add value to our products. Right now the main product is tobacco, but we will be moving towards other products. We also hope to add value to our produce, for example start processing tobacco. We have the Green Belt Initiative, which I am sure you have heard about. We hope to have very soon irrigation in over one million hectares to start growing legumes, soya, and so forth. So agriculture is a big area for investment.
Power is also a very important area for investment. At the moment we depend largely on hydropower, but unfortunately the level of the Shire River goes down during dry seasons and when that happens, our capacity for providing power is affected. So we have opportunities to generate over 300 megawatts from coal, and huge opportunities in solar and wind energy.
We believe tourism has a lot of potential. We have the third largest freshwater lake in the world and the eighth largest lake in the world with over four thousand species of fish, more than any other lake in the world. It is a beautiful lake. It is called the Calendar Lake because at its longest point it is 365 miles and 52 miles at its widest point.
So there is potential there for tourism and also for fishing.
We can, in fact, be a big exporter of fish. Tilapia, for example, which is very popular in the United States, its home is here in Malawi. On the lake, right now, there is an exploration project going on. We believe there is oil and gas on the lake and on the shores and soon we will begin exploration, but we will make sure we don’t destroy the ecosystem of the lake. But I am sure that there will be many possibilities and it will make us an oil producer.
Another area of investment is Infrastructure development. For example, right now, there are big rail projects which connect Malawi to the Sea through Mozambique, Tanzania and Zambia. In addition, we are planning to build an inland port at Nsanje, the southern district of Malawi. That one is almost finished and it is now a question of our arrangements with the government of Mozambique. Through this inland port, we will open Malawi to the world and this will have immediate impact.
Nowadays a tube of toothpaste costs in Malawi four times more than it costs in New York, largely because of transport. Sixty percent of the cost is transport, so if we can open up this inland port I think it will reduce the cost of things.
I went to Hamburg, Germany and Antwerp in Belgium to see the inland ports there and what they are doing, and it is fantastic, it is tremendous what they have done. So we will build our own inland port.
My visit to the US-Africa Leaders’ Summit, which was hosted by President Obama revealed that not many American and other investors know about the investment opportunities that exist in my country.
We, therefore, embarked on compiling a compendium of bankable projects in Malawi. I am pleased that now this information can be accessed online and through our embassies across the world. I have received feedback from among others, the Corporate Council on Africa that the bankable projects compendium is what they needed.
To make matters easier for investors, we have set up the Malawi Investment and Trade Center (MITC), a one-stop investment operational arm of the Government. MITC will reduce the period of investment application from 95 days to five days.
Another area we have worked on, and continue to do the same, is the area of security, both in law and physical terms: Our laws protect investments and no investment will be going through either exorbitant taxation or expropriation or any of those things; it will be protected. And if there is a dispute between the investor and us, we have a mechanism for the settlement of investment disputes either here in our courts or at the World Bank or other tribunal of their choice.
So, investments are very secure and they can expect reasonable profits that they can repatriate. In the world, the average profit rate is about 8 percent; in Africa it is about 33 percent. So they will make much more money here than anywhere else in the world.
In this African race to see who attracts those investments, why would you say Malawi is the best destination?
There are so many reasons why every investor should look towards Malawi. Malawi is one of the most peaceful countries in the world–we have never had any war since independence of 1964, in fact an independence that was gotten from the British through dialogue. We have no ethnic groups fighting each other and there are no revolutions here or coups d’état.
Its people are very hard working. In fact, Malawians are legendary in Africa for how hard they work and how consciously they work. So investors will find very hard working people and they will find friendly people. The country is mild in terms of temperature, so they will be very comfortable here. And we have a good education system here, so their children will be able to go to school, secondary school or university and get as good education as they could get elsewhere.
And, of course, the uniqueness of the lake and its species. From almost any part of Malawi you can get to the lake in less than three hours, because it is cross country; we also have 6 excellent wildlife and game reserves, where you can find almost anything, from elephants to crocodiles and everything in between, and that is an area of interest for many people. We want to be a country that people want to visit and where they want to stay.
As I have already said, when investors come to Malawi, they will have the processes complete within 5 days. Once they invest, their investment is secure. Further they have access to over 400 million population found in the COMESA and SADC regions to which Malawi is a bona fide member.
Malawi is an investment destination yet to be discovered and exploited. We have a number of minerals, talk of uranium, heavy sands, bauxite, nobium, possibilities of gold, oil and gas etcetera.
Bearing in mind that we are addressing an American audience, the US has traditionally been a major aid donor. President Obama has often spoken of the transformation of the relationship between the U.S. and African states from one based on aid to trade. You recently attended the US-African Leaders’ Summit (ALS) in Washington shortly after which the United States government said Malawi’s attendance at the first ever US-Africa Summit is a “golden opportunity” for exploring trade links. What are your thoughts on the outcome of this summit?
When we were sitting in that round table organized alphabetically, President Obama was sitting right across from me. And I could see from the way he was speaking that he was speaking from his heart, that he was committed. When he was saying he wants a new relationship there is no doubt in my mind that he meant it.
Since the summit, a lot of enquiries are coming concerning investment possibilities in Malawi. For example, we have engaged the Corporate Council on Africa, a collection of 180 corporations in the United States that have great interest in investing in Africa. This is one of the immediate outcomes of the US-Africa Summit.
The only area we are more concerned about is the AGOA; we would like it to be extended for another 15-20 years of trading without reciprocity. We are allowed to send 20,000 metric tons to the United States as per our quota, but as you may know tobacco is our main export and we would like to export more.
We are aware that a number of other countries, including Brazil and Mexico have higher quotas which they do not meet anyway. So, what we are asking is a change of the arrangement; that Malawi be given the quota that the other countries can’t meet and we will be able to meet that. So we are talking about it with the US Government to see if they can help us with that.
Your Excellency, we would like to ask you a personal question, since we don’t interview institutions, we interview people. Who is the man behind Malawi’s President?
I am committed to this country and that is why I came back from international responsibilities. I left a very distinguished academic career in the Unites States to come here, because I wanted to contribute to this country; I believe I have something to offer. For close to 40 years I taught international trade and international investment law, so that is my expertise and that is why I was appointed to the World Bank panel of conciliation and arbitration.
I think I have the required experience and commitment to develop this country. I work well with others; a few days ago I invited all the presidential candidates, there were 12 of us who competed, and they all came for a working lunch and we came out having decided to work together now that the election is over.
About a month ago I had a meeting with all the leaders of the civil society and our agreement was to work together and we are establishing mechanisms to see how we can cooperate. And I also met with religious groups, the whole faith community and I am very open to advice on religious affairs. So we are reaching out and working on national unity. What I mean is that I am available and that I have no problem working with anybody or any segment of our society.
How would you like Malawi to be perceived by the international community?
Malawi is moving in the right direction. We have the environment conducive to business investments and trade. In fact, I should mention this: probably I am one of the fewest leaders here in Africa that selected a businessman as my running mate, now my Vice President, and this is somebody who was not even in politics. I did that to show to the private sector, both domestic and international, that it is no longer business as usual and that government will be running in a different way. It is a new Malawi now, no question about it.
My country wants to be self-sufficient. We have the Malawi Growth and Development Strategy, Malawi Export Strategy and other policies that are meant to facilitate to expand the economy. Malawi is an English-speaking country, so in terms of language investors will find very highly educated and skilled workforce. And skilled labor is very important for investment.
Finally, there is the rule of law in this country. Nobody in this country is going to be imprisoned or detained for political reasons; Investors will be assured of the security of their moneys and persons. And we have institutions like the Malawi Human Rights Commission, the Ombudsman, the Anti-Corruption Bureau; a working judicial system and many others that will make Malawi, the home of all investors.
As a government, we have started playing our role of setting the environment for investors. We are committed to fiscal prudence. We are cutting back on spending; I have reduced the number of Cabinet positions and Ministries. In the previous Government the Cabinet had 32 positions and in my Government there are 20, counting the President and the Vice President.
Also, for the sake of cutting back, I have only travelled three times since I became President. Furthermore, we are reforming the civil service, to make it efficient and effective.
I welcome all investors to Malawi, the Warm Heart of Africa.
Thank you very much your Excellency.