President Dr Joyce Banda, announced on Friday in Parliament that Malawi’s economic growth would increase by 6.1% in 2014 with inflation projected to decrease by 14% by the end of the year.
Further strong indicators of economic revival are that during the last few weeks the Malawian currency, the Kwacha, has made a recovery against the dollar from MK420 to MK360, the fuel crisis is under control and foreign reserves have increased from one week in April 2012 to 1.5 months now, said President Banda in her State of the Nation address.
The International Monetary Fund’s (IMF) confidence in the country has returned as the government has renegotiated the IMF’s Extended Credit Facility. This has led to the resumption of donor support and two disbursements from the IMF, which are twice the normal quarterly amount traditionally secured.
The Malawi leader outlined how the tax regime in Malawi has been reviewed to make it friendly to business, investors, and to support Malawi’s job creation agenda. She said procedures for business licensing, work permits and visas have also been reviewed and simplified to encourage foreign investment and tourism into Malawi.
“We have implemented a policy of liberalising the process of accessing foreign exchange for imports, business and travel allowances. Additionally, exporters are now allowed to keep a larger portion of their earnings in Foreign Currency Denominated Accounts. The plan now is to allow them to keep even more so long as they reconcile their export receipts,” said President Banda.
The resurgence of foreign investment into the country is evident in the many infrastructure and industrial projects planned. One billion USD has been invested into a railway and the construction of a new international airport in the lakeshore district of Mangochi in Southern Malawi is planned. Other infrastructure projects include the construction of a large soccer stadium in the capital, Lilongwe, by 2015 and the upgrading of rural roads.
“Government will make a concerted effort to remove investment barriers in such areas as land, energy, transport infrastructure and in the issuance of permits,” said President Banda.
With a reliable energy supply being the cornerstone of foreign investment, the government initiated a three-year Coal Fired Power Generation project and has signed the Malawi-Mozambique Power Interconnector Agreement in April to promote regional interconnectivity. The Malawi Rural Electrification Programme is well underway with 27 rural trading centres being electrified by December 2013.
The manufacturing sector is also on the up with the development of a new textile factory by a Dubai based company in Lilongwe as well as the construction of a-state of-the-art agro-processing plant for banana and mango pulp in Salima. In the next few months, President Banda’s Government will also commission cotton ginneries in Chikhwawa, Salima and Karonga districts.
Sunseed Oil Ltd is putting up a plant to process crops into edible oils and animal feed for both local and export markets. This will help Malawi save US$45 million in crude edible oil imports and the company projects that it will earn about US$52 million from the export of soya cake.
“We have started to experience the first signs of economic recovery. We were forced to make some difficult decisions, but they were the right decisions. The road to recovery is long and some of our policy options have been tough but in the last year we have laid the foundations for healing and recovery. Building on these foundations will be the focus for the next phase,” said President Banda.
During the address, President Banda also highlighted that the economic turnaround had begun one month earlier than projected and that under the Economic Recovery Plan (ERP) no debt had been created. Another sign Malawi is gearing up for economic growth was the announcement that the country’s first ever tea auction floor will be opened later this year.
For Malawians this means that tea can be sold across the country, allowing the country to maximise its foreign exchange earnings from tea.
Non-agricultural sectors have also been reorganised to promote greater investment and competition. In the area of transport, the Government is implementing an open sky policy to allow more and competitive flights in and out of Malawi. Ethiopian Airlines has been identified as a strategic partner for Air Malawi and the new Air Malawi (2012) Ltd is expected to start operations once all the mandatory requirements have been fulfilled.
“The revival of the Tourism sector is to ensure that Malawi becomes an attractive and competitive tourist destination. The tourism industry has the potential to generate foreign exchange earnings and create jobs,” said Banda.Follow and Subscribe Nyasa TV :