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Immigration: Ostracle to promoting foreign direct investment in Malawi

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James Mhango 16 August, 2008 05:25:00

Despite the efforts done by Bingu Mutharika administration to improve the investment climate in Malawi through macroeconomic stability, reduced perceived corruption, rule of law, removal of customs duties and VAT on machinery, tax rebates on raw materials among others.

The country’s investment climate seems to be gloomy mainly due to actions of the Department of Immigration. 

Firstly, the Department of Immigration took away the powers from the Malawi Investment Promotion Agency (MIPA), Investment Approval Committee (IAC) right to approve the Business Residence Permit (BRPs) for company shareholders and Temporary Employment Permit (TEP) for expatriate staff.

The implication of this action is that there has been no issuance of BRPs since March 2008 to date. This means investors are staying illegally in the country and hence can not invest money under such climate. 

Secondly, Department of Immigration has raised the fees paid by investors of Business Residence Permit (BRPs) from K53, 500 to K500, 000 representing over 900% of which is not justifiable.

Similarly Temporary Employment Permit (TEPs) fees have jumped from K63,500 to K120,000 representing 200% increase. BRPs are valid for 5 years while TEPs are valid for 2 years. 

Thirdly, the Department of Immigration demands that investors should have a bank statement as a precondition for being granted BRPs and TEPs.  This action is also far from being convincing because Malawian commercial Banks can not open a corporate or personal account for an investor without having business permits.

Therefore, under normal circumstances, permits are supposed to come first then other formalities such as Bank statement should come later. 

Fourthly, there is massive fraud and corruption at the Immigration Department especially at the top levels.

Unconfirmed reports suggest that an investor pays over K300,000 for him to have a BRP issued. This drastically pushes up the cost of doing business in Malawi. 

Fifthly, the department is partly to blame for the for failure to implement one-stop investment shop for Malawi Investment Promotion Agency(MIPA) due to its refusal to station officers at MIPA who could ensure fast processing of permits for investors as is the case with our neighboring countries Mozambique, Zambia and Tanzania. 

RecommendationsWe would Appeal to the Minister of Home Affairs, Hon. Ernest Malenga, M.P. to ensure that the department of Immigration should not frustrate government efforts in improving the investment climate in Malawi through cumbersome process of getting permits for investors which provides a perfect catalyst for corruption and bribes.  

We would also call upon The Chief Immigration Officer to ensure that foreign investors’ are given permits at most in 30 days as compared to over 8 months as is the case now.  

In conclusion, we would like to request the Chief Immigration Officer to reverse his uncalculated decision to remove powers for the Malawi Investment Promotion Agency (MIPA), Investment Approval Committee (IAC), right to approve the Business Residence Permit (BRPs) for company shareholders and Temporary Employment Permit (TEP) for expatriate staff.  

The Investment Approval Committee (IAC) which is chaired by Principal Secretary, Ministry of Industry, Trade and Private Sector Development has been approving permits since 1991 as stipulated by the Investment Promotion Act of 1991. 

Now a million dollar question is why did the previous Chief Immigration Officers not have problems with this action.

We view the action to remove such powers as detrimental to Mutharika vision of making this country predominatly producing and exporting one through attracting Foreign Direct Investment. 

 * The author is a Business Development Specialist

jamesmhango@yahoo.com   

Comments (9 posted):

Boyson Moyo on 16 August, 2008 10:11:47
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* think you raised very important issues here. However, my main interest is on corruption. * think if this animal called corruption is tackled the process of doing business in Malawi will be okey. We have seen experts and permits given to people who deny Malawians jobs not because they have special tallent that we need to learn from them but they are there just to earn a living of very high standard that they cannot afford in their home countries because they luck skills. Tobacco industry has/had a lot of such people in Malawi (such as buyers and auctioneers). Sir, let us as Malawian tackle corruption as you suggested without blaming the measures that have been put in place to rectify the observed problem. What * am saying is that the problem is corruption not the channel. Timanena chatsitsa dzaye kuti njobvu ithyoke mnyanga in our local understanding of events although you are right the current arrangement is not ideal.
Mabulabo on 16 August, 2008 10:44:02
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* support the decision to raise the various fees, as this will prevent those foreign businesses with small capital from taking business from malawian small enterprises. * also think in the other countries, the fees are equally quite high. Look at how many small nigerian shops we have in the towns.
Lloyd Mahowe on 16 August, 2008 11:05:24
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To add on the above, * wish to share the frustrations * have gone through last month with our Immigration department. * am working for a Dubai based company (Emirates Airlines) and came accross an Arab from Dubai who intends to invest in residential appartments in Malawi. Through the help of estate agents, we identified land in Area 44 for 2 blocks of appartments and he planned to make his first trip to Malawi this month. Since the nearest Malawian embassy is in Egypt, we thought of applying for a visa on arrival. * spoke to an immigration official at KIA who confirmed that since * will be the sponsor of this Arab friend, all * need is to write the immigration dept requesting for visa on arrival and should attach passport copies for both of us. * did this and after waiting for three weeks, our application got rejected. They said we need to send his physical passport to Malawi for visit visa procesing.

Ironically, this Arab friend has been to Kenya, Mozambiqui, Zambia, Tanzania and Uganda and in all these places, he has obtained visas on arrival and its only Malawi that requested for his passport before granting him a visa. * tried to persuade him to comply but he is not ready to send his valuable document to an african country where even the safety of his passport can not be guaranteed.
* find our immigration authorities a big barrier to progress. We need to wake up. No wonder countries like Mozambiqui that have been at civil war for years have managed to overtake us.
Thanks Nyasanet for bringing this up. Lets keep up shaking these hopeless authorities for the sake of our beloved country.
kazolo(Cape Town) on 16 August, 2008 12:30:03
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* have seen nothing wrong here with immigration process,even here in *.Africa its Immigration offices who make the residents and Tep permit for investors.

To me it shows that you are corrupt,Nanuso m'madyera momwemo pano mkupanga sanje chifukwa azanuso akudyera momwemo.

Leave it the way it is to immigration.sitikufuna kuti mzipasa anthu wamba ma Permit kuno ku *.africa amavuta kuti akupase,you have to show them more than R25,000 to get perment residents.

so please don'* sell our country ku anthu woti satithandiza kutukula dziko lathu,but to steal from us.

And they are those who are coming with GUNS to our beloved country malawi.
naphiri on 16 August, 2008 01:06:43
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James Mhango, * personally see no reason why work permits should just be issued to people who claim to come and invest in Malawi with less than 3,000USD and just because they are able to pay the fees for work permits doesn'* mean, they are investors. They need to prove that by showing their bank statements if really they have money to invest. Thanks to the immigration department for reviewing the fees for work permits. Mukufuna tidzingotolela ndi ***** zomwe in the name of investors? Check what other african countries even european countries what they need when one want to get a Business permit let alone work permit, you will be shocked. Just because other chief immigration officers didn'* have a problem with this doesn'* mean things were okey.
mjomba on 16 August, 2008 06:42:28
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raising BRPs and TEPs is nothing to worry about,but let us think about who gonna end the corruption in our beloved country, Malawi.The past four years Mutharika is busy hunting corruptive activities for the previus government pretending and try to confuse M ALAWIANS THAT THEY ARE ANGELS.This where the problem starts from.The next president will do the same and on and on.Malawians let us think deeply before 2009 becomes a reality.
Kumbweza Banda on 29 August, 2008 03:49:42
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Charles, you are a patriot you have raised a very important issue. If indeed we are serious in turning around the economy we need to put our house in order. It does not make sense really to make investors dance before they start operations. Investors are very strategic they go like shoppers comparing the cost of doing business. * dont think the Arab investor would start his project if he is already frustrated with basic things. Checking out briefcase investors would not require to frustrate them this way but rather a systematic scrutiny of their business proposals. This is why you need a strong Investment Promotion Agency (IPA) which is a true one-stop-investment shop. The last time * checked the IPA was headed by a political appointee who is not all that competent by all standards.He got the job when his wife was a minister in the former administration but he is still around. * have met him trice in meetings: one in Egypt and the other time in South Africa oh dear Malawians a shame!How do we have a CEO who is not on top of issues. * was literally ashamed to be Malawian on the two occasions. How do we have a CEO like that for an important institution like MIPA. No wonder * am reliably told staff turn over is so higher at the IPA! Frustration by young and dynamic men!
If the Government is serious about turning around the economy it would change things at the IPA because the equation is very simple to understand: how do we achieve economic growth when there is no production and how do we produce when there is no investment- both domestic and FDI and how do we bring in this when our IPA is ineffective. Please act and act now!
k Banda on 29 August, 2008 04:42:31
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Charles, you are a patriot you have raised a very important issue. If indeed we are serious in turning around the economy we need to put our house in order. It does not make sense really to make investors dance before they start operations. Investors are very strategic they go like shoppers comparing the cost of doing business. * dont think the Arab investor would start his project if he is already frustrated with basic things. Checking out briefcase investors would not require to frustrate them this way but rather a systematic scrutiny of their business proposals. This is why you need a strong Investment Promotion Agency (IPA) which is a true one-stop-investment shop. The last time * checked the IPA was headed by a political appointee who is not all that competent by all standards.He got the job when his wife was a minister in the former administration but he is still around. * have met him trice in meetings: one in Egypt and the other time in South Africa oh dear Malawians a shame!How do we have a CEO who is not on top of issues. * was literally ashamed to be Malawian on the two occasions. How do we have a CEO like that for an important institution like MIPA. No wonder * am reliably told staff turn over is so higher at the IPA! Frustration by young and dynamic men!
If the Government is serious about turning around the economy it would change things at the IPA because the equation is very simple to understand: how do we achieve economic growth when there is no production and how do we produce when there is no investment- both domestic and FDI and how do we bring in this when our IPA is ineffective. Please act and act now!
Mtavu on 29 August, 2008 09:15:13
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* sincerely agree Kaphwereza Banda should go at MIPA, He is not fit for the job ay the IPA. there are better Malawians with credentils who can do the job!
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