NORAD

PSD in Malawi Final Report Page i

NORAD
PSD in Malawi Final Report Page ii
The Norwegian Agency for Development Co-operation (NORAD ha! "#ring the perio"
May-Septem$er %&&% reviewe" it! !#pport of private !ector "evelopment in ma'or
partner co#ntrie!( The co#ntrie! are )angla"e!h an" Sri *an+a in A!ia, an" Malawi,
Mo!am$i-#e, Tan.ania, /gan"a, an" 0am$ia in Africa(
The aim of the review! wa! to e1plore the po!!i$ilitie! of improving an" e1pan"ing the
!#pport of private !ector "evelopment within the g#i"eline! given $y the Strategy for
Norwegian S#pport of Private Sector Development in Developing Co#ntrie!(
The !t#"ie! have $een #n"erta+en $y team! con!i!ting of an e1ternal con!#ltant on
private !ector "evelopment, a re!o#rce per!on from the Norwegian private !ector, an"
a"vi!er! from NORAD, O!lo, an" the Norwegian em$a!!ie!( The fin"ing!,
interpretation!, an" concl#!ion! e1pre!!e" in the !t#"ie! are entirely tho!e of the
team! an" !ho#l" not $e attri$#te" to NORAD(
The !t#"y of the private !ector in Malawi i! n#m$er 2 in the !erie! of 3 co#ntry !t#"ie!(
NORAD
PSD in Malawi Final Report Page iii
LIST OF ABBREVIATIONS
Anti Corr#ption )#rea#
Agric#lt#ral Development an" Mar+eting Corporation
African 4rowth Opport#nity Act
Agric#lt#re Re!earch an" 51ten!ion Tr#!t
)#!ine!! Development Service!
Common Approach to )#"get S#pport
Co#ntry A!!i!tance Strategy
Comprehen!ive Development Framewor+
Co#ntry 5conomic Memoran"#m
Common Mar+et of 5a!tern an" So#thern Africa
Con!#mer Price 6n"e1
Department for 6nternational Development
Diagno!tic Tra"e 6ntegration St#"y
5verything )#t Arm!
51port Promoting 0one!
5nhance" Str#ct#ral A"'#!tment Programme
Framewor+ Convention on To$acco Control(
Foreign Direct 6nve!tment!
Fi!cal Re!tr#ct#ring an" Dereg#lation Programme
4lo$al 5nvironmental Facility
The 6celan"ic 6nternational Development Agency
6ntegrate" Framewor+ for Tra"e Relate" Technical A!!i!tance
6ntegrate" 7o#!ehol" S#rvey
6nternational *a$o#r Organi!ation
6n"epen"ent Power Pro"#cer
6n"epen"ent Power Di!tri$#tor
Malawi Development Company
Malawi R#ral 5lectrification Programme
Malawi Social Action F#n"
Malawi Confe"eration Cham$er! of Commerce an" 6n"#!try
Malawi Development Corporation
Malawi 51port Promotion Co#ncil
Micro Finance 6n!tit#tion!
Malawi 6nve!tment Promotion Agency
Malawi Proc#rement A#thority
Malawi Poverty Re"#ction Strategy
Malawi Reven#e A#thority
Micro, Small an" Me"i#m Scale 5nterpri!e!
Me"i#m Term Competitive Strategy
Me"i#m Term 51pen"it#re Framewor+
Malawi 8wacha
National Ai"! Control Programme
National Smallhol"er Farmer A!!ociation
Nor"ic Development F#n"
National Foo" Re!erve Agency
Norwegian Agency for Development Cooperation
National Stati!tical Office
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PSD in Malawi Final Report Page iv
P#$lic Acco#nt! Committee
Poverty Alleviation Programme
P#$lic 51pen"it#re Management
P#$lic 51pen"it#re Review
Poverty Re"#ction 4rowth Facility
Poverty Re"#ction S#pport Cre"it
Poverty Re"#ction Strategy Paper
Private Sector Development
Re!erve )an+ of Malawi
Renewa$le 5nergy Technology
So#thern Africa C#!tom! /nion
So#thern African Development Comm#nity
Str#ct#ral A"'#!tment Programme
To$acco A!!ociation of Malawi
Malawi Tra"e Policy Review
/nite" Nation! Conference on Tra"e an" Development
/nite" Nation! 6n"#!try Development Organi!ation
9orl" Tra"e Organi!ation
NORAD
PSD in Malawi Final Report Page v
KEY FACTS ABOUT MALAWI
PEOPLE 1996 1999 2000
Pop#lation million! :,2 ;&,; ;&,<
Pop#lation growth = per year %,> %,; %,;
*ife e1petancy at $irth ?ear! <@,;
Fertlity rate )irth! per woman A,2 A,<
6nfant mortality rate per ;&&& live $irth! ;&%,@
Mortality rate, #n"er-five per ;&&& live $irth! ;:<
/r$an pop#lation = of total ;<,: ;> ;>,2
76B prevalence = of female! age" ;>-%2 ;>,<
6lliteracy rate, male = of male over ;> year! %3,@ %A,; %>,>
6lliteracy rate, female = of female! over ;> year! >3,@ >2,A ><,>
ECONOMY 1996 1999 2000
4ro!! Dome!tic pro"#ct )illion /SC %,2 ;,@ ;,3
4N6 per capita /SC per capita ;:& ;:& ;3&
4DP growth = over prece"ing year 3,< 2 ;,3
6nflation 4DP "eflator, ann#al = >@,: 2%,% %2,>
Agric#lt#re, val#e a""e" = of 4DP <A,@ <@ 2;,A
6n"#!try, val#e a""e" = of 4DP ;@,% ;:,% ;:,;
Service!, val#e a""e" = of 4DP 2> 2%,@ <:,2
51port! = of 4DP %;,< %3 %A,<
6mport! = of 4DP %:,: 2%,2 <@,%
4ro!! capital formation = of 4DP ;;,A ;2,@ ;<,;
TRADE AND FINANCE 1996 1999 2000
Net $arter term! of tra"e 6"e1D ;::> E ;&& ;&A ;&&
Foreign Direct 6nve!tment Net inflow in mn /SC 22 A& 2>
Pre!ent val#e of "e$t $illion /SC ;,>
Total "e$t !ervice = of e1port reven#e ;>,> ;%,3 ;;,3
Ai" per capita /SC per capita >%,; 22,% 2<,%
ENVIRONMENT 1996 1999 2000
S#rface area Tho#!an" !-#are +m ;;@,>
Fore!t area Tho#!an" !-#are +m %A
Ann#al "efore!tation = change %,2
6mprove" water !o#rce = of pop#lation with acce!! >3
/r$an !anitation = of #r$an pop( wF acce!! :A
TECHNOLOGY AND INFRASTRUCTURE 1996 1999 2000
Fi1e" telephone line! per ;,&&& people 2,; A,% :
Per!onal comp#ter! per ;,&&& people ; ;,%
6nternet #!er! Total n#m$er ;&&&& ;>&&&
Pave" roa"! = of total %& ;@,>
Aircraft "epart#re! Total n#m$er <>&& 22&& 2@&&
OTHER FACTS
Pre!i"entG
)a+ili M#l#.i (!ince %; May
;::2
7ea" of 4overnment
)a+ili M#l#.i (!ince %; May
;::2
*a!t electionG ;> H#ne ;:::
Main e1port! To$acco, tea, !#gar, cotton, coffee, pean#t!, woo" pro"#ct!
51port tra"ing partner!
(;::: So#th Africa ;A=, 4ermany ;A=, /S ;>=, Netherlan"! 3=, Hapan
Main import! Foo", petro( pro"#ct!, !emiman#fact#re!, con!#mer goo"!, tran!port e-#ip(
6mport tra"ing partner!
(;::: So#th Africa 2<=, 0im$a$we ;2=, /8 >=, 4ermany >=, 0am$ia, Hapan, /S
*owe!tFhighe!t point H#nction Shire RiverF$o#n"ary with Mo.am$i-#e <3 m, Sapitwa <&&% m
Sea!on! Rainy !ea!on (Novem$er to MayD "ry !ea!on (May to Novem$er
Religion! Prote!tant >>=, Roman Catholic %&=, M#!lim %&=, in"igeno#! $elief!
NORAD
PSD in Malawi Final Report Page vi
Official lang#age! 5ngli!h an" Chichewa
ACKNOWLEDGEMENTS
The team mem$er! wo#l" li+e to e1pre!! their !incere gratit#"e to
the many private !ector repre!entative!, government official! an"
e1pert! in Malawi who have !hare" their +nowle"ge with the team( 6n
partic#lar, we wo#l" li+e to than+ 6mani Tr#!t for all their effort!(
Finally, the team mem$er! wo#l" li+e to than+ the !taff of the
Norwegian 5m$a!!y in Malawi who wa! availa$le to a!!i!t the team
with preparation!, !ervice! an" +nowle"ge(
NORAD
PSD in Malawi Final Report Page i
EXECUTIVE SUMMARY
Is Pr!"#$ S$%#&r D$!$'&()$*# +PSD, *$$-$- .
Malawi i! the !malle!t of NorwayI! main partner co#ntrie! in Africa( 6t
occ#pie! an area a little larger than 6celan", mainly on the we!tern
$an+! of *a+e Malawi, an" it i! lan"loc+e" $etween Mo.am$i-#e
an" 0am$ia( 6t! ;& million inha$itant! now !#ffer from wor!e !ocio-
economic con"ition! than !een in mo!t of !#$-Saharan Africa(
MalawiI! economy i! the !econ" mo!t ai"-"epen"ent in !#$-Sahara
Africa - after Mo.am$i-#e
;
( 6t i! al!o $y far the economy in the worl"
that "epen"! mo!t on to$acco for non-ai" foreign e1change
earning! - ahea" of 0im$a$we( 6n ;::@, Malawi receive" /SC 23&
mn in Official Development A!!i!tance (ODA an" earne" /SC <<%
mn in to$acco e1port!( The !#m of all other e1port reven#e! wa!
/SC ;%2 mn( )oth ai" an" to$acco earning! pea+e" in that year an"
have !ince "ecline", contri$#ting to increa!e" poverty( To"ay, Malawi
!#ffer! from the wor!t foo" !hortage in >& year!(
There i! no "e$ate over the importance of "iver!ifying MalawiI!
!o#rce! of income( 7owever, the increa!ingly a"ver!e !ocial
con"ition! have le" $oth 4overnment of Malawi an" it! international
co-operation partner! to foc#! on alleviating !hort-term pro$lem!(
Mo!t recently, $oth 4ermany an" 5/ have agree" with Malawian
a#thoritie! to !hift prioritie! from the PSD !ector to !ocial i!!#e!(
Thi! ha! left PSD in nee" of co-operation partner!hip!( 6t i!, to !ome
e1tent, an J#n"er-f#n"e"K area within an Jover-ai"e"K economy, yet it
i! the only !ector which can offer a long-term way o#t of MalawiI!
fragile "epen"ency on to$acco earning! an" foreign ai"(
W/$r$ "r$ #/$ %&*s#r"*#s .
The private !ector in Malawi i! mini!c#le( *e!! than /SC 2& million i!
inve!te" in it in an average year, an" the entire economy L
mea!#re" a! 4ro!! Dome!tic Pro"#ct L i! only /SC ;(@ $illion(
Apart from $eing !mall, MalawiI! pro"#ctive !ector al!o lac+!
"iver!ity( 6t ha! a few larger private companie! with !ome tra"ition L
partic#larly tea, !#gar an" to$acco e!tate!( 6n a""ition, it con!i!t! of
a n#m$er of large (in Malawian !tan"ar"! companie! with para!tatal
root!, in the #tility !ector! (water, electricity, telecomm#nication!,
railway!, air tran!port, etc( an" within monopoli!tic agri$#!ine!!(
The!e companie! are c#rrently in vario#! !tage! of privati!ation an"
commerciali!ation(
Apart from thi!, mo!t companie! are !mall family $#!ine!!e!( Malawi
ha! pro$a$ly !een le!! inve!tment from inve!tor! of A!ian or Mi""le-
5a!tern origin than it! neigh$o#r! to the north (8enya an" Tan.ania,
an" le!! inve!tment from So#th Africa than co#ntrie! to it! !o#th
!#ch a! Mo.am$i-#e, Swa.ilan" or *e!otho( 6t al!o lac+! a "ia!pora
who co#l" repatriate earning! for "ome!tic inve!tment(
1
F Mea!#re" a! Official Development A!!i!tance (ODA per #nit of 4DP( ODA per capita i! not higher in Malawi
than in !everal other African co#ntrie!(
NORAD
PSD in Malawi Final Report Page ii
A main concern of the Team ha! $een to i"entify way! in which
MalawiI! !mall an" me"i#m-!i.e" companie! can evolve into more
!ophi!ticate" entitie! that can provi"e ta1 income, e1port earning!,
an" varie" employment to the co#ntryI economy(
MalawiI! !mall economy p#t! an effective !i.e cap on it! "ome!tic
companie!, who m#!t cater to a mini!c#le "ome!tic mar+et that i!
al!o prone to #n!ta$le macro-economic factor!( 51change rate!,
inflation rate! an" intere!t rate! have fl#ct#ate" $a"ly( The co#ntryI!
lan"loc+e" po!ition ha! confine" e1port! to to$acco an" a few other
ca!h crop!( More preci!ely, inflation ha! e1cee"e" %&= p(a( in all
$#t one of the la!t ten year!, an" anti-inflation mea!#re! have only
!#ffice" to $ring it to a c#rrent level of ;@= p(a( Nominal commercial
len"ing rate! are !till at 2>=-2@= p(a(, implying that re"#ce"
inflation ha! create" e1tremely high real intere!t rate!( The c#rrency
e1change rate ha! $een thro#gh !everal "eval#ation !hoc+!, mo!t
recently in %&&&, when the Malawi 8wacha (M98 fell 2&= again!t
the /S Dollar( 6n a recent worl"wi"e !#rvey among $#!ine!!men,
Malawi wa! one of only two African co#ntrie! where inflation wa!
rate" a! the n#m$er one o$!tacle to "oing $#!ine!!(
6n !hort, MalawiI! private !ector !#ffer! from a wea+ "ome!tic mar+et
($eca#!e of it! !mall !i.e an" volatile macroeconomic con"ition!,
an" from a "iffic#lt e1port mar+et ($eca#!e it i! lan"loc+e"( The
con"ition! in Malawi are in many way! !imilar to tho!e of it! clo!e!t
neigh$o#r!D the ea!tern part! of 0am$ia an" the north-we!tern part!
of Mo.am$i-#e L $oth of which are among the lea!t "evelope" in
0am$ia an" Mo.am$i-#e, re!pectively(
W/%/ "r$ #/$ &((&r#0*#$s .
The ;::&! wa! a Jlo!t "eca"eK for Malawi in term! of economic
"evelopment( The co#ntry entere" the "eca"e with !everal
a"vantage!D (i a peacef#l tran!ition to "emocracy an" a !ta$le
political !y!temD (ii comparatively well f#nctioning in!tit#tion!D (iii
low la$o#r co!t!D (iv well a"vance" !tr#ct#ral reform!D an" (v
!#$!tantial !#pport from "onor!( De!pite the!e promi!ing feat#re!,
Malawi emerge" into the new Millenni#m with a 4ro!! Dome!tic
Pro"#ct (4DP that wa! #nchange" !ince ;::& in c#rrent price! L
i(e( a real re"#ction when inflation an" pop#lation growth are ta+en
into acco#nt(
The po!itive a!pect! of Malawi !till e1i!t( 7owever, the co#ntryI!
pace in !tr#ct#ral reform! ha! $een !#rpa!!e" an" Malawi can no
longer offer a more !ta$le inve!tment climate than other co#ntrie! in
the region which compete for inve!tor attention(
6n the TeamI! analy!i!, it wa! a!!#me" that Malawi will mo!t li+ely
contin#e to !#ffer from a pro$lematic $#!ine!! framewor+ "#ring the
ne1t ;-< year!( The Team $elieve! that thi! perio" will $e
characteri!e" $y con!i"era$le "onor !#pport to the !ocial !ector!,
$oth to alleviate the foo" cri!i! an" to mitigate other wor!ening
!ocial i!!#e!( The co#ntryI! Poverty Re"#ction Strategy Paper
(PRSP, which wa! p#$li!he" in April %&&%, will $e the g#i"ing
in!tr#ment "#ring thi! proce!!( 6t may $e "iffic#lt to improve macro-
economic !ta$ility at the !ame time, a! foo" !hortage an" infl#1 of
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PSD in Malawi Final Report Page iii
"onor f#n"! ten" to !tim#late inflation an" "i!tort the c#rrency
mar+et( 6t i! al!o li+ely that "ome!tic tran!port capacity will $e tie" #p
an" that the high tran!port co!t! will $e !#!taine"(
D#ring thi! perio", PSD pro'ect! are mo!t li+ely to !#ccee" if they
are !tr#ct#re" to $e ro$#!t again!t macro-economic in!ta$ility an"
co!tly logi!tic!( S#ch !ector! co#l" incl#"e electricity generation an"
"i!tri$#tion, con!#lting !ervice!, an" !#pplie! to the "onor-finance"
mar+et(
6n the longer r#n (i(a(, after <-2 year!, the framewor+ may $e
improve" an" a wi"er !et of po!!i$ilitie! may emerge( The Nacala
Corri"or (to the 6n"ian Ocean, via Mo.am$i-#e may $ecome
availa$le, an" re"#ce tran!port co!t!( Macro-economic con"ition!
may have improve", an" re"#ce tran!action ri!+! partic#larly for
companie! that "o $#!ine!! with international mar+et!( 6nfra!tr#ct#re
improvement! may have occ#rre", !#ch a! power interconnection
with Mo.am$i-#e an" a more "ynamic an" con!#mer-frien"ly
telecomm#nication !ector( Malawi will pro$a$ly have achieve" a
$etter #n"er!tan"ing of the opport#nitie! offere" $y the "#ty-an"-
-#ota reform! #n"er the 5/I! 5verything )#t Arm! (5)A !y!tem
an" the /(S(I Africa 4rowth an" Opport#nitie! Act (A4OA( )ilateral
a!!i!tance will $e #!ef#l for PSD within all activitie! that co#l" f#rther
the!e proce!!e!(
9ith the!e improve" framewor+ con"ition! in place, Malawi will $e in
a $etter po!ition to e1ploit it! re!o#rce en"owment within !ector!
!#ch a! to#ri!m, mineral!, fi!herie!, an" !peciali!t ca!h crop! !#ch
a! !#gar an" papri+a( The man#fact#ring !ector may $e a$le to
regain !ome it! lo!t territory, for e1ample within the garment! !ector,
where !everal companie! have clo!e" "own in recent year!( The
previo#! an" pre!ent para!tatal! within telecomm#nication,
tran!port, electric power an" agriproce!!ing !ho#l" al!o $e a$le to
$#il" $etter-f#nctioning $#!ine!! mo"el!, $a!e" on mar+et-oriente"
principle!(
W/"# %"* NORAD -& .
Several of MalawiI! !tr#ct#ral PSD pro$lem! are long-term, an" are
fo#n" in area! where it will $e "iffic#lt for a NORAD !#pporte"
program to ma+e a profo#n" impact( The team therefore
recommen"! that NORAD foc#! on area! of !#pport where
program! can $e !#cce!!f#l within the pre!ent !et of framewor+
con"ition!, $#t which are !till relevant in MalawiI! larger PSD
conte1t(
A!!e!!ment! of NORADI! an" the 5m$a!!yI! capacity to a"mini!ter
PSD a! an a""itional area of !#pport NORAD were not part of the
TeamI! man"ate( 6n general term!, PSD !#pport in Malawi will
re-#ire !ignificant attention an" there wo#l" $e a !trategic choice to
$e ma"e $etween large ($#t few pro'ect! an" a wi"er portfolio of
!maller, PSD-relate" activitie!(
Some option! recommen"e" for f#rther con!i"eration are
!#mmari!e" $elowG
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PSD in Malawi Final Report Page iv
Monitor co-financing po!!i$ilitie! within the Nacala Corri"or
Pro'ect
Develop pilot )OTF)OO mo"el for infra!tr#ct#re provi!ion
Co-financing with 9orl" )an+ Privati.ation an" /tility Reform
Program
Monitor co-financing po!!i$ilitie! within the Mo.am$i-#e-Malawi
Power 6nterconnection Pro'ect
Con!i"er !econ" pha!e of NASFAM pro'ect or other involvement
in agric#lt#re an" fi!herie!
Micro-finance
)#!ine!! Development Service!
Deman"-"riven PSD Jf#n"K
Mapping of mining re!o#rce!
S#pport to e"#cation in travel-!ector management
Con!i"er TA to help Malawi in international tra"e negotiation!
(9TO, etc(
W/"# %"* N&r1$2"* %&)("*$s "*- &r2"*s"#&*s -& .
9hile Malawi offer! all of the opport#nitie! of an #n"er"evelope"
mar+et, it! !mall !i.e an" volatile macro-economy limit! the n#m$er
of opport#nitie! where Norwegian partner! can reach Jcritical ma!!K
for pro-active pro'ect wor+( 6n the TeamI! opinion, it i! mo!t reali!tic
to e1pect that Norwegian competence can $e #!e" in !peciali!t,
niche area!, with an empha!i! on the "onor mar+et(
S#ch opport#nitie! e1i!t i(a( in the energy $#!ine!!, in con!#lting, in
woo" proce!!ing, an" in import into Norway of pro"#ct! that have
$ecome more availa$le within the 5)A an" A4OA "#ty an" -#ota
reform!( A Norwegian gro#p i! alrea"y inve!tigating tra"e in animal
fee"!(
Norwegian firm! an" organi!ation! can al!o contri$#te a!
"evelopment partner! in "onor f#n"e" pro'ect!( Thi! co#l" relate to
almo!t all of the potential propo!al! li!te" $y $#llet point! a$ove(
6n"ee", intro"#cing the Norwegian $#!ine!! comm#nity to Malawi $y
fo!tering !#ch partner!hip! co#l" $e among the mo!t efficient ro#te!
towar"! a $roa"er commercial co-operation $etween Malawi an"
Norway in the long r#n(

NORAD
PSD in Malawi Final Report Page v
TABLE OF CONTENTS
1 INTRODUCTION33333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333
2 GENERAL COUNTRY INFORMATION333333333333333333333333333333333333333333333333333333333333333333333333333333333333333
%(; 4eneral information((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
%(% 7i!tory((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
%(< The 5conomy(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
%(2 Foo" cri!i!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
4 THE PRIVATE SECTOR AGENDA3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333
<(; Nat#ral Re!o#rce 5n"owment an" MalawiI! Competitive A"vantage!((((((((((((((((((((((((((((((((((((((((
<(;(; Agric#lt#re - to$acco an" other ca!h crop!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
<(;(% Agric#lt#re L mai.e an" other !#$!i!tence crop!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
<(;(< Fi!herie!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
<(;(2 Man#fact#ring(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
<(;(> Service!((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
<(;(A Mineral!(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
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5 POTENTIAL AREAS OF BILATERAL CO6OPERATION3333333333333333333333333333333333333333333333333333333333
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NORAD
PSD in Malawi Final Report Page vi
2(< Strategy for the Norwegian Development Cooperation((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
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7 POTENTIAL FOR CO6OPERATION WITH NORWEGIAN COMPANIES AND
INSTITUTIONS33333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333
>(; Potential role!(((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((((
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APPENDICES8
Appen"i1 ;G Map of Malawi
Appen"i1 %G Reference! an" )i$liography
Appen"i1 <G *i!t of 6nformant!
Appen"i1 2G Term! of Reference
NORAD
PSD in Malawi Final Report Page ;
1 INTRODUCTION
Origin of !t#"y Thi! !t#"y i! a re!#lt of an initiative ta+en $y the Norwegian Mini!ter
for Development Cooperation, 7il"e Fraf'or" Hohn!on, to review the
potential for Private Sector Development in main partner co#ntrie!
receiving Norwegian "evelopment a!!i!tance(
Thi! report cover! Pha!e 6 of the private !ector review an" foc#!e!
on inve!tment climate an" private !ector "evelopment policie! a!
well a! phy!ical an" !ocial infra!tr#ct#re, ta+ing into con!i"eration
pre!ent area! of co-operation an" the effort! of other "onor!( 6t
f#rther incl#"e! an a!!e!!ment of area! of co-operation where
Norwegian private !ector organi.ation! or enterpri!e! can enhance
the "evelopment effect! in term! of poverty re"#ction(
Policy "oc#ment! The following "oc#ment! are the $a!i! an" !tarting point! for thi!
!t#"yG
Strategy for Norwegian S#pport of Private Sector
Development in Developing Co#ntrie!, from the Mini!try of
Foreign Affair! in Norway(
Strategy for the Norwegian Development Cooperation with
Malawi %&&;-%&&>(
Malawi Poverty Re"#ction Strategy Paper, of April %&&%
(PRSP(
O#tline )a!e" on the o#tp#t! !pecifie" in the Term! of Reference, the report
pre!ent! an a!!e!!ment of MalawiI! re!o#rce en"owment,
comparative a"vantage!, inve!tment climate, in!tit#tional an" policy
framewor+ a! well a! phy!ical an" !ocial infra!tr#ct#re (Chapter! %
an" <(
)a!e" on the information, potential! for e1ten"e" Norwegian
"evelopment cooperation are "e!cri$e" (Chapter 2(
Finally, the report "e!cri$e! potential! for cooperation with
Norwegian firm! an" in!tit#tion! (Chapter >(
Data collection Data for thi! !t#"y wa! collecte" "#ring two wee+! fiel" wor+ in
Malawi from May %@ L H#ne 3, %&&%, an" incl#"e" vi!it! an"
con!#ltation! with the private !ector, government in!tit#tion!,
a!!ociation!, "onor! an" N4OI!( A review of literat#re, report! an"
policy "oc#ment! relevant to the topic wa! carrie" o#t(
Data from "ifferent !o#rce! in Malawi can $e incon!i!tent L thi!
!ho#l" $e +ept in min" when rea"ing the report(
The team The team wa! compo!e" $y Mr( Han 5ri+!en, NORADD M!( )ritt 7il"e
8'NlO!, Fir!t Secretary at the Royal Norwegian 5m$a!!y in *ilongweD
Mr( Sverre Thron"!en, repre!entative of N7O an" Mar+eting
Manager of A)) Norway, an" Hohan Olav )'er+e, Mar+eting
Coor"inator at NORP*AN, an" !ecretary an" con!#ltant to the team(
NORAD
PSD in Malawi Final Report Page %
Mr( HNrn 7Ni!ta", Senior A"vi!er at NORP*AN provi"e"
$ac+!topping !#pport thro#gho#t the !t#"y(
NORAD
PSD in Malawi Final Report Page <
2 GENERAL COUNTRY INFORMATION
231 G$*$r"' *9&r)"#&*
Malawi i! a lan"loc+e", African co#ntry locate" $etween
Mo.am$i-#e an" Tan.ania to the ea!t an" 0am$ia to the we!t( 6t
occ#pie! aro#n" ;;@,&&& !-#are +ilometre! (i(e(, '#!t over the !i.e of
6celan", an" ha! aro#n" ;& million inha$itant!( A map of Malawi i!
provi"e" in Appen"i1 ;(
232 Hs#&r:
Malawi $ecame the )riti!h Protectorate of Nya!alan" in ;@:;( 6n
;:>< the )riti!h fe"erate" Nya!alan" with Northern an" So#thern
Rho"e!ia (now 0am$ia an" 0im$a$we, $#t Nya!alan" !ece"e" in
;:A<, following election! which gave Dr 7a!ting! 8am#.# )an"aP!
Malawi Congre!! Party (MCP a ma'ority in the *egi!lative Co#ncil(
6n ;:A2, Nya!alan" $ecame in"epen"ent #n"er the name of Malawi
an" two year! later, Dr )an"a "eclare" it a rep#$lic an" a one-party
!tate( 6n ;:3;, he "eclare" him!elf life-time pre!i"ent( Malawi #n"er
Dr( )an"a wa! characteri!e" $y violent oppre!!ion of political
opponent!, $#t al!o of relatively peacef#l "ome!tic relation!( The
)an"a regime wa! critici!e" internationally for it! clo!e relation! with
aparthei" So#th Africa(
The K)an"a perio"K la!te" #ntil ;::2, when he wa! "efeate" $y Mr(
)a+ili M#l#.i in the fir!t m#ltiparty election! hel" in Malawi( Relation!
with So#th Africa have remaine" !trong( So#th African companie!
are c#rrently among the main inve!tor! in Malawi( National m#ltiparty
election! were hel" again in ;:::, renewing Mr( M#l#.iI! man"ate(
234 T/$ E%&*&):
Malawi i! among the worl"I! mo!t ai"-"epen"ent co#ntrie!( 6n ;::@,
Official Development A!!i!tance (ODA e-#alle" %2(2= of 4ro!!
National Pro"#ct L the !econ" highe!t in the worl" (after
Mo.am$i-#e
%
( 6t i! al!o among the mo!t to$acco-"epen"ent
co#ntrie! in the worl"( To$acco acco#nt! for two-thir"! of it! e1port
earning!( 6n ;::@, Malawi receive" /SC 23& million in ai", while
e1port earning! from to$acco were /SC <<@ million( )oth ai" an"
to$acco earning! pea+e" in ;::@ however, an" have "ecline" !ince(
MalawiI! economy i! very !mall, even $y African !tan"ar"!( 6t! 4ro!!
Dome!tic Pro"#ct (4DP i! aro#n" /SC ;(@ $n, of which <@= i!
agric#lt#ral o#tp#t( Thi! mini!c#le !i.e of the "ome!tic mar+et p#t! a
!i.e cap on local companie!, who remain !mall an" #n"evelope"(
Meanwhile, MalawiI! lan"loc+e" po!ition i! an important o$!tacle for
e1port-le" growth L e1cept for a !mall n#m$er of ca!h crop!
(to$acco, tea, coffee an" !#gar on which MalawiI! e1port earning!
rely heavily(
2
/ MalawiI! ai" "epen"ency i! very high in proportion to the !i.e of it! economy, partly a! a re!#lt of it! low
4DP( Several African co#ntrie! receive more ODA per capita than Malawi(
NORAD
PSD in Malawi Final Report Page 2
Malawi i! the mo!t "en!ely pop#late" co#ntry of NorwayI! main
partner co#ntrie! in Africa, $#t it! nat#ral re!o#rce! an"
man#fact#ring $a!e are not a"e-#ate to generate !#fficient income
for it! pop#lation( Mo!t of MalawiI! !ocial in"icator! are therefore
wor!e than the average fort !#$-Saharan Africa( Of it! pop#lation of
;& million, two-thir"! are $elow the poverty line, %:= are con!i"ere"
#ltra-poor( *e!! than half of the pop#lation have acce!! to !afe
water, ;A= are infecte" with the 76B vir#!, an" life e1pectancy i!
only 2% year!
235 F&&- %rss
A! thi! !t#"y i! $eing carrie" o#t, Malawi i! e1periencing it! wor!t
foo" cri!i! in fifty year!( A! a re!#lt of a"ver!e weather con"ition!,
lac+ of a proper early warning !y!tem, 6MFI! earlier a"vice to !ell off
foo" !#rpl#!e! (pro$a$ly a con!e-#ence of poor !tati!tical "ata,
an" fail#re an" lac+ of tran!parency in management of foo" !toc+!
an" re!erve!, Malawi e1perience! !evere !hortage of mai.e, the
main !taple foo"( Thi! ha! contri$#te" to inflate" foo" price! an" to
inflation in general(
Foo" ai" i! !lowly !tarting to arrive, creating $ottle nec+! in tran!port
which affect the import of other commo"itie!( An e1ample i! the
import of fertili.er, where Malawi i! facing the "ilemma of importing
mai.e to meet the imme"iate "eman" for foo", at the co!t of
negatively affecting the ne1t growing !ea!on "#e to lac+ of fertili!er,
with the po!!i$ility of prolonging the cri!i!(
NORAD
PSD in Malawi Final Report Page >
4 THE PRIVATE SECTOR AGENDA
431 N"#0r"' R$s&0r%$ E*-&1)$*# "*- M"'"1;s C&)($##!$
A-!"*#"2$s
3.1.1 Agriculture - tobacco and other cash crops
Malawi ha! an agric#lt#re "ominate" economy with appro1imately
3A= percent of the pop#lation !till $eing r#ral( Of the 5conomically
Active pop#lation engage" in agric#lt#re, animal h#!$an"ry an"
fore!try, >A= are women( 5!tate growing of e1port crop! !#ch a!
to$acco, cotton, tea an" coffee, ha! long tra"ition!( Agric#lt#re
acco#nt! for <<= of 4DP( 51port of agric#lt#ral pro"#ct! acco#nt for
@& = of national e1port reven#e!, to$acco alone acco#nting for
3&=(
For "eca"e! the agric#lt#ral !ector in Malawi ha! ha" a !tr#ct#re
characteri.e" $y e!tate an" !mallhol"er !#$-!ector!( 6n the pa!t
growing wa! !trictly controlle", !mallhol"er! $eing $arre" from
c#ltivating ca!h crop! !#ch a! to$acco( Thi! !tr#ct#re inherite" from
the colonial era, wa! enforce" in the po!t in"epen"ence perio"
thro#gh a n#m$er of policy or legi!lative framewor+! incl#"ing the
Special Crop! Act which gave the monopoly of pro"#cing high val#e
ca!h crop! to the e!tate !#$-!ector(
To$acco Malawi ha! a very favo#ra$le climate for to$acco-growing( On paper,
it i! only a mo"e!t-!i.e" pro"#cer, acco#nting for !ome ;2&,&&&
tonne! of the worl"P! >(3 million tonne! in ann#al to$acco o#tp#t( )#t
it ha! carve" o#t a powerf#l role in the e1port mar+et, an" co#nt!
almo!t all the worl"P! main to$acco tra"er! an" cigarette
man#fact#rer! a! c#!tomer!( To$acco earn! Malawi !ome C;A>m a
year, acco#nting for more than two-thir"! of it! ann#al foreign
e1change ta+ing!(
Opening of to$acco
farming to
!mallhol"er!
6ncrea!e"
!mallhol"er
pro"#ction
/ntil the mi"-;::&!, to$acco e1port! were a privilege of large
e!tate!, controlle" $y MalawiI! elite( 7owever, following the ;::2
election!, !mallhol"er to$acco growing ha! increa!e" "ramatically(
*ifting of -#ota! applica$le to !mallhol"er! ha! in"#ce" a threefol"
increa!e !ince ;::< in the pro"#ction of !mallhol"er $#rley to$acco(
*i$erali!ation of the mar+e" for inp#t! an" a $anning of fi1e" price!,
le" to !#$!tantial growth in to$acco, root crop! an" potatoe!, $#t
le!! in mai.e, cotton, !#gar( *i$erali!ation ha! al!o le" to re"#ce"
pro"#ction at e!tate! while !mallhol"er! have increa!e" their
pro"#ction !#$!tantially( The To$acco A!!ociation of Malawi, TAMA,
refer! to @A(&&& to$acco grower!, of which A&(&&& are !mallhol"er!(
Accor"ing to /(S( agric#lt#ral report!, however, the n#m$er of
!mallhol"er grower! co#l" $e a! high a! ;>&,&&&(
Conver!ion of lan" Thi! proce!! ha! le" to profo#n" !ocio-economic change!( Small
farmer! who previo#!ly relie" on mai.e have converte" lan" to
to$acco farming, an" a com$ination of ca!h an" !#$!i!tence crop!(
Real per capita income! for !mallhol"er to$acco pro"#cer! have
increa!e", from C;>< in ;::% to C%>> in ;::3, accor"ing to /SA6DP!
;::@ f#n"ing re-#e!t to Congre!!( 7owever, at the !ame time, the
NORAD
PSD in Malawi Final Report Page A
!mall farm! have $ecome more "epen"ent on to$acco income, an"
!en!itive to international price fl#ct#ation!, while le!! lan" i!
availa$le for foo" crop!( A! !hown $elow, the international mar+et!
for to$acco (a! well a! for tea, MalawiI! other main ca!h crop have
fallen con!i!tently !ince the co#ntryI! in"epen"enceD
F"''*2 (r%$s &9 M"'"1<s #1& )&s# )(&r#"*# $=(&r#
%&))&-#$s
&
;&&&
%&&&
<&&&
2&&&
>&&&
A&&&
3&&&
@&&&
:&&&
;:A& ;:A>;:3& ;:3>;:@&;:@> ;::&;::> %&&&
T
&
>
"
%
%
&

(
r

%
$
?

U
S
@
A
)
#
&
;&&
%&&
<&&
2&&
>&&
A&&
T
$
"

(
r

%
$
?

U
S
6
%
$
*
#
s
A
B
2
To$acco Tea
Source: World Bank, World Development ndicators !""1# $rimar% &ommodit%
prices
6n %&&&, MalawiI! to$acco in"#!try e1perience" a har!h year, with
average a#ction price t#m$le" $y <>=, "own from /SC;(>A in ;:::
to /SC;(&;( Total to$acco e1port earning! wa! ;A> million /S
"ollar!, "own from ;@3(> million /SC in ;:::( The "ecline in price i!
partly "#e to the $a" -#ality of to$acco !ol", a! farmer! #!e" le!!
fertili.er following the price hi+e! of chemical fertili.er!( 6t i! al!o
$elieve" that $ig to$acco companie! have !#ccee"e" in pa!!ing
!ome of their co!t! from !mo+ing litigation on to the to$acco
grower!, thro#gh re"#ce" pro"#cer price!(
7ealth a!pect! To$acco i! #n"er pre!!#re "#e to the negative health a!pect! of
con!#mption( Malawi i! concerne" a$o#t the effect! on their
economy of thi! an" of the pre!ent move! $y 9orl" 7ealth
Organi.ation to promote the Framewor+ Convention on To$acco
Control
<
(
Pro"#ction an" mar+eting of to$acco in Malawi "emon!trate a highly
organi!e" pro"#ction an" mar+eting chain an" e1perience! from thi!
may $e #!e" for the $enefit of other commo"itie!(
Diver!ification There i! potential for !mallhol"er! to "iver!ify o#t of to$acco growing
tho#gh, an" to complement the to$acco-growing with pro"#ct! !#ch
a! coffee, rice, her$!, chilli, gro#n"n#t!, pea!, wheat, cotton, an" c#t
flower!, for which there i! an e1port mar+et(
<
9TO ;:::G JFramewor+ Convention on To$acco Control, A primerK(
NORAD
PSD in Malawi Final Report Page 3
Other ca!h crop! Malawi ha! a potential for pro"#ction of !everal crop! con!i"ere" for
e1port( Coffee, followe" $y !orgh#m, papri+a, inter-plante" $ean!
an" mai.e, p#re !tan" $ean!, !oy$ean!, 6ri!h potatoe!, pigeon
pea!Fmai.e an" rice appear to have !ignificant competitivene!! in
term! of e1port val#e(
Malawi ha! a tra"ition of growing ca!h crop! for e1port( Smallhol"er!
have !hown that they are highly re!pon!ive to incentive!( There i!
!#$!tantial potential for growth in pro"#ction, val#e a""ing an"
e1port! of mo!t crop!( 6n a""ition there i! a potential for improving
agro $a!e" man#fact#ring for which there i! a tra"ition( 7owever,
MalawiI! e1port! are to the ma'or e1tent commo"ity $a!e", an" th#!
v#lnera$le to international fl#ct#ation! in commo"ity price!(
3.1.! Agriculture ' mai(e and other subsistence crops
6t ha! $een e!timate" that >(3 million hectare! of MalawiI! lan" (in
total, :(2 million hectare! i! !#ita$le for agric#lt#re( Of thi!, 2(A
million hectare! have alrea"y $een c#ltivate"( *an" !carcity i!
$ecoming an i!!#e a! the co#ntryI! pop#lation grow!, an" c#ltivation
i! alrea"y occ#rring on marginal or environmentally fragile area!
!#ch a! !teep !lope! an" river$an+!( Nearly all c#ltivate" lan" i!
rain-fe"(
Mai.e i! a! "ominant among foo" crop! in Malawi a! to$acco among
the ca!h crop!(
3.1.3 )isheries
*a+e Malawi i! the thir" large!t la+e in Africa with partic#larly rich
!pecie! "iver!ity with !everal h#n"re" en"emic !pecie!( Malawi ha!
a !trong tra"ition for !hallow water !mall !cale fi!herie!, $#t the!e
are now !#ffering from local overe1ploitation, "epletion of !toc+! an"
"eclining ret#rn!( Deep water fi!h pop#lation! are only e1ploite" to
a limite" e1tent however, mainly in the two !o#thern arm! of the
la+e, an" the "eepwater fleet i! very !mall(
*a+e fi!herie! acco#nt for appro1imately 3&= of animal protein
con!#me" in the co#ntry, an e!timate" :>= of fi!h catch $eing
ca#ght $y !mall !cale arti!anal fi!hermen( *ocal fi!h proce!!ing an"
"i!tri$#tion involve a large n#m$er of women, an" i! vital to
ho#!ehol" income an" n#trition( The limite" commercial activity i!
not a$le to meet the "ome!tic "eman" for fre!h an" fro.en pro"#ct!(
A few player! now "ominate the commercial !ector, MA*D5CO
Fi!herie! $elieve" to $e the large!t( MA*D5CO, a commercial
hol"ing $y the Pre!! Corporation *t"(, receive" !#$!tantial amo#nt!
of inve!tment !#pport thro#gh the 9)F NDFF6C5A6D !#pporte"
Fi!herie! Development Pro'ect, incl#"ing financing for a trawler,
for+lift!, an" tr#c+!( MA*D5CO Fi!herie!, with three trawler!,
con!i!tently an" !#!taina$ly lan" ;% tonne! per "ay( 6t i! reporte"
that there i! active effort $y large firm! to "i!co#rage new entrant!,
a! a re!#lt of there $eing no effective anti-monopoly policy
2
(
4
9)FOD5 %&&&, Co#ntry A!!i!tance 5val#ation(
NORAD
PSD in Malawi Final Report Page @
Pa!t e1perience Donor f#n"e" programme! foc#!ing on *a+e Malawi an" it!
re!o#rce! have $een carrie" o#t thro#gho#t the ;::&-ie!
>
( 6t ha!
$een ac+nowle"ge" that previo#! "onor intervention, partic#larly
foc#!e" on re!tr#ct#ring, ha! ha" !erio#! !hortcoming! an"
negative impact!, to !#ch a "egree that poor fi!hermen are wor!e off
than $efore the intervention!( A "onor-"riven "ive!tit#re of Fi!herie!
Department commercial !ervice! to the fi!hing comm#nitie! ha!
contri$#te" to a $rea+"own of commercial operation!( Only a limite"
n#m$er of paire" trawler! are $elieve" to $e in operation to"ay(
Re!earch Donor f#n"e" re!earch on the eco!y!tem ha! however !#$!tantially
improve" +nowle"ge a$o#t the la+e( Follow #p of !#pport to the
fi!hery !ector i! planne" thro#gh the *a+e MalawiFNya!a 5co!y!tem
Management Pro'ect to $e finance" $y 9)F45FFNDF( 9)F45FFNDF
i! e1pecte" to finali!e an apprai!al of thi! pro'ect $y H#ly %&&%(
There i! rea!on to $elieve that pelagic an" "eep water !toc+! hol" a
potential for increa!e" e1ploitation with a potential ann#al yiel" of
aro#n" <&(&&& ton!
A
( 7owever, !tati!tic! on $oth pro"#ction an"
catche! are #ncertain(
Trawling At pre!ent trawling for "emer!al fi!h only ta+e! place in the !o#thern
arm! of the *a+e( 6n the So#th 5a!t Arm (S5A there i! one pair
trawl #nit (3(> m long woo"en $oat with <&-2& 7p in$oar" engine 6t
operate! in the !hallow part !o#th of )oa".#l# 6!lan"( Catche! are
relatively goo", a$o#t ;(% t per "ay( 6n a""ition there are 2-> !mall
!tern trawler!, ;>-;3 m long in S5A( Of tho!e, two operate a pelagic
trawl (MA*D5CO owne" an" two on "emer!al trawling(
There i! con!i"era$le !cope for "emer!al trawling in the So#th 9e!t
Arm( The only trawling ta+ing place there at pre!ent i! %-< pair trawl
#nit! operating from Malem$o There were at one time ;& #nit!
operating from there, an" >-3 for -#ite a long time( The limite" effort
i! not $eca#!e of poor catche!, $#t rather $eca#!e of lac+ of
!ervice! to the pairtrawler!, an" lac+ of facilitie! for !tern trawler!
3

6t wa! not po!!i$le for the team to cro!! chec+ thi! information, an"
a more thoro#gh review of "ata i! nee"e"(
3.1.* +anu,acturing
Malawi ha! ha" a !mall $#t relatively vigoro#! man#fact#ring an"
in"#!trialFproce!!ing !ector, which to a large e1tent ha! foc#!e" on
agro-proce!!ing( Man#fact#ring contri$#te! appro1imately ;2 = to
4DP( 6n the perio" ;::A L ;::: the !ector !howe" &= growth
@
( The
rea!on! for thi! are many, $#t worth mentioning i! the rapi"
li$erali!ation of mar+et! e1po!ing MalawiI! man#fact#rer! to
5
SADCF45F *a+e MalawiFNya!a )io"iver!ity Con!ervation Pro'ect an" 9)FNDFF6C56DA Malawi Fi!herie! Development Pro'ect,
an" FAOF/NDP Cham$o Fi!herie! Re!earch Pro'ect( Other pro'ect! have $een carrie" o#t $y 4T0, 5/, ODA (now D6F6D an"
H6CA(
6
Towar"! Re!pon!i$le Development of the Fi!herie! Sector in Malawi, Department of Fi!herie!, March %&&&(
3
T#mi TQma!!on (Ph(D( Programme "irector, /nite" Nation! /niver!ity, Fi!herie! Training Programme, Marine Re!earch 6n!tit#te,
S+Rlagata 2, Rey+'avS+, 6C5*AND
8
O$!ervation! on )#!ine!! O$!tacle! Confronting Man#fact#rer! in Malawi an" Recommen"ation! for Action, 5conomic
Re!o#rce! *imite" (Malawi, A#g#!t F Septem$er %&&&
NORAD
PSD in Malawi Final Report Page :
competition from So#th Africa an" 0im$a$we( The !ector i! !till
hampere" $y monopoli!tic $ehavio#r (cotton, tra"e $arrier!, lac+ of
acce!! to capital, illegal import!, an" #npre"icta$le implementation
or lac+ of implementation of e1i!ting $ilateral tra"e agreement!(
The !ector i! in !harp "ecline, ill#!trate" $y a contraction of %>=
from ;::& to %&&;(
4arment! The privately owne" garment !ector i! fa!t "i!appearing( Since
Septem$er ;:::, five garment man#fact#ring companie! have
clo!e", an" other! are at !erio#! ri!+( 6t i! a po!!i$ility that the whole
te1tile an" garment !ector will have clo!e" within the ne1t two year!(
The !ector i! characteri!e" $y low capacity #tili!ation, o#t"ate"
e-#ipment, an" ina"e-#ate !tan"ar"!( There i! #rgent nee" for
inve!tment! an" mo"erni.ation in the !ector, for concerte" effort! to
improve MalawiI! term! of tra"e, an" enforcement of the e1i!ting
import an" "#ty regime!(
Mem$er! of the man#fact#ring !ector e1pre!!e" "e!pair over lac+ of
mini!terial !#pport for improvement of MalawiI! term! of tra"e,
follow-#p of e1i!ting tra"e agreement!, incon!i!tent reg#lation! an"
practice! with re!pect to importFe1port of man#fact#ring e-#ipment
among other!(
Malawi ha! an a"vantage a! an *DC to e1port te1tile! "#ty-free to
the /SA thro#gh the A4OA framewor+ #ntil %&&2, regar"le!! of the
co#ntry of origin of inp#t!( 7owever, the tra"e "eal with the /SA may
not $e f#lly e1ploite" a! the in"#!tryI! capacity to re!pon" to thi!
opport#nity i! limite"( So far only two companie! are +nown to have
-#alifie"(
3.1.- Services
Service! !hare of MalawiP! 4DP fell from >3= in ;::2 to 23= in
;:::( The main growth in !ervice! ha! occ#rre" in Tfinancial an"
profe!!ionalT !ervice!, which acco#nte" for @= of 4DP in ;:::(
Other !ignificant component! incl#"e" "i!tri$#tion (%;= of 4DP
an" tran!port an" telecomm#nication! (2=(
Malawi ha! a !#$!tantial "eficit on !ervice! tra"e, mo!tly attri$#ta$le
to freight an" in!#rance( 6n ;:::, thi! "eficit wa! /SC:& million,
e-#ivalent to almo!t 2&= of that yearP! tra"e "eficit(
3.1.. +inerals
Mineral re!o#rce! in Malawi have in general not $een well
inve!tigate", $#t there are in"ication! that there may $e !ignificant
potential( 6nve!tment! in pro!pecting were negligi$le "#ring the pa!t
%& year!, an" +nowle"ge of e1i!ting mineral re!o#rce! !eem! not to
have increa!e" "#ring tho!e year!( Only in ;::@ "i" inve!tment!
!tart to grow(
*imite" e1ploration To"ay there i! limite" e1ploration of re!erve! of coal, lime an"
gem!tone!, an" +nown "epo!it! of $a#1ite, vermic#lite, #rani#m,
!ilica !an"!, an" heavy mineral !an"!, $#t otherwi!e little +nowle"ge
NORAD
PSD in Malawi Final Report Page ;&
of other non e1plore" re!erve!( The mineral !ector contri$#te" to
le!! than ;= of 4DP in ;:::, of which coal acco#nte" for more than
:&=( The real vol#me an" val#e, partic#larly of gem!tone!
e1ploration i! however a!!#me" to $e m#ch higher( 6t i! f#rther
rea!ona$le to a!!#me that gem!tone e1ploration i! "ominate" $y
!mall-!cale arti!anal mining( The formal mining !ector employ!
appro1imately >&&& people(
*icen!ing 6n %&&&, ;%> licence! were i!!#e" for pro!pecting, reconnai!!ance
an" e1ploration( /ncontrolle" growth in the !ector may have
negative effect! $oth to the environment an" to the economy with
!#$!tantial lo!!e! to Malawi(
Arti!anal mining Mining - partic#larly !mall-!cale mining - i! i"entifie" a! one of the
!o#rce! of pro-poor growth in the PRSP( 6"entification an"
"i!!emination of information on mineral availa$ility, incl#"ing
#p"ating of inventorie! on mineral! are mentione" a! relevant
activitie!( Department of Mine! ha! !tate" that their goal i! to
increa!e mining activity o#tp#t to <= of 4DP(
3.1./ 0ourism
Malawi ha! a !mall to#ri!t !ector mainly concentrate" aro#n" *a+e
Malawi( There i! al!o infra!tr#ct#re pertaining to the vario#! national
par+! in the co#ntry( Foreign e1change earning! from vi!itor!
$etween ;::2 an" %&&& average" a$o#t 2(3 per cent of the total
foreign e1change receipt!( D#ring the aparthei" era, Malawi wa! one
of very few acce!!i$le "e!tination! for So#th African to#ri!m $#t thi!
mar+e" wa! !#$!tantially re"#ce" with the fall of aparthei"(
7otel! ten" to have low #tili!ation rate!, even high -#ality well r#n
e!ta$li!hment!( 6t i! a general opinion that there i! over !at#ration in
the mar+et at pre!ent, $#t that there i! !#$!tantial potential for
increa!ing to#ri!m( Some operator! have inve!tigate" the po!!i$ility
of la+e to#ri!m with par+ to#ri!m in neigh$o#ring 0am$ia, f#n"ing
c#!tom! clearance at local airport! form their own f#n"! a! a one-
time trial( 51perience ha! $een very po!itive, an" co#l" open a
promi!ing mar+e"(
*a+e Malawi *a+e MalawiI! #ni-#e character, the high a-#atic $io"iver!ity, the
$eache!, mo#ntain! an" !cenery are attraction! per !e( 6n
com$ination with other "e!tination in the region, there i! !cope for
attracting a larger n#m$er of to#ri!t! than i! the ca!e(
3.1.1 2nerg%
5nergy component! MalawiI! energy !ector ha! five +ey component!G electricity, li-#i"
f#el! an" ga!, coal, $ioma!! an" other renewa$le !o#rce!(
)ioma!! )ioma!! (firewoo", charcoal, crop an" in"#!trial re!i"#e! "ominate!
the energy $alance in Malawi acco#nting for :3= of pro"#ction(
Other renewa$le! Malawi i! well en"owe" with renewa$le energy !o#rce! incl#"ing
goo" !#n!hine thro#gho#t the year for photo-voltaic an" photo-
thermal application!, rea!ona$le win" !pee"! for water p#mping,
"ome!ticate" animal! for $ioga! application!, an" hot !pring! for
NORAD
PSD in Malawi Final Report Page ;;
geothermal power generation( A$o#t >(&&& PB-!y!tem! have $een
in!talle", $#t more than >&= of them are malf#nctioning or have
completely !toppe" wor+ing(
Coal De!pite the fact that Malawi ha! large coal re!erve! (more than <>
million tonne! of coal have $een prove" only %&= of the co#ntryI!
re-#irement i! covere" $y own pro"#ction( The re!t i! importe" from
neigh$o#ring co#ntrie!(
*i-#i" f#el! an" ga! A$o#t :3= of the petrole#m pro"#ct! are importe"( <= (;@ mill(
litre! compri!e! locally pro"#ce" ethanol which i! $len"e" with
petrol( The ethanol pro"#cer! are not a$le to meet the capacity to
maintain a re-#ire" %&G@& petrol-ethanol $len" an" the ratio
achieve" i! normally ;%G@@(
No oil an" ga! e1ploration! have !o far $een #n"erta+en(
5lectricity The 5lectricity Act wa! intro"#ce" in ;::@( Thi! allowe" the 5lectric
S#pply Corporation of Malawi (5SCOM to change it! corporate
!tat#! to a regi!tere" limite" lia$ility company with ::= of !hare!
hel" $y 4oM an" ;= $y the Malawi Development Corporation
(MDC( 5SCOM *t" wa! al!o permitte" to operate $#!ine!! #nit! in
generation, tran!mi!!ion an" "i!tri$#tion( The act al!o provi"e" for
the e!ta$li!hment of an in"epen"ent reg#lator, the National
5lectricity Co#ncil(
9hite Paper The 5nergy 9hite Paper of Fe$r#ary %&&% will g#i"e the
"evelopment of the energy !ector, incl#"ing the 5nergy Sector
6n"#!try (5S6( The 5nergy Policy ha! !i1 o$'ective!G
;( 6mprove technical an" economic efficiency of mo"ern energy
!#pply in"#!trie!D
%( 6ncrea!e the !ec#rity an" relia$ility of energy !#pply !y!tem!D
<( 6ncrea!e acce!! to affor"a$le an" mo"ern energy !#pply
!y!tem!D
2( Stim#late economic "evelopment an" r#ral tran!formation for
poverty re"#ctionD
>( 6mprove energy !ector governanceD an"
A( Manage impact! of energy pro"#ction an" !ervice! on the
environment, health an" !afety
:
(
The Power Sector Reform Strategy of March %&&% i! e1pecte" to
attract private !ector in the 5S6 a! competitor!( 6n"epen"ent Power
Pro"#cer! (6PP an" 6n"epen"ent Power Di!tri$#tor! (6PD !hall $e
allowe"
;&
(
5lectricity pro'ect! New pro'ect! are #n"er implementationG
- The ;<%+B tran!mi!!ion !y!tem will $e !trengthene", partly to $e
finance" $y Nor"ic Development F#n"(
9
4oM %&&%G JMalawi 5nergy Policy 9hite PaperK, Min( of Nat#ral Re!o#rce! an" 5nvironmental Affair!, Department of 5nergy
Affari!, March %&&%(
10
4oM %&&%G JPower Sector Reform StrategyK, Min( of Nat#ral Re!o#rce! an" 5nvironmental Affair!, Department of 5nergy Affair!,
Malawi(
NORAD
PSD in Malawi Final Report Page ;%
- *ilongwe Reha$ilitation an" Ref#r$i!hment of the Di!tri$#tion
Sy!tem! Pro'ect, Pha!e ;, !tarte" in ;:::( A !econ" pha!e ha!
!tarte" in %&&%( The Norwegian 4overnment thro#gh NORAD ha!
finance" $oth pha!e!(
- )lantyre Reha$ilitation an" Ref#r$i!hment of the Di!tri$#tion
Sy!tem Pro'ect will !tart thi! year( The Swe"i!h 4overnment thro#gh
S6DA will finance the pro'ect(
- The 4oM ha! !ince ;:@& $een implementing a Malawi R#ral
5lectrification Programme (MAR5P( Three pha!e! of the
programme have $een implemente"( 4oM aim! at increa!ing the
acce!! rate to electricity to ;& = of the pop#lation $y %&;& a!
!tip#late" in the 5nergy Policy Doc#ment(
- Pha!e 6B will !tart in %&&% an" incl#"e! 2< !ite! an" electrification
of *i+oma Di!trict #!ing "ie!el generator!( The total co!t i! !tip#late"
to M8 >:> million of which M8 <;> million are "onor f#n"! from the
Hapane!e 4overnment( The remain"er of M8 %@& million will $e met
from local re!o#rce! thro#gh a levy on petrole#m pro"#ct! !ale(
- Pha!e B compri!e! a Hapane!e 4overnment !pon!ore" Malawi
R#ral 5lectrification Ma!ter Plan St#"y !che"#le" to $e finali!e" $y
March %&&<( A total of >2 !ite! are e1pecte" to $e incl#"e"(
- Reha$ilitation programme! for the power !tation! are #n"er
"i!c#!!ion(
The generating capacity wa! $ro#ght to the e1i!ting level $y
commi!!ioning the 8apichira 7y"ro Scheme in H#ne %&&&( 7owever,
f#rther capacity increa!e! will $e nee"e" to meet pro'ecte" "eman"
of %:2 M9 in %&&>, ri!ing to 3A3 M9 in %&%&(
6nterconnection Malawi !igne" a Memoran"#m of /n"er!tan"ing an" an Agreement
with Mo.am$i-#e in ;::@ for the interconnection of power !#pply(
The implementation of the %%&+B !ingle circ#it interconnection with
Mo.am$i-#e i! now a high priority for the 4oM( The line will have a
total length of %&& +m whereof A& = will $e locate" in Mo.am$i-#e(
The co!t for the pro'ect wa! e!timate" to $e /SD <% million at ;::A
price level( Thi! will con!e-#ently ena$le Malawi to participate in the
emerging regional electricity mar+et thro#gh the So#thern African
Power Pool, SAPP(
A n#m$er of "onor agencie!, incl#"ing NORAD, have previo#!ly
!hown intere!t in the interconnection( The pro'ect i! again $eing
"i!c#!!e" with the 9) who i! actively !ee+ing co-financing
agencie!(
432 F"%#&r %&s#s "*- C0"'#:
3.!.1 &ost comparisons
The ta$le $elow compare! the co!t of !electe" #tilitie! in Malawi with
co!t! in other ea!t African co#ntrie!( A! the ta$le !how! that $oth
electricity an" telecomm#nication! are comparatively cheap in
Malawi( 7owever, "ie!el an" petrol are e1pen!ive, a""ing to the high
NORAD
PSD in Malawi Final Report Page ;<
tran!port co!t! which have $een "i!c#!!e" el!ewhere in thi! report(
;;
C&)("r"#!$ %&s#s 9&r s$'$%#$- 0#'#$s
M"'"1 K$*:" T"*D"*" U2"*-"
5lectricity (/SCF+9h, in"#!try &(&2 &(&:3 &(;&@ &(&A2
6n"#!trial f#el (/SCFlitre &(>A &(<3< &(<>< &(2@:
Phone call to /SA (/SCFmin %(& %(%& >(A< 2(<&
Phone call to COM5SA area (/SCFmin &(> ;(A2 >(>% ;(A;
So#rce!G 9ater an" COM5SA phone call!G 5conomic Re!earch )#rea#, /niver!ity
of Dar e! SalaamD /(S( phone call!G )M6 Technology 4ro#pD 5lectricityG 8P*C
(8enya, 6nve!t in /gan"a (/gan"a, PSD mi!!ion fin"ing! (Tan.ania( 5!com
(electricity, Malawi, MT* (telecomm#nication!, Malawi
3.!.! 0elecommunications and mail service
Telecom !ervice! Malawi ha! a cell phone networ+ covering the large!t citie! an" mo!t
pop#lar to#ri!t "e!tination!( The fi1e" line !y!tem ha! a !#$!tantial
$ac+log in term! of connection!, an" the average waiting time for
$#!ine!! #!er! i! two year!( 6n %&&&, Malawi ha" >@,&&& fi1e"
telephone line!( Average recor"e" waiting time! for a telephone line
to $e in!talle" can $e #p to ten year!, e!pecially in the more i!olate"
r#ral area!( Recent improvement! in the !#$ !ector incl#"e
increa!e! in the p#$lic fi1e" networ+I! e-#ippe" capacity to :&,&&&
line!, an" "igitali.ation of the P#$lic Switching Telephone Networ+(
Many private !ector repre!entative! have cite" the lac+ of relia$le
telecomm#nication! a! the !ingle mo!t !ignificant impe"iment to
"oing $#!ine!! in Malawi(
A recent ten"er for a new mo$ile an" fi1e" line operator conce!!ion
(privati!ation of Malawi Telecomm#nication! *t"( i! $eing eval#ate",
which if privati!ation i! reali!e", mo!t pro$a$ly will lea" to e1pan!ion
of !ervice! an" $ring telecom price! "own( 6t will intro"#ce a thir"
operator to the cell phone mar+et(
Price! Telecomm#nication! price! are not e1ce!!ive compare" with
neigh$o#ring co#ntrie!( A <-min#te phone call to the /(S( co!t! /SC
<(A&, compare" with /SC A(%; in Mo.am$i-#e(
Mail There i! al!o a con!i"era$le $ac+log for po!tal !ervice!, with a
waiting li!t of more than ;3,&&& private letter $o1e! compare" with
>;,&&& in!talle" $o1e!(
3.!.3 2lectricit%
Price! 6n ;::>, average electricity price! in Malawi were /SC &(&<F+9h L
the lowe!t in !o#thern Africa e1cept 0am$ia( To"ay, the price! are
higher $#t !till "o not reflect the co!t of !#pply(
U#ality The -#ality an" relia$ility of 5SCOMI! !ervice ha! $een a !ignificant
o$!tacle to $#!ine!!( The poor con"ition of the national electric gri"
re-#iring h#ge inve!tment! an" the limite" capacity of con!#mer! to
pay increa!e" rate! i! a threat to national growth( The tariff regime!
11
/ 5lectricity price! in Malawi have $een "erive" for a me"i#m-!i.e" #!er, with ;&& +BA pea+ con!#mption an"
A&= loa" factor( Telecom price! are from Malawi Telecom! *imite", the large!t provi"er(
NORAD
PSD in Malawi Final Report Page ;2
"o not reflect the co!t of power in term! of pro"#ction or loa"
management(
6n %&&; a new management wa! intro"#ce" in 5SCOM thro#gh a <
year! contract with 5S8OM 5nterpri!e, So#th Africa( 5SCOM ha! a
!#$!tantial "e$t $#r"en an" the challenge i! to t#rn the #tility into a
commercial via$le entity( 6n"ication! !how that 5SCOM i! on right
trac+(
3.!.* 3oads and transport
Malawi ha! a roa" networ+ lin+ing it with all three neigh$o#ring
co#ntrie! 0am$ia, Mo.am$i-#e an" Tan.ania, an" 0im$a$we i!
ea!ily acce!!i$le via Tete in Mo.am$i-#e(
MalawiP! total "e!ignate" roa" networ+ amo#nt! to a$o#t ;>,;&&
+ilometre! of whichG A,>&& +ilometre! are main an" !econ"ary, 3,A&&
+ilometre! are tertiary an" "i!trict, an" ;,&&& +ilometre! are #r$an(
U#ality ha! clearly "eteriorate" over the la!t ten year! !#ch that over
>&= of the networ+ i! now $elieve" to $e in poor con"ition(
Port acce!! Malawi i! lin+e" $y roa" to the port! of Nacala, )eira, Dar e! Salaam
an" D#r$an( )eira an" Nacala have the "i!a"vantage! of not
provi"ing m#ch ret#rn ha#l( D#r$an i! th#! !till favo#re" $y many
tran!porter!(
5/ f#n"e" programme! to improve !econ"ary roa"! are #n"erway(
9) i! financing the !ector thro#gh the Roa" Maintenance an"
Reha$ilitation Pro'ect, ROMARP( The 4overnment i! con!i"ering
$#il"-operate-tran!fer ()OT !cheme! in or"er to involve the private
!ector in roa" con!tr#ction an" maintenance(
Tran!port co!t! Tran!port i! a ma'or co!t factor an" !t#"ie! of !mall tra"er! !how
that together, tran!port of goo"! an" of the tra"er repre!ent! the
mo!t !ignificant !hare, A<=, of the financial o#tlay! a!!ociate" with
an in"ivi"#al tran!action
;%
( Tran!port co!t! were i"entifie" a! !ome
of the ma'or con!traint! to economic growth $y all !ta+ehol"er! met(
Malawi companie! have %-< time! higher tran!port co!t! than
companie! in 0am$ia an" So#th Africa(
Con!traint! The commercial tran!portation mar+et i! characteri!e" $y high
competition an" many !mall companie!( De!pite the n#m$er of
companie! there are few large tran!port provi"er!, an" there are
con!traint! on tran!porting large -#antitie! in a !hort perio" of time,
mainly "#e to lac+ of tr#c+!( Regi!tration re-#irement al!o hamper!
tran!port, a! vehicle! have to $e regi!tere" in the co#ntry of
"epart#re, tran!it co#ntrie! an" co#ntry of "e!tination( The total
vol#me of international freight traffic increa!e" $y <&= in %&&&( The
growth in e1port cargo, at 23=, e1cee"e" that for import!, at %A=(
6nformation on local contractor!I potential to "evelop their $#!ine!!
$y ta+ing part in larger, #pcoming infra!tr#ct#re pro'ect! i! limite"(
;%
Agric#lt#ral Mar+et! in )enin an" MalawiG Operation an" Performance of Tra"er!( 6nternational Foo" Policy Re!earch 6n!tit#te,
Decem$er %&&;
NORAD
PSD in Malawi Final Report Page ;>
3.!.- 3ail4a%s
Railway! lin+ )lantyre an" *ilongwe, an" connect to Mo.am$i-#e
an" the port of Nacala( There are no railway connection! with
Tan.ania, 0im$a$we or 0am$ia( A rail lin+ from )lantyre via N!an'e
to )eira in neigh$o#ring Mo.am$i-#e i! o#t of operation "#e to war
"amage to the $ri"ge cro!!ing 0am$e.i(
Co!t! Tran!port co!t! are favo#ra$le $y rail thro#gh the Nacala corri"or to
Nacala port, $#t the poor !tate of part! of the railway, partic#larly
from the $or"er to C#am$a in!i"e Mo.am$i-#e - 33 +m - lea"! to
fre-#ent "elay!( 7an"ling at Nacala ha! accepta$le efficiency, $#t
the crane capacity at the port limit! the !i.e of !hip!( F(o($( rate! are
cheaper than for the port! of )eira an" D#r$an( 7an"ling at )eira i!
!lowing "own "#e to the cri!i! in 0im$a$we(
Privati!ation Malawi Railway! (;::2 *t" wa! privati.e" in late ;:::( The
operator, an international con!orti#m calle" the Central 5a!t African
Railway! Company *t", compri!e! CFM of Mo.am$i-#e, Rail
Development Corporation of the /(S(A, an" 5"low Re!o#rce! *t"(
The 4overnment retaine" owner!hip of the rail networ+ an"
$#il"ing!, while the operator ac-#ire" the rolling !toc+( The Central
5a!t African Railway Company operate! the Nacala rail lin+( Since
Malawi Railway! wa! privati.e", freight tonnage ha! ri!en $y <&=(
Nacala Corri"or Development of the Nacala corri"or i! ta+ing place thro#gh the
Nacala Development Corri"or initiative
;<
( The Corri"or "evelopment
wa! officially la#nche" $y !igning of an agreement $y the Pre!i"ent!
of Malawi an" Mo.am$i-#e on the %@
th
of Septem$er %&&&( The
corri"or area e1ten"! from Mchin'i in the we!t of Malawi to Nacala on
the Mo.am$ican coa!t, an" the initiative aim! at facilitating growth in
!o#thern Malawi an" Northern to central Mo.am$i-#e( Privati!ation
of the national port an" railway company CFM, in Mo.am$i-#e i! !till
pen"ing however( A #nifie" operation of the railway corri"or from
Nacala, "epen"! on privati!ation of the Mo.am$ican railway
operation!(
Sector St#"ie! Preliminary Apprai!al! of the vario#! !ector! within the corri"or will
$e carrie" o#t an" pre!ente" a! Strategy Paper! an" Sector St#"ie!
in a Development Per!pective Doc#ment for "i!tri$#tion to potential
inve!tor!, an" al!o pre!ente" at a conference in Septem$er %&&%(
The aim i! to "evelop the tran!port infra!tr#ct#re at the !ame time a!
growth opport#nitie! in the corri"or are "evelope"(
3.!.. 5abour and 5abour unions
Co!t an" pro"#ctivity Malawi ha! relatively low la$o#r co!t!, le!! than /SD ;F"ay for
#n!+ille" la$o#r, $#t the pro"#ctivity i! al!o relatively low( 76BFA6DS
are among the factor! lea"ing to high "egree! of a$!enteei!m, an"
in!ta$ility( There i! limite" availa$ility of traine" an" e"#cate" la$o#r,
an" !ome !ector! have to import people to meet their nee"!, for
e1ample in to#ri!m an" management(
;< Nacala Development Corri"or, A De!criptive Doc#ment an" Progre!! Report, Nacala Development Corri"or Secretariat /nit, %&&;(
NORAD
PSD in Malawi Final Report Page ;A
*a$o#r #nion! Malawi ha! two ma'or #nion! con!i!ting of !maller mem$er #nion!(
Malawi Congre!! of Tra"e /nion! (MCT/ forme" in ;::>L con!i!t!
of ;> affiliate" #nion! with a total of ;&&(&&& mem$er! o#t of a
potential of half a million( Teacher! form the large!t mem$er #nion(
MCT/ receive! !#pport form the Norwegian Confe"eration of Tra"e
/nion!, *O( The action! aim at "eveloping an" !trengthening
MCT/I! organi!ation an" a"mini!tration, partic#larly empha!i!ing
#nion e"#cation, recr#itment, improving financial control! an"
increa!ing reven#e!( Several MCT/ mem$er #nion! have women
lea"er!(
Congre!! of Malawi Tra"e /nion! (COMAT/ L con!i!t! of two
#nion!D civil !ervant! an" local government(
#nion!D civil
Malawian la$o#r law! conform to the convention! of the 6nternational
*a$o#r Organi!ation an" are a"mini!tere" $y the *a$o#r
Commi!!ion #n"er the Mini!try of *a$o#r( Malawi ha! no legali!e"
!ocial !ec#rity !y!tem( *e!! than ;&= of the la$o#r force i!
#nioni!e", mainly in the !o#thern part of Malawi( The Tra"e /nion!
Act reg#late! relation! $etween tra"e #nion! an" employer!(
Chil" *a$o#r 9hile acc#rate !y!tematic "ata i! lac+ing, !ome wor+ ha! $een
"one in"icating that chil" la$o#r in Malawi i! wi"e!prea"( Chil"
la$o#r i! fo#n" in !everal !ector! incl#"ing large commercial farm!,
!mallhol"ing!, "ome!tic wor+, micro in"#!trie! an" the informal
!ector
;2
(
De!pite ratifying the /nite" Nation! Convention on Chil" *a$o#r,
MalawiP! recor" on the i!!#e i! !till poor( A recent !#rvey con"#cte"
$y the Malawi Congre!! of Tra"e /nion! MCT/ ha! e!ta$li!he" that
ca!e! of chil" la$o#r are !till wi"e!prea"( NORAD i! pre!ently
f#n"ing /N6C5F an" their wor+ to prevent chil" la$o#r(
3.!./ 5and
*an" Act An #pcoming *an" Act that recogni!e! comm#nal lan"!, ha! lea" to
#ncertainty a$o#t lan" owner!hip( The new act re-#ire! among other
that lan" only $e owne" $y Malawi citi.en!( The new act together
with recent "evelopment! in 0im$a$we, have create" in!ec#rity
among foreign inve!tor! a$o#t the f#t#re( Mortgage on lan" i! not
wi"ely accepte" $y commercial len"er!, an" !o#rce! the team met
in"icate" that lan" val#ation wa! highly overrate"(
14
6/FF6T4AF)AT - Chil" *a$o#r in the To$acco 4rowing Sector in Africa, *(5l"ring et(al( Nairo$i Octo$er %&&&(Fafo-paper %&&&G%;(
NORAD
PSD in Malawi Final Report Page ;3
L"*- D$!$'&()$*# C/"r2$s MWKA/"
Capital City :>&(&&&
Re!i"ential %>>(&&&
Secon"ary Commercial @%>(&&&
Ol" Town <%>(&&&
*ocal Centre <%>(&&&
6n"#!trial 3>&(&&&
Rental! per !-#are metre M98FM
%
Commercial <3>-2&&
6n"#!trial <3>-2&&
Source: +$A in 6nvestors 7uide to +ala4i8.
434 M"%r&$%&*&)% s#0"#&*
3.3.1 $ast per,ormance
MalawiI! per capita 4DP grew at a rate of aro#n" &(>= "#ring the
;::&!( Thi! mo"e!t growth wa! $etter than S#$-Saharan Africa a! a
whole, where "eclining 4DP per capita wa! recor"e"( 6t wa! al!o an
improvement over MalawiI! own performance "#ring the ;:@&!,
when it! per capita growth rate wa! negative( Nonethele!!, the
achieve" growth wa! "i!appointing given the n#m$er of po!itive
in"icator! at the !tart of the "eca"e( The!e in"icator! were, however,
o#tweighe" $y a n#m$er of negative "evelopment!, a! !hown in the
ta$le $elowD
MalawiI! !trong !i"e! at $eginning of
;::&!
A"ver!e "evelopment! occ#rring "#ring
;::&!
Peacef#l tran!ition to "emocracy
an" a !ta$le political !y!tem
Comparatively well f#nctioning
in!tit#tion!
*ow la$o#r co!t!
S#$!tantial "onor a!!i!tance
51ten!ive !tr#ct#ral reform!,
incl#"ing li$erali!ation of
agric#lt#re mar+et! an" foreign
tra"e
6nternational price of to$acco "own
<&=D negative term!-of-tra"e
"evelopment al!o on other
commo"itie!
Two ma'or "ro#ght!
The 76BFA6DS pan"emic re"#ce"
o#tp#t
Strong pre!!#re on 4overnment
!pen"ing
9ar in Mo.am$i-#e increa!e"
tran!portation co!t!
6mportantly, the negative event! that "i" occ#r "#ring the ;::&!
ten"e" to amplify each other( The negative e1ternal !hoc+! (term! of
tra"e, "ro#ght!, 76BFA6DS, war! in neigh$o#ring co#ntrie!
contri$#te" to lac+ of pace in !tr#ct#ral reform an" to lac+ of
$#"getary "i!cipline( For e1ample, in re!pon!e to "ro#ght!, the
4overnment p#rcha!e" mai.e in the international mar+et!, which
h#rt local pro"#ction( There were al!o "elay! in a"'#!ting the price!
of petrole#m pro"#ct!, an" there wa! political pre!!#re to increa!e
government !pen"ing witho#t there $eing managerial capacity to
a"mini!ter the increa!e" activitie!(
NORAD
PSD in Malawi Final Report Page ;@
A! a re!#lt, Malawi entere" the new Millenni#m with !#$!tantial
macro-economic pro$lem!( )y %&&& it! economy ha" $ecome one of
the mo!t volatile in 5a!tern an" So#thern Africa( The macro-
economic factor! are !till !o important for PSD in Malawi that !ome
!pace m#!t $e affor"e" in thi! report to "e!cri$e the critical factor! in
!ome "etail(
3.3.! &urrenc% e9change rates
MalawiI! c#rrency, the +wacha (M98 wa! "eval#e" con!i"era$ly in
;::2 an" then remaine" -#ite !ta$le in nominal term! #ntil a$o#t
H#ne ;::@( 4iven the high inflation rate "#ring the !ame perio", thi!
act#ally repre!ente" a real appreciation of the c#rrency that
wor!ene" the term! of tra"e( Then, in the la!t half of ;::@ the
+wacha !tarte" to "epreciate an" $y Decem$er, ;::@ it ha" fallen $y
nearly 2&=( Thi! off!et the real appreciation that ha" occ#rre", $#t
wa! followe" $y a new perio" of nominal c#rrency !ta$ility (an"
con!e-#ently, a real appreciation, #ntil April %&&&, when a new
"epreciation of 2&= wa! recor"e" #p to Han#ary %&&;( The
e1change rate ha! move" into a new perio" of !ta$ility !ince then(
MWK E=%/"*2$ r"#$ +$*- &9 :$"r? $=%$(# 2002,
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The central $an+ ha! now a"opte" a f#lly fle1i$le e1change rate
!y!tem with rate! "etermine" $y the mar+et, in the hope that the
"ramatic "eval#ation epi!o"e! of the pa!t (partic#larly ;::@ an"
%&&& will $e eliminate" in the f#t#re( The foreign e1change mar+et
i! highly infl#ence" $y the !ea!onal to$acco e1port!, an" $y the
inflow! of foreign ai"(
NORAD
PSD in Malawi Final Report Page ;:
3.3.3 n,lation
6nflation ha! $een another factor that ha! a""e" to MalawiI!
macroeconomic volatility( Data !ho#l" $e viewe" "i!criminately, !ince
the price! of a few !ingle commo"itie! !#ch a! mai.e have a high
impact on hea"line inflation
;>
( There are al!o !ome a"mini!tere"
price! that conceal the real #n"erlying inflation rate(
6n $roa" term!, MalawiI! inflation rate! have $een create" a! a re!#lt
of wea+ monetary management, c#rrency volatility, an" !carcity of
agric#lt#ral o#tp#t( 6n mi"-%&&&, the!e factor! ha" com$ine" to
reach an inflation of over >&= (the yearI! average wa! 22(@=, a!
!hown $elowD
I*9'"#&* r"#$s
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All 6tem!
Foo"
4overnment wa! pre!!#re" into ma+ing !trict mea!#re! to control
inflation( The "i!inflation program ha! $een !#cce!!f#l, a! the
Re!erve )an+ of Malawi (R)M ha! maintaine" a tight monetary
policy( Core inflation e1cl#"ing mai.e an" a"mini!tere" price! ha!
"ecline" from 2&= in Decem$er %&&& to @= in March %&&%(
7ea"line inflation fell from <>= to ;@= over the !ame perio"(
3.3.* nterest rates
7igh intere!t rate! are -#ote" among the main con!traint! for PSD
in Malawi( Nominal intere!t rate! have remaine" over %&= p(a( for
more than ten year!( Some +ey intere!t "ata are pre!ente" $elowD
15
J7ea"line inflationKG the aggregate", Jall-item!K price in"e1
NORAD
PSD in Malawi Final Report Page %&
N&)*"' *#$r$s# r"#$s
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;@;-"ay Trea!#ry
)ill!
Commercial $an+
len"ing rate!
Commercial $an+
"epo!it rate!
The!e fig#re! m#!t however $e !een in com$ination with MalawiI!
high inflation rate! (!ee Chapter <(<(<( 6n all $#t two year from
;::2-::, real intere!t rate! from commercial $an+! were act#ally
negativeD
R$"' *#$r$s# r"#$s
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-%>,&=
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Prime len"ing
rate
Saving! "epo!it!
The !#cce!! in re"#cing inflation after ;::: ha! ha" a "ramatic
infl#ence on real intere!t rate!( /p to la!t year, the intere!t pro$lem!
were largely relate" to volatility( To"ay, there i! al!o a con!i"era$le
pro$lem of the intere!t rate level, !ince inflation ha! $een re"#ce"
while commercial loan! !till co!t 2>=-2@=( Thi! ha! create" real
intere!t at a recor" level(
NORAD
PSD in Malawi Final Report Page %;
The Team "i" not have !#fficient time to e1plore whether lea!ing
co#l" $e a via$le alternative to len"ing, given MalawiI! high intere!t
rate!(
3.3.- >$& Debt 3elie, Status
Malawi reache" Deci!ion Point for 76PC "e$t relief in Decem$er,
%&&&( The Net Pre!ent Bal#e (NPB of the planne" "e$t relief i! 22=
of MalawiI! total foreign "e$t!( The time !che"#le for reaching
Completion Point ha! not yet $een fi1e"(
3.3.. Domestic private investment in +ala4i
Malawi ha!, for !everal year!, !#ffere" from having !ome of AfricaI!
lowe!t inve!tment rate!( Private "ome!tic !aving! act#ally
"ecrea!e" from the ;:@&! to the ;::&!, a! $#"get "eficit! a$!or$e"
m#ch of the availa$le capital( MalawiI! "evelopment ha! largely
$een finance" $y foreign inflow!, which con!tit#te aro#n" ;&= of
4DP( Thi! i! !till the ca!e, a! a n#m$er of Trea!#ry $on" i!!#e! pic+
#p "ome!tic !aving! to finance government !pen"ing(
MalawiI! private inve!tment! average" 3= of 4DP "#ring the ;::&!
compare" with an average of over ;>= for !#$-Sahara Africa( 6n
recent year!, it ha! $een even lower ($etween %(<= an" 2(%=(
3.3./ )oreign Direct nvestment
Foreign Direct 6nve!tment (FD6 !toc+! in Malawi are compara$le to
the average for Africa( 6n %&&&, it wa! aro#n" >&& million /SC( FD6
!toc+ in ;::: wa! %2(>= of 4DP, compare" with %;= for Africa an"
%@= for all "eveloping co#ntrie!( 7owever, the per ann#m inflow! in
;::@ -%&&& (the late!t year! for which fig#re! are availa$le were
very high $y African !tan"ar"! L at <A(;= of total gro!! fi1e" capital
formation in ;::@, an" %A(@= in ;:::( Ann#al gro!! FD6 inflow!
range" $etween >& mn /SC an" 3& mn /SC "#ring the!e year!(
Thi! confirm! that m#ch of MalawiI! recent inve!tment ha! $een
f#n"e" from e1ternal !o#rce!, while local capital ha! $een "rie" #p
$y the T-$on" i!!#e! to finance government $#"get "eficit!( One
con!e-#ence ha! $een a prono#nce" lac+ of "evelopment in
"ome!tic $#!ine!!(
435 L$2"' "*- *s##0#&*"' 9r")$1&rB
3.*.1 +ala4i nvestment $romotion Agenc%, +$A
Malawi pa!!e" an 6nve!tment Promotion Act in ;::;( 6n ;::< Malawi
e!ta$li!he" the Malawi 6nve!tment Promotion Agency, with the aim of
creating a Jone !top !hopK for potential inve!tor!( The Agency !hall
provi"e all nece!!ary permit! for an inve!tor to e!ta$li!h in Malawi(
The approval i! !#ppo!e" to $e given within ;& "ay of !#$mitting an
application( 7owever, #pon approval, application! neverthele!! have
to $e !ent to the Mini!try of Finance an" thi! may ta+e !everal
month! to proce!!( Doc#mentation receive" $y the team from M6PA,
J6nve!tor! 4#i"e to MalawiK will nee" !#$!tantial #pgra"ing in or"er
to f#lfil a potential inve!torI! nee" for information(
NORAD
PSD in Malawi Final Report Page %%
6nve!tor! g#i"e M6PA provi"e! an T6nve!tor! 4#i"e to MalawiT which contain!
information on re-#irement! for regi!tration an" overview! of factor
co!t! for lan", electricity, water, telecomm#nication!, an" tran!port(
De!pite the information form M6PA $eing #p"ate", cite" co!t! varie"
!#$!tantially from what wa! reporte" $y the private !ector( Time "i"
not permit verification of the acc#racy of the information provi"e" $y
either( 6n a""ition M6PA provi"e! co#ntry information an" an overview
of $#!ine!! opport#nitie!(
M6PA re-#ire! that inve!tment! $e minim#m /SD >&(&&& to $e
con!i"ere", an" foc#! primarily on pro"#ctive !ector, le!! on
!ervice!(
Merging M6PA i! in the proce!! of merging with Malawi 51port Promotion
Co#ncil, M5PC( The technical an" $#"getary implication! of thi!
merging are not yet clear(
The team receive" information from private !ector that re-#irement!
for an application are c#m$er!ome, an" that M6PA "oe! not have the
nece!!ary power! to a!!#re the proce!! i! complete" $y the vario#!
a#thoritie!(
3.*.! nvestment ncentives
Ta1e! The corporate ta1 in Malawi ha! $een re"#ce" to <&=, $#t new
inve!tment! $etween /SC > million an" /SC ;& million are given an
option to pay ;>= corporate ta1 in"efinitely or get a five-year ta1
holi"ay( 6nve!tment! over /SC ;& million have the !ame choice $#t
with a ten-year ta1 holi"ay( There i! no withhol"ing ta1 on "ivi"en"!,
an" man#fact#ring in"#!trie! have "#ty-free importation of raw
material!(
Malawi i! !een a! having one of the mo!t li$eral tra"e regime! of
So#thern Africa( 7owever, the impo!ition of a %&= !#rta1 on $oth
importe" raw material! an" pro"#ction machinery, with a f#rther
!#rta1 on e1-factory price!, ha! ha" a ma'or impact on the overall
"eman" an" co!t competitivene!! of Malawi in"#!try
;A
( There i! al!o
a f#nctioning $on"e" wareho#!e regime( A pre-!hipment in!pection
arrangement ha! $een p#t in place with a foreign firm(
9hile in !ome ca!e! it i! po!!i$le to reclaim the !#rta1 on import!,
the !y!tem i! $#rea#cratic an" time-con!#ming an" i! a ma'or i!!#e
of concern for mo!t companie! vi!ite"( /!er in"#!trie! often have to
$orrow at very high intere!t rate! in or"er to f#n" the!e payment!
an" waiting for over a year for repayment i! not #n#!#al(
6nve!tment incentive! Accor"ing to M6PA, Malawi offer! incentive! for inve!tor! which
incl#"eG
16
The 4overnment intro"#ce" a con!#mption ta1, calle" a !#rta1, in ;:@:( Altho#gh initially applie" !electively
to goo"! an" !ervice!, it ha! $een e1ten"e" progre!!ively, an" c#rrently applie! at a rate of %&= to mo!t goo"!(
The !#rta1 applie! (at the !ame rate to $oth "ome!tic an" importe" pro"#ct!, an" no longer "i!criminate!
again!t import!( D#ty-free importation of raw material! are grante" to in"ivi"#al companie!, $#t "oe! not imply
e1emption from !#rta1, which m#!t $e pai" on all tran!action! involving a partic#lar pro"#ct( 7owever
man#fact#rer!, li+e e1porter!, can claim ta1 cre"it! for !#rta1 pai" on inp#t! #!e" for their pro"#ction(
NORAD
PSD in Malawi Final Report Page %<
2&= inve!tment allowance on -#alifying e1pen"it#re! for new
$#il"ing! an" machinery(
/p to %&= inve!tment allowance on -#alifying e1pen"it#re!
for #!e" $#il"ing! an" machinery
Allowance for man#fact#ring companie! to "e"#ct all
operational e1pen!e! inc#rre" #p to %2 month! prior to the
!tart(
Agreement! for re"#ction of withhol"ing ta1e! on remittance!
an" payment!(
D#ty-free import of raw material! in the man#fact#ring
in"#!try(
No withhol"ing ta1 on "ivi"en"!(
51port incentive! 6ncentive! for e1port in"#!trie! man#fact#ring in $on" incl#"eG
An allowance of ;% percent of e1port reven#e! for non-
tra"itional e1port! (e1port! other than to$acco, tea, !#gar(
A tran!port allowance of %> = for all international tran!port
co!t!(
No "#tie! on import! of capital e-#ipment for the man#fact#re
of e1port(
No e1ci!e ta1e! on the p#rcha!e of raw material! an"
pac+age material! ma"e in Malawi(
No Bal#e A""e" Ta1e!(
Timely ref#n" of all "#tie! on import of raw material! an"
pac+aging material!(
5P0 incentive! 6ncentive! for in"#!trie! in 51port Proce!!ing 0one! (5P0 incl#"eG
0ero percent corporate ta1(
No withhol"ing ta1 on "ivi"en"!(
No "#ty on capital e-#ipment an" raw material(
No e1ci!e ta1 on locally pro"#ce" raw an" pac+aging
material!(
No !#rta1e!(
3.*.3 ?e% legislation
C#!tom! an" 51ci!e Act of ;:3%
The Act govern! the a"mini!tration, management an" control of
c#!tom an" e1ci!e, the impo!ition an" collection of c#!tom!, e1ci!e
an" other "#tie! an" for matter! connecte" therewith( The Malawi
Reven#e A#thority i! re!pon!i$le for reg#lation(
51port Promotion Act of ;:3;
The o$'ective of thi! Act i! to facilitate the "evelopment of !#!taine"
an" competitive e1port! of agric#lt#ral an" man#fact#re" pro"#ct!
partic#larly high val#e non- tra"itional e1port!( The Act le" to the
e!ta$li!hment of the Malawi 51port Promotion Co#ncil (M5PC(
6nve!tment Promotion Act of ;::;
Provi"e! for a legal framewor+ for facilitation of all inve!tment
proce!!e! an" accor"! paramo#nt !tat#! to the policie! an"
proce"#re! containe" in the !tatement of inve!tment policie!( The
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PSD in Malawi Final Report Page %2
Malawi 6nve!tment Promotion Agency (M6PA i! the implementing
agency(
)#rea# of Stan"ar" Act of ;:3%
Thi! Act e!ta$li!he" the Malawi )#rea# of Stan"ar"! an" provi"e!
for the "evelopment of national !tan"ar"! an" !cheme! for the
implementation of the!e !tan"ar"! incl#"ing pro"#ct certification(
P#$lic 5nterpri!e (Privati!ation Act of ;::A
Thi! provi"e! the framewor+ for the privati!ation an"
commerciali!ation of p#$lic enterpri!e!, p#$lic commercial entitie!
an" p#$lic commercial a!!et! an" provi"e! for the e!ta$li!hment of
the Privati!ation Commi!!ion(
6n"#!trial Act of ;::%
The primary o$'ective of thi! Act i! to !#pport an" enco#rage private
!ector "evelopment $y creating a con"#ctive environment for
$#!ine!!(
The Companie! Act of ;:@A
The o$'ective of the Companie! Act i! to reg#late the con"#ct of
companie! an" !harehol"er!I right! an" facilitate the regi!tration of
all companie! operating in Malawi( 6t "oe! not pre!cri$e e-#ity
participation limit! on foreign inve!tment(
Capital Mar+et Development Act of ;::&
The p#rpo!e of thi! Act i! to provi"e for the "evelopment of the
capital mar+et, to e1pan" acce!! $y companie! in Malawi to term
financing for "evelopment p#rpo!e!, to provi"e the #tili!ation of
!aving! an" e1ce!! li-#i"ity in "ome!tic "evelopment an" to provi"e
a"e-#ate reg#lation of the capital mar+et an" !elf reg#latory
organi!ation!, to fo!ter "evelopment of fair an" or"erly financial
mar+et! The Act i! a"mini!tere" $y the Re!erve )an+ of Malawi(
Other act! Other e!!ential act! incl#"eG
The Competition an" Fair Tra"ing Act, ;::@(
51port 6ncentive! Act, ;:@:
The Cooperative! Act, ;::@(
The Fi!herie! Con!ervation an" Management Act, ;:::(
The Mine! an" Mineral! Act of ;:@;
The Comm#nication! Act, ;::@(
3.*.* +ala4i &on,ederated &hambers o, &ommerce and ndustr%
MalawiI! cham$er of commerce MCCC6 i! mainly con!tit#te" $y
me"i#m an" !mall !cale enterpri!e!( Total n#m$er of mem$er! i!
e!timate" $y the Cham$er to $e aro#n" @(&&&, altho#gh paying
mem$er! are only appro1imately ;(@&&( *arger e1port oriente"
companie!, altho#gh many $eing mem$er!, "o not actively
participate in the Cham$er( MCCC6 lo$$ying capacity i! #ncertain,
an" certain $#!ine!! area!, !#ch a! the larger e1port oriente"
$#!ine!!e! "o not feel their intere!t! are !#fficiently ta+en care of(
Mem$er! e1pre!! #nreali!ticly high e1pectation! a! to what i!
NORAD
PSD in Malawi Final Report Page %>
po!!i$le to achieve, !ometime! lea"ing to fr#!tration an" pa!!ivity
on the part of mem$er!(
One firm one vote The Cham$er !eem! to $e r#le" $y the principle of Jone firm one
voteK which in the view of larger companie! place them in an
#nfavo#ra$le po!ition, a! !maller firm! have limite" #n"er!tan"ing of
the challenge! e1port oriente" firm! e1perience( Thi! ha! re!#lte" in
the Private Sector $eing fragmente" an" many firm! prefer to lo$$y
their own concern! in"ivi"#ally(
The Cham$er ha! a clear o$'ective to $ee treate" $y the
4overnment a! the tr#ly repre!entative private !ector $o"y(
3.*.- $ublic-$rivate Dialogue
)#!ine!! Co#ncil 6n or"er to improve an" complement the "ialog#e $etween the
private !ector an" the 4overnment, initiative! have $een ta+en to
e!ta$li!h a formal )#!ine!! Co#ncil( Thi! ha! however not
materiali!e"( A! a re!pon!e to the nee" for clo!er "ialog#e,
partic#larly with the larger enterpri!e! an" important a!!ociation!, a
gro#p ha! met on !everal occa!ion!( The gro#p ha! a"vocate" the
importance of foc#!ing on the private !ector in the PRSP among
other i!!#e!, an" ha! contri$#te" to !haping the private !ectorI!
place in the PRSP( Nonethele!!, the PRSPI! attention to the private
!ectorI! potential role in poverty alleviation ha! remaine"
#n"er"evelope"( The Mini!try of Commerce an" 6n"#!try ha! al!o
e1pre!!e" an intere!t in improving the "ialog#e in it! Concept
Doc#ment for a Private Sector Development Pro'ect
;3
(
3.*.. $rivatisation @ $arastatal Sector 3e,orm
Dive!tit#re plan Malawi ha! em$ar+e" on a privati!ation programme( The P#$lic
5nterpri!e! Privati!ation Act of ;::A, the Dive!tit#re Se-#ence Plan
con!i!ting of a li!t of ;&& P#$lic 5nterpri!e!, an" the e!ta$li!hment
of the Privati!ation Commi!!ion, ha! lai" the $a!i! for the
privati!ation proce!!( 8ey !ector! !#ch a! telecomm#nication!,
power an" water have $een targete"(
The privati!ation an" #tility reform programme! have $een a
!ignificant part of the !tr#ct#ral a"'#!tment programme! !#pporte"
$y the 9orl" )an+(
)y Novem$er %&&&, 2& of the ;&& enterpri!e! !che"#le" for
privati!ation ha" $een privati!e"( 6n"epen"ent reg#lation ha! $een
intro"#ce" in telecomm#nication an" electric power( The large!t
remaining p#$lic enterpri!e! areD
17
Mini!try of Commerce an" 6n"#!try, Private Sector Development Pro'ect Concept Doc#ment( Han#ary %&&%
NORAD
PSD in Malawi Final Report Page %A
S#"#0s &9 s#"#$6&1*$- $*#$r(rs$s
5nterpri!e Net profit
Agric#lt#re Development an" Mar+eting Corporation
(ADMARC
<3A
Malawi Development Corporation -;;@
Malawi 7o#!ing Corporation %
5lectricity S#pply Commi!!ion (5SCOM A3
Air Malawi -;3
)lantyre 9ater )oar" <A
*ilongwe 9ater )oar" -;23
Source: +) &ountr% 3eport Ao. "1@3!, Banuar% !""1
3.*./ &orruption and governance
A! note" a$ove, Malawi ha! $een ran+e" among the $e!t thir" of
African co#ntrie! in Tran!parency 6nternationalI! Corr#ption
Perception 6n"e1( Al!o, a! will $e !een in Chapter <(2(@, Malawian
$#!ine!!men ran+ corr#ption a! le!! of a pro$lem than inflation,
infra!tr#ct#re, financing, crime, an" ta1e!(
Thi! implie! that corr#ption i! not among MalawiI! +ey pro$lem! in
relative term!, altho#gh it may $e a !i.ea$le pro$lem in a$!ol#te
term!( For thi! rea!on, the i!!#e i! not e1plore" in more "etail in thi!
report(
3.*.1 &onstraints to gro4th
A !#rvey among $#!ine!!people wa! carrie" o#t for !mall firm! in a
worl"-wi"e !#rvey in ;:::F%&&&( Some fin"ing! from thi! !t#"y are
pre!ente" $elowD
O>s#"%'$s #& -&*2 >0s*$ss E 1999A2000 s0r!$:
(; E no o$!tacleD %G minor o$!tacleD
<E mo"erate o$!tacleD 2 E ma'or o$!tacle
Malawi 0am$ia 0im-
$a$we
So#th
Africa
Africa
6nflation <(<A <(<@ <(3; %(<< %(3;
6nfra!tr#ct#re <(<A <(&< %(33 %(&& %(@;
Financing <(&@ <(&A %(:3 %(2& %(:&
Organi!e" crime <(&A %(:& %(A2 <(3& %(>2
Street crime %(@< <(&A %(2; <(@3 %(A<
Ta1e! %(>@ %(:; %(:< <(&A %(@A
Corr#ption %(>> <(&& %(3> <(&& %(@A
Policy in!ta$ility %(%& %(>: %(>@ %(%& %(<3
51change rate %(&& %(&2 <(&& %(>2 %(;A
So#rceG Firm !i.e an" the )#!ine!! 5nvironmentG 9orl"wi"e S#rvey Re!#lt!
(6nternational Finance Corporation, Di!c#!!ion Paper No( 2<, %&&&
The !#rvey !how! that inflation an" infra!tr#ct#re are regar"e" a!
the two mo!t important $#!ine!! con!traint! $y Malawian
$#!ine!!men( 6nflation i! !een a! more of a pro$lem in Malawi than
in Africa in general, $#t the !it#ation i! not !een a! wor!e than in
NORAD
PSD in Malawi Final Report Page %3
neigh$o#ring co#ntrie! !#ch a! 0am$ia an" 0im$a$we, which have
al!o ha" con!i"era$le inflation pro$lem!( The infra!tr#ct#re pro$lem
i! !een a! a higher o$!tacle in Malawi than in the neigh$o#ring
economie!, an" higher than in the average African co#ntry, an" are
relate" $oth to MalawiI! lan"loc+e" po!ition an" to the poor !tate of
it! #tility !ervice!(
On the po!itive !i"e, corr#ption an" policy in!ta$ility are rate" a!
le!! of an o$!tacle in Malawi( 51change rate! are al!o !een a! a
relatively minor pro$lem( Thi! pro$a$ly reflect! that Malawi ha! few
e1porter!, who !ee the "irect impact! of e1change fl#ct#ation!( The
fl#ct#ation! are !een $y "ome!tic companie! mainly in the form of
inflation (which i! rate" a! a $ig pro$lem(
437 I*#$r*"#&*"' r$'"#&*s "*- *!$s#&r ($r%$(#&*
3.-.1 >o4 is +ala4i perceivedC
De!pite it! n#mero#! pro$lem!, Malawi !core! comparatively well,
$y African !tan"ar"!, on !everal international rating!( Some of the!e
in"icator! are li!te" $elowD
Tran!parency 6nternational
Corr#ption Perception 6n"e1G
Malawi No A; of :; co#ntrie! (No > of ;>
African co#ntrie! ran+e"
7eritage Fo#n"ation 6n"e1 of
5conomic Free"om
;;@ of ;A; co#ntrie! (wor!t !#$!coreG
monetary policy
9orl" )an+ 6n!tit#teG AA of ;A@ co#ntrie! on 4overnment
5ffectivene!! (!imilar to *ith#ania
@% of ;A% on Political !ta$ility (!imilar to
)elar#!
AA of ;&& on reg#latory -#ality (!imilar to Mali
:< of ;A: on r#le of law (!imilar to Hamaica
3.-.! +emberships and Access to nternational markets
MalawiI! mo!t important !o#rce of import i! SADC, while the
5#ropean /nion $#y! appro1imately >&= of it! e1port!(
Come!a Malawi i! a mem$er of COM5SA, the Common Mar+et for 5a!tern
an" So#thern Africa, which i! to $ecome a c#!tom! an" monetary
#nion(
SADC Malawi i! !ignatory to the SADC Tra"e Protocol, !igne" in ;::A(
The o$'ective! of COM5SA an" SADC incl#"e among other thing!,
facilitating, increa!ing an" promoting intra-regional tra"e thro#gh the
gra"#al re"#ction an" event#al elimination of tariff an" non- tariff
$arrier!( COM5SA an" SADC al!o aim at promoting cro!! $or"er
tra"e an" inve!tment an" at enhancing the economic "evelopment,
"iver!ification an" in"#!triali.ation of the region( COM5SA
envi!age! the e!ta$li!hment of a Common 51ternal Tariff $y the year
%&&2( The SADC Tra"e Protocol aim! at e!ta$li!hing a Free Tra"e
Area within eight year! of it! entry into force(
NORAD
PSD in Malawi Final Report Page %@
)ilateral agreement! Malawi ha! $ilateral tra"e agreement!, mainly with So#th Africa,
)ot!wana an" 0im$a$we, an" i! negotiating !imilar agreement! with
0am$ia, Tan.ania, an" Mo.am$i-#e( The Malawian a#thoritie! !ee
the!e a! largely interim agreement! #ntil the SADC Free Tra"e Area
i! e!ta$li!he"(
Cotono# Malawi i! a mem$er of the Cotono# Agreement( /n"er the Cotono#
Agreement, the 5/ grant! non-reciprocal tra"e preference! to mo!t
import! originating from ACP !tate!( The 5/I! T5verything )#t Arm!T
(5)A initiative, implemente" from March %&&;, ha! e1ten"e" "#ty-
an" -#ota-free acce!! to 5/ import! of all pro"#ct! from lea!t
"evelope" co#ntrie!, e1cept for arm!( The 5/ i! an important
mar+et for MalawiP! main e1port! of to$acco, tea, coffee, an" !#gar,
which enter the 5/ at .ero tariff!( 6t! !#gar e1port!, however, are
covere" $y the S#gar Protocol #n"er which Malawi i! allocate" an"
f#lly #!e! !pecial -#ota acce!! to the 5/ of %&,&&& tonne! ann#ally,
at price! higher than the worl" level!( The recent e1ten!ion $y the
5/ of preference! to all lea!t "evelope" co#ntrie! #n"er the
T5verything )#t Arm!T (5)A initiative, from March %&&;, an" the
5/P! own m#ltilateral tariff re"#ction! have re"#ce" their importance(
5/ i! MalawiI! main mar+et Other !o#rce! !how that acce!! to 5/
mar+et! may $e more ren"ering than SADC
;@
(
A4OA The African 4rowth an" Opport#nity Act (A4OA, offer! free acce!!
to !ome man#fact#ring pro"#ct! originating in African co#ntrie!(
African co#ntrie! eligi$le for preferential treatment #n"er the A4OA
will receive 4SP treatment (e1empt from the competitive nee"!
limitation! in the /(S( mar+et #ntil the en" of Septem$er %&&@,
Malawi $enefit! from 4enerali.e" Sy!tem of Preference! (4SP
treatment an" e1port! ;&,&&& ton! of !#gar ann#ally to the /nite"
State! #n"er "#ty-free 4SP -#ota acce!!, an" $egan e1porting
garment! #n"er the!e arrangement! from A#g#!t %&&;( Altho#gh
many other pro"#ct!, incl#"ing certain proce!!e" agric#lt#ral goo"!,
are covere" $y the A4OA, MalawiP! ma'or agric#lt#ral e1port! of
#nproce!!e" !#gar, to$acco, an" tea are ineligi$le
;:
(
9TO Malawi i! a 9TO mem$er( A! an /N-"e!ignate" lea!t-"evelope"
co#ntry, Malawi i! eligi$le for T!pecial an" "ifferential treatmentT
provi"e" #n"er the 9TO Agreement!( Malawi "oe! not have
"iplomatic repre!entation in 4eneva( *imitation! of government
official! on 9TO matter!, incl#"ing negotiating !+ill! in the
m#ltilateral conte1t, i! a con!traint on MalawiP! participation in the
m#ltilateral tra"ing !y!tem, which i! f#rther hampere" $y the
a$!ence of "iplomatic repre!entation in 4eneva( 9TO affair! have
$een covere" $y it! em$a!!y locate" in )r#!!el!, incl#"ing ACP an"
5/ relation!( Malawi can rarely atten" 9TO meeting! "#e to
financial limitation!(
9TO finali!e" a Tra"e Policy Review of Malawi in Fe$r#ary %&&%
%&
(
18 6mani Development %&&;G JOverview of MalawiI! Tra"e Relation! )oth Regionally an" 6nternationallyK(
19 9TO %&&%D TRAD5 PO*6C? R5B659, Malawi, Report $y the 4overnment
20 9TO %&&%D
J
Tra"e Policy Review, Report $y the 4overnment
K
NORAD
PSD in Malawi Final Report Page %:
Overlapping
agreement!
To !#m #p, Malawi i! a mem$er of the Common Mar+et for 5a!tern
an" So#thern Africa (COM5SA, an" the So#thern African
Development Comm#nity (SADC( 6t i! a !ignatory to a $ilateral
tra"e agreement with 0im$a$we, an" it i! negotiating !#ch
agreement! with Mo.am$i-#e, Tan.ania, an" 0am$ia( Malawi
receive! non-reciprocal preferential treatment from the 5#ropean
/nion #n"er the Cotono# Agreement an" the T5verything )#t Arm!T
!chemeD from the /nite" State! #n"er the African 4rowth an"
Opport#nity ActD from other "evelope" co#ntrie! #n"er the
4enerali.e" Sy!tem of Preference! (4SPD an" #n"er a !eparate
agreement with So#th Africa(
MalawiP! cro!! mem$er!hip of overlapping regional an" $ilateral
arrangement! with "ifferent tra"e li$erali.ation agen"a! an" tra"ing
r#le! ma+e! it! tra"e regime more comple1( 6t may "i!tort MalawiP!
tra"e an" incentive pattern! an" entail #n"erta+ing incon!i!tent
o$ligation!(
6ntegrate" Framewor+ Malawi ha! $een !electe" for the pilot pha!e of the 6ntegrate"
Framewor+ (6F for Technical A!!i!tance for Tra"e Development in
*ea!t Develope" Co#ntrie!, an initiative ta+en $y 9TO, 6TC, 9),
/NDP, 6MF og /NCTAD(( The aim of the 6F i! to promote the
integration of *DCI! into the glo$al economy( The Mini!try of
Commerce an" 6n"#!try will $e the focal point( A! an intro"#ction to
the programme a Diagno!tic Tra"e 6ntegration St#"y (DT6S will $e
carrie" o#t lea" $y the 9)(
M64A Malawi i! al!o a mem$er of the M#ltilateral 6nve!tment 4#arantee
Agency (M64A(
MalawiP! mem$er!hip of overlapping regional an" $ilateral
arrangement! with "ifferent geographical coverage, ma+e! it! tra"e
regime comple1, an" i! an a"mini!trative $#r"en( 6t! tra"ing partner!
receive "ifferent acce!! con"ition! to the Malawi mar+et "epen"ing
#pon which agreement they are in, an" the !tage of implementation
of the agreement $y the partner!( Mem$er! of more than one
agreement can tra"e with Malawi #n"er either agreement( The
!ame applie! to MalawiP! e1port! to the!e mar+et!( Thi! may "i!tort
tra"e an" incentive pattern! in an #npre"icta$le manner an" co#l"
entail incon!i!tent o$ligation! $eing #n"erta+en $y Malawi(
436 Pr!"#$ s$%#&r s#r0%#0r$ "*- &1*$rs/(
3...1 =4nership structure and ,irm si(e
Previo#! monopolie! MalawiI! ha! a few large (in Malawian !tan"ar"! companie! with
para!tatal root!, in the #tility !ector! an" within monopoli!tic
agri$#!ine!!( The mo!t important companie! in thi! gro#p are
5lectricity S#pply Commi!!ion of Malawi, Malawi
Telecomm#nication! Co(, Air Malawi, Malawi Railway!, an" Aric#lt#re
Development an" Mar+eting Co( The!e companie! are c#rrently in
vario#! !tage! of privati!ation an" commerciali!ation(
*arge private firm! Malawi ha! few large private firm! o#t!i"e of the gro#p of e1-
para!tatal!( Tho!e that e1i!t are pre"ominantly to$acco, tea an"
!#gar e!tate!(
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PSD in Malawi Final Report Page <&
/nfort#nately, the para!tatal !ector ha! not pro"#ce" any !ignificant
ca"re of !+ille" manager!, even with m#ch operational e1perience(
The co#ntryI! !tronge!t $#!ine!! !+ill! are pro$a$ly locate" within
the e1port-$a!e" to$acco in"#!try, which i! organi!e" in To$acco
A!!ociation of Malawi (TAMA(
6nve!tment comm#nity Malawi ha! pro$a$ly !een le!! inve!tment from inve!tor! of A!ian or
Mi""le-5a!tern origin than it! neigh$o#r! to the north (8enya an"
Tan.ania, an" le!! inve!tment from So#th Africa than co#ntrie! to
it! !o#th !#ch a! Mo.am$i-#e, Swa.ilan" or *e!otho( 6t al!o lac+! a
"ia!pora who co#l" repatriate earning! for "ome!tic inve!tment(
Capital acc#m#late" in the to$acco in"#!try ha! not $een reinve!te"
in other in"#!trie! to a !ignificant e1tent(
3...! Small, micro and medium si(ed companies
MalawiI! Micro an" Small 5nterpri!e! (MS5 !ector (firm! #p to >&
employee! con!i!t! of appro1imately 323,&&& income-earning
activitie!( On average, the co#ntryI! MS5! together generate an
ann#al gro!! !ale! val#e of M8 23 $illion (/SC 3:& million #!ing
%&&& e1change rate!, which i! !#$!tantial for a relatively poor
co#ntry( They have a total ann#al profit of M8 ;A(3 $illion amo#nting
to a$o#t ;>(A percent of MalawiI! 4DP, a"'#!te" to %&&& price!( The
entire MS5 !ector employ! over ;(3 million people, of whom
appro1imately 2% percent are women( Thi! acco#nt! for a$o#t <@
percent of the total economically active pop#lation of 2(> million(
%;
A few reg#latory i!!#e! "i!criminate again!t !mall an" me"i#m-!i.e"
companie! (SM5!D for e1ample, the ta1 $enefit! offere" $y M6PA
are $etter for pro'ect! that $ring in more than /SC > mn or /S2 ;&
mn in inve!tment( 7owever, many of MalawiI! main con!traint! to
$#!ine!! (!ee Chapter <(2(@ are even more important for
companie! of !ome !i.e L e(g( the c#rrency volatility, "i!tance from
over!ea! mar+et!, #nrelia$le power an" telecomm#nication!, etc(
Mo!t of MalawiI! SM5! are family-owne", an" rely on agric#lt#re in
!ome way or another( Mo!t Malawian town! f#nction a! mar+et! for
agric#lt#ral pro"#ce, an" their private $#!ine!!e! revolve aro#n"
!imple agro-proce!!ing !#ch a! mai.e mill! an" foo" con!ervation,
an" hotel!, re!ta#rant! etc, that cater to people who come to the
town!I mar+et!( The potential growth of the!e $#!ine!!e! i! #!#ally
"efine" primarily $y the mar+et for it! goo"! an" !ervice!, an"
!econ"ly $y the acce!! to cre"it L for propo!al! that "o have a
mar+et that i! not !at#rate"(
6nformal !ector The informal !ector i! very important, partic#larly for women( The
high inflation, with re"#ce" wage income!, an" the growing
#nemployment in the formal !ector, increa!e" it! importance "#ring
the ;::&!( 6n a !#rvey of %,&%% low-income ho#!ehol"! in )lantyre
an" *ilongwe, Chilowa (;::; fo#n" that <& percent of the *ilongwe
!ample an" %% percent of !ample ho#!ehol"! in )lantyre
participate" in informal !ector activitie!, primarily in tra"e or !ervice!(
Many of the activitie! were ca!#al an"For !ea!onal an" were
21
MS5 %&&& )a!eline S#rvey(
NORAD
PSD in Malawi Final Report Page <;
#n"erta+en along!i"e a range of other livelihoo" activitie!, in !ome
ca!e! in parallel to formal !ector employment(
A re!#lt of MalawiI! comparatively $enign governance regime! for
the private !ector i! that there are pro$a$ly fewer "i!a"vantage! in
Malawi in moving from the formal to the informal !ector than in
neigh$o#ring co#ntrie!(
NORAD
PSD in Malawi Final Report Page <%
5 POTENTIAL AREAS OF BILATERAL CO6
OPERATION
531 Is PSD s0((&r# F0s#9$- .
*.1.1 0he private sectorDs need ,or development
6n general term!, MalawiI! e1ceptional ai" "epen"ency (!ee Chapter
%(< call for rapi" "evelopment of it! pro"#ctive !ector, to re"#ce the
ri!+! a!!ociate" with relying on foreign !#pport(
There i! no "i!p#te over the nee" to improve MalawiI! private !ector(
6t nee"! "iver!ification, from it! pre!ent narrow $a!e of to$acco an"
other ca!h an" foo" crop!( 6t al!o nee"! capital, $eing #nfavo#ra$ly
locate" away from the main inve!tment flow!( 9ith a !mall "ia!pora,
with limite" inve!tment from the Mi""le 5a!t, with relatively few lin+!
to the A!ian $#!ine!! comm#nity, an" with relatively limite"
inve!tment from So#th Africa, Malawi i! "eprive" of many of the
main !o#rce! of inve!tment capital that f#el the "evelopment of
other nation! in 5a!tern an" So#thern Africa(
)oth 5/ an" 4ermany have recently with"rawn from !#pport to
PSD, a! 4overnment of Malawi ha! !hifte" it! prioritie! towar"! the
!ocial !ector!( Al!o, Denmar+I! program! have $een "i!contin#e"(
Thi! ha! contri$#te" to a certain f#n"ing vacancy within PSD(
*.1.! =ther donor support
The "onor comm#nityI! e1perience with PSD in Malawi i! limite"(
An overview of "onor programme! that !#pport PSD in a $roa"er
!en!e i! !#mmari!e" $elowD
K$: "r$"s 9&r -&*&r s0((&r# #& PSD * M"'"1
D&*&r K$: ss0$s
/nite" 8ing"om Agric#lt#re, micro-finance, training, tran!port, SM5,
$#!ine!! lin+age!
5#ropean /nion Tra"e, SM5!, tran!port, agric#lt#re
4ermany Capacity $#il"ing, training, SM5!
/NDP Tra"e, SM5!, agri$#!ine!!
/SA6D Privati!ation, e1port "iver!ification, agri$#!ine!!,
financial !ector, inve!tment !ervice!
9orl" )an+ Privati!ation, roa"!, #tility reform, financial !ector,
PSD program in progre!!
Source: mani Development
A! a general concl#!ion, the Team fo#n" that MalawiI! general over-
"epen"ency on foreign ai" i! not manife!te" in the PSD !ector(
There i! a nee" for financial a!!i!tance for goo" propo!al!(
NORAD
PSD in Malawi Final Report Page <<
532 M"'"1;s (&'%: 9r")$1&rB
*.!.1 +ala4i $overt% 3eduction Strateg% $aper :$3S$<
Malawi la#nche" it! Poverty Re"#ction Strategy Paper (PRSP in
April %&&%(
The PRSP ha! a! it! main !trategy a pro-poor growth,
complemente" $y tran!fer! to the #ltra-poor( The me"i#m goal of the
PRSP i! that $y %&&> the inci"ence of poverty !ho#l" $e re"#ce" $y
A=(
Fo#r pillar! The PRSP o#tline! fo#r pillar!G
;( Rapi" Pro-poor S#!taina$le 5conomic 4rowth an" Str#ct#ral
Tran!formation
%( 5nhancing 7#man Capital Development
<( 6mproving U#ality of *ife for the Mo!t B#lnera$le
2( Promoting 4oo" 4overnance(
5ach pillar ha! a n#m$er of goal! an" !#$-goal!, o$'ective!,
!trategie! an" activitie!(
6t i! recogni!e" that for Pillar ;, the private !ector will $e the "riving
force( Thi! i! foc#!e" on empowering the poor an" !#pporting !mall
an" me"i#m, enterpri!e! an" !ector! where the poor are active,
while ac+nowle"ging the role of the large !cale private !ector( The
PSD i! however only to treate" to a very limite" e1tent(
8ey !ector The +ey !ector i"entifie" for pro-poor growth i! the agric#lt#ral
!ector, e!pecially thro#gh Micro, Small, an" Me"i#m enterpri!e!(
Diver!ification will ta+e place thro#gh e1pan"ing the nat#ral
re!o#rce! #tili!ation, man#fact#ring, to#ri!m an" !mall-!cale mining
!ector( Acce!! to "ome!tic, regional an" international mar+et! i!
!een a! e!!ential(
Financing of large-!cale infra!tr#ct#re pro'ect! ha! not $een
incl#"e" in the PRSP $#"get !ection!, $#t have $een given attention
in the te1t !ection( Thi! implie! that Malawi will !olicit pro'ect
financing, over an" a$ove the PRSP-relate" $#"get!, for
infra!tr#ct#re pro'ect! within telecomm#nication!, electricity an"
roa"! L e(g( the Mo.am$i-#e-Malawi 6nnterconne!ction(
4en"er, 76BFA6DS an" 5nvironment are i"entifie" a! cro!!-c#tting
i!!#e! in the PRSP(
534 S#r"#$2: 9&r #/$ N&r1$2"* D$!$'&()$*# C&&($r"#&*
Accor"ing to the Memoran"#m of /n"er!tan"ing $etween Malawi
an" Norway !igne" in April %&&; Norwegian "evelopment
cooperation i! to foc#! on goo" governance, health, 76BFA6DS, an"
macro economic reform( Norway al!o !#pport! other, !electe"
activitie! !#ch a! NASFAM( The !trategy clearly #n"erline! that there
will $e no poverty re"#ction witho#t economic growth( 5nhancing
MalawiI! competitivene!! i! th#! of vital importance
%%
(
%%
NORAD %&&;G JStrategy for the Norwegian Development Cooperation with Malawi %&&; L%&&>,
NORAD
PSD in Malawi Final Report Page <2
6n %&&; Malawi receive" appro1imately NO8 @> million in Norwegian
$ilateral "evelopment a!!i!tance, incl#"ing f#n"ing thro#gh N4OI!(
%<
NORAD an" S6DA have agree" to channel Swe"i!h f#n"ing to the
fo#r priority area! in Malawi thro#gh NORAD( All activitie! within thi!
agreement are th#! f#n"e" >&F>& $y NORAD an" S6DA(
*.3.1 ntegrated )rame4ork ,or 0echnical Assistance
6t i! recommen"e" that Norwegian initiative! $e clo!ely coor"inate"
with the 9TO 6ntegrate" Framewor+ for Technical A!!i!tance for
Tra"e Development (6F, an" the Diagno!tic Tra"e 6ntegration St#"y
(DT6S #n"er preparation (cla#!e <(>(< a$ove(
535 K$: ss0$s
)a!e" on the TeamI! interview! with !ta+ehol"er! in Malawi, the +ey
con!traint! for PSD have $een i"entifie" a!D
7igh tran!port co!t!
Macro-economic volatility an" high capital co!t!
*imite" "ome!tic mar+et
/nrelia$le infra!tr#ct#re
6n a""ition, MalawiI! economy !#ffer! from a n#m$er of inherent
wea+ne!!e! which can only $e mitigate" thro#gh private !ector
"evelopmentD
*ac+ of foo" !afety
Depen"ency on to$acco an" "onor f#n"! for foreign e1change
An increa!ing lan" !hortage
The +ey concern! of a PSD program in Malawi !ho#l" $e to target
the!e pro$lem!(
537 R$-0%*2 Tr"*s(&r# C&s#s
*.-.1 0he Aacala &orridor
6n light of the !trategic importance of the Nacala corri"or to Malawi,
an" the !#$!tantial inve!tment! alrea"y ma"e to #pgra"e the
tran!port infra!tr#ct#re, it i! e!!ential that the relatively limite" wor+!
nee"e" to f#lly e1ploit it! potential are complete"( Completion of the
railway line will improve the potential! in the area, an" $oo!t rail an"
har$o#r tran!port( 5/ i! f#n"ing a fea!i$ility !t#"y for completion of
the !ection in Mo.am$i-#e an" ha! committe" 5/R ;& mill for
reha$ilitation( 6t i! e1pecte" that wor+! will !tart within a year(
23
)ilateral $i!tan" g'ennom NORAD for"elt pO region, lan" og $#"!'ettpo!t %&&;
NORAD
PSD in Malawi Final Report Page <>
The planne" inve!tor! conference in Septem$er %&&% for Spatial
Development in the corri"or area !ho#l" $e promote" a! an
opport#nity for intro"#ction to the $#!ine!! environment in $oth
Malawi an" Mo.am$i-#e(
*.-.! 3oads
There i! con!en!#! among !ta+ehol"er! that roa" infra!tr#ct#re
m#!t $e improve" in or"er to facilitate economic growth( 7owever,
9), NDF an" 5/ are alrea"y a""re!!ing the #pgra"ing of roa"!(
The 9orl" )an+ ha! approve" a /SC <& million cre"it towar"! roa"
maintenance an" reha$ilitation (ROMARP(
6t i! concl#"e" that there i! little !cope for Norwegian involvement in
financing the !ector at thi! !tage( S#$!tantial opport#nitie! for
Norwegian firm! e1i!t however for "elivering goo"!, wor+! or
!ervice! for the anno#nce" roa" reha$ilitation an" con!tr#ction
contract! in the !ector in the coming year!(
536 I)(r&!*2 )"%r&$%&*&)% s#">'#:
Norway i! alrea"y heavily involve" in macroeconomic policy, !trategy
an" "onor coor"ination on $#"get !#pport, a! part of it! co#ntry
programme( 7owever, performance on the !i"e of Malawi ha! $een
!low(
Since ;::@, Norway ha! provi"e" $alance of payment !#pport an"
$#"get !#pport, an" macroeconomic reform i! one of the fo#r priority
area! agree" #pon in the Memoran"#m of /n"er!tan"ing from
%&&;(
*...1 &ABS
NORAD participate! in a "onor coor"ination mechani!m (CA)S -
Common Approach to )#"get S#pport together with S6DA, DF6D
an" 5/( One con"ition for NORADP! $#"get !#pport i! to engage
more actively to !#pport capacity $#il"ing within financial
management, an" !everal intervention! are now #n"erway( S#pport
to macroeconomic reform an" financial management ha! a !trong
lin+age to improving the frame con"ition! for private !ector
"evelopment( So#n" an" !tringent p#$lic e1pen"it#re management
will event#ally re"#ce the crow"ing o#t of private !ector which at
pre!ent i! ta+ing place(
The CA)S gro#p i! al!o concerne" with "ome!tic reven#e collection
an" DF6D i! c#rrently provi"ing technical a!!i!tance to Malawi
Reven#e A#thority (MRA( Po!!i$le co-financing from NORAD i!
$eing "i!c#!!e"(
*...! &)AA
Malawi, the 9orl" )an+ an" !everal $ilateral "onor! have recently
'ointly #n"erta+en a Co#ntry Financial Acco#nta$ility A!!e!!ment
(CFAA( The a!!e!!ment cover! financial management in p#$lic,
private an" civil !ector( An action plan will $e "evelope" for the
"onor! an" the 4overnment to enhance an" coor"inate the vario#!
NORAD
PSD in Malawi Final Report Page <A
initiative! within thi! area( NORAD i! an active partner in thi! an"
!#pport i! alrea"y ongoing for the in!tit#tional co-operation $etween
the National A#"it Office an" the Swe"i!h Ri+!revi!'on!ver+et
(A#"itor 4eneral(
53G O!$r%&)*2 ')#"#&*s * #/$ -&)$s#% )"rB$#
*./.1 B=0@B== nnovation
African co#ntrie! are !lowly !eeing the $enefit! of private inve!tment
in #nconventional !ector! !#ch a! infra!tr#ct#re an" !ocial !ervice!(
Attracting private financing to "evelopment !ector! wo#l" have a
"o#$le impact in Malawi, where p#$lic-!ector over!pen"ing ha! $een
a chronic pro$lem( 7owever, there are clear in"ication! that vent#re
capital for mo"el! !#ch a! )OT an" )OO are not attracte" to Malawi
$eca#!e of the !mall !i.e of it! #tility !ector!( For e1ample, total
electricity con!#mption i! le!! than ; T9h, one-tenth of the !ale! of
Bi+en 5nergi in Norway, an" al!o le!! than half of the con!#mption
in Tan.ania an" le!! than ;&= of the con!#mption in 0am$ia(
An area of con!i"eration co#l" $e to try o#t innovative p#$lic-private
partner!hip! in Malawi, with grant-$a!e" co-financing of a""itional
amo#nt! nee"e" to achieve a tran!action given MalawiI! negative
economie!-of-!cale(
The Team ha! not ha" !#fficient time to "evelop a f#ll pro'ect
concept, $#t a po!!i$le mo"el co#l" $e $a!e" on ref#r$i!hment-an"-
operation contract! where private capital an" "onor capital are
com$ine"(
For e1ample, NORAD an" a private company co#l" f#n" initial
repair! an" a !toc+ of !pare part! for an infra!tr#ct#re pro'ect L !ay
a water an" !ewage !y!tem or an electricity "i!tri$#tion networ+( The
NORAD f#n"! wo#l" $e provi"e" on grant $a!i! while the private
inve!tor wo#l" "erive hi! income from !#cce!!f#l operation of the
!cheme over a given perio"( 6n !#ch a !cenario, the proce!! wo#l"
involve (i #pgra"ing of the a!!et!, carrie" o#t $y the inve!torD (ii a
perio" where the inve!tor operate" the !y!tem, an" wa! pai" for hi!
!#pplie! via the tariff payment! collecte" from c#!tomer!, an" (iii
event#al tran!fer of a!!et! $ac+ to the #tility( The J#p!i"eK for $oth
partie! wo#l" $e that the inve!torF!#pplier i! pai" on the $a!i! of the
act#al val#e he i! a$le to create, thro#gh "elivering !ervice! to the
c#!tomer!(
The Jprivate inve!torK co#l" $e a !trategic partner (e-#ipment
man#fact#rer, con!#lting company, etc( in co-operation with a
financial partner !#ch a! NORF/ND(
53H E*/"*%*2 r$'">'#: &9 I*9r"s#r0%#0r$
*.1.1 2nerg%
The Team recommen"! that NORAD con!i"er !#pport to the Malawi-
Mo.am$i-#e 6nterconnection( NORAD !ho#l" al!o con!i"er pro'ect!
"e!igne" to ma+e electricity !#pply more relia$le, !#ch a!
NORAD
PSD in Malawi Final Report Page <3
reha$ilitation programme! for power !tation!, "i!tri$#tion !y!tem!,
an" technical a!!i!tance(
*.1.! $rivatisation
The 9orl" )an+ ha! "evelope" a Privati.ation an" /tility Reform
pro'ect, with a SDR %;(@ mn cre"it( Co-financing po!!i$ilitie! co#l"
$e e1plore"(
539 Pr&)&#*2 F&&- S$%0r#: "*- C&))$r%"'s"#&* &9 A2r%0'#0r$
*.;.1 &ommercialisation o, Agriculture
9ith it! c#rrent lea"er!hip of the 97O, Norway wo#l" $e in a
!pecial po!ition with re!pect to a!!i!ting in rever!al of the conver!ion
of agric#lt#re lan" into to$acco lan"( A! !tate" in Chapter <(;(;,
!mallhol"er farmer! have inve!te" inten!ely in to$acco !ince the
mi"-;::&!(
The agric#lt#re !ector i! !ingle" o#t $y !ta+ehol"er! at all level! a!
the main !ector in term! of potential for growth( The -#e!tion of
analy!ing the val#e chain from pro"#ction thro#gh mar+eting,
tran!port, refining, man#fact#ring to e1port, an" i"entifying po!!i$le
entry point! for a""e" val#e effort! have al!o $een a""re!!e" $y
mo!t of the !ta+ehol"er! the team met( There i! th#! a clear
motivation an" willingne!! to e1plore potential! an" improve
performance(
Acce!! to international mar+et! an" term! of tra"e are al!o !een $y
mo!t a! e!!ential to !trengthen(
NASFAM NASFAMI! approach appear! to a""re!! +ey element! in the
MPRSP an" N6S !trategy, an" i! relevant for a large !egment of the
pop#lation of Malawi( There i! !cope for !trengthening an" po!!i$ly
al!o e1pan"ing the !ervice! of NASFAM( NORAD i! con!i"ering a
!econ" agreement with NASFAM with a total $#"get of NO8 2&
million( An apprai!al of NASFAM i! planne", an" !ho#l" $e carrie"
o#t a! !oon a! po!!i$le( *imit! to NASFAMS growth !ho#l" $e given
!pecial attention( D#e to the ri!+! involve" with rapi" growth, the
po!!i$ilitie! of wor+ing thro#gh other national organi!ation! !ho#l"
$e e1plore"( Technical cooperation with Norwegian in!tit#tion! within
the fiel" !ho#l" al!o $e con!i"ere"( Po!!i$le area! for con!i"eration
co#l" $e f#rther analy!i! of agric#lt#ral technologie!, val#e chain
a!!e!!ment an" improvement, an" mar+eting mechani!m!(
*.;.! )isheries
Nor"ic Development F#n", are e1pecte" to f#n" the reha$ilitation
an" "evelopment of the commercial fi!herie! in the So#th 9e!t Arm
of the la+e( , 6t appear! to $e !cope for an increa!e in effort! an"
catche! in the commercial fi!herie! !ector, an" a rea"y "ome!tic
mar+e" for fre!h an" proce!!e" fi!h( There !eem! to $e !cope for
increa!e" "emer!al trawling in the So#th 9e!t Arm, inve!tment in
$oat $#il"ing, !ervice! an" lan"ing facilitie! S#$!tantial information
on the la+eP! fi!herie! i! availa$le at the Fi!herie! Re!earch /nit in
Mon+ey )ay, #nfort#nately the team "i" not have the time to e1plore
NORAD
PSD in Malawi Final Report Page <@
thi! !o#rce of information( F#rther con!i"eration! of inve!tment or
!#pport to thi! !ector m#!t $e $a!e" on caref#l analy!i! of "ata, an"
$e well coor"inate" with other "onor!(
5310 Cr$"#*2 *$1 s&0r%$s &9 9&r$2* $=%/"*2$ r$!$*0$s
*.1".1 +ining
The !ector ha! $een i"entifie" in the PRSPS a! a pro-poor growth
!ector, if a""re!!ing !mall L !cale mining( Formali!ing of Mineral!
Policy, re!tr#ct#ring of the !ector an" review of the legal framewor+
are prere-#i!ite! for a !o#n" "evelopment in the mineral! !ector(
Other area! of !#pport co#l" $e mapping of the co#ntry P ! geological
re!o#rce!, an" in!tit#tional reform an" capacity $#il"ing of p#$lic mining
in!tit#tion!( 6n the TeamI! opinion, large-!cale mining will remain an
important growth vehicle an" !#pplement to the !mall-!cale mining
initiative! "e!cri$e" in the PRSP( A potential cooperation partner e1i!t!
in Department of Mine!(
*.1".! 0ourism
To#ri!m i! a promi!ing !ector for Malawi( 6t! main opport#nitie! lie in
pro"#ct "evelopment an" mar+eting of Malawi a! a co-"e!tination
within Africa ro#n"-to#r!(
The c#rrent NORAD PSD !trategy !tate! that !#pport !ho#l" not $e
provi"e" to in"ivi"#al companie! L to avoi" mar+et "i!tortion!(
MalawiI! To#ri!m A!!ociation may $e a co#nterpart for a "onor
programme( A!!i!ting the Mini!try in policy "evelopment etc( co#l"
$e an option, $#t the Team i! not certain that programme! at
Mini!terial level will $e effective for ta!+! !#ch a! mar+eting an"
pro"#ct "evelopment( F#rther i"entification of a wor+ing interme"iary
i! nee"e" $efore ta+ing any initiative! in the !ector( Malawi ha!
in"icate" that it nee"! !#pport to e"#cation in to#ri!m an" travel-
!ector management(
*.1".3 0rade relations
Malawi ha! a fragmente" an" a"mini!tratively "eman"ing framewor+
of $oth $ilateral an" international tra"e agreement!( 9TO ha!
clearly in"icate" that Malawi "oe! not have the capacity or
e1perience to f#lly participate in an" ta+e a"vantage of 9TO an"
other tra"e relate" agreement! an" in!tit#tion!( Malawi th#! face!
to#gh challenge! in negotiating, !treamlining an" complying with the
many agreement!, an" may not have the capacity to "o !o to their
$e!t a"vantage( 6n the conte1t of the 6ntegrate" Framewor+ (6F for
Technical A!!i!tance for Tra"e Development in *DCP!, there may $e
!cope for Norwegian TA !#pport to facilitate preparation! an"
negotiation of MalawiP! po!ition in relation to one or !everal tra"e
agreement!(
NORAD
PSD in Malawi Final Report Page <:
5311 C0r>*2 '"*- s/&r#"2$ +&#/$r (r&(&s"'s,
*.11.1 $roblem de,inition
The increa!ing lan" !hortage in Malawi can only $e met $y
increa!ing pro"#ctivity on c#ltivate" lan", an" $y "eveloping
alternative !o#rce! of employment an" income for the #r$an
pop#lation( Thi! will re-#ire acce!! to cre"it, for irrigation an"
fertili!er an" other !ea!onal financing in the agric#lt#re !ector, an"
for creation of new employment opport#nitie! within man#fact#ring
an" !ervice!( 6n thi! chapter, we pre!ent a n#m$er of option! for
!#pport that will a""re!! the!e i!!#e! in a $roa" !en!e(
*.11.! +icro ,inance
Micro finance !cheme! are !#pporte" i(a( $y DF6D( The environment
for micro-cre"it in Malawi i! "iffic#lt, with wil"ly fl#ct#ating real
intere!t rate! (!ee Chapter <(<(2( Provi"er! of micro-cre"it provi"er!
face a m#ltit#"e of pro$lem! to $ecome !#!taina$le( 7owever, given
MalawiI! n#mero#! "evelopment challenge! it i! an area that
"e!erve! clo!er con!i"eration( 4overnment of Malawi ha! recently
complete" a micro finance policy paper( Co-financing e(g( with
DF6DI! Malawi Micro Finance Pro'ect or Micro Finance 51pan!ion
(F6NCA co#l" $e envi!age", $#t the team ha! not ha! !#fficient time
to review all option!(
*.11.3 Business Development Services
Another potential area of intervention within thi! fiel" co#l" $e
$#!ine!! "evelopment !ervice! !#ch a! a"vi!ory agencie! an"
facilitating $#rea#1 for SM5!( There i! no !trong tra"ition for !#ch
!ervice! in Malawi L an agency !#ch a! M6PA i! mo!tly concerne"
with more formal i!!#e! an" with me"i#m-to large-!i.e" companie!(
The 5/-f#n"e" 5)AS program i! an e1ample of new !ervice!
targete" "irectly towar"! SM5!( The 9orl" )an+ an" /N6DO have
al!o propo!e" PSD program with $#!ine!! !ervice component!(
*.11.* $SD additions to e9isting A=3AD support
NORADI! main priority area! in Malawi L health, 76BFA6DS, goo"
governance, an" macro-economic reform! L "o not imme"iately len"
them!elve! to PSD-motivate" e1pan!ion!( The Team met with
repre!entative! of Central Me"ical Store, to e1plore opport#nitie!
!#ch a! local pro"#ction of !imple me"ical !#pplie!( 7owever, thi!
"oe! not !eem very via$le in Malawi at the moment, "#e to -#ality
re-#irement! an" relatively low "eman"(
The entire !#pport to macro-economic reform! will $enefit Malawian
$#!ine!!, if !#cce!!f#l( 4oo" governance i! al!o an important i!!#e
for private companie!, altho#gh governance i! not regar"e" to $e a!
cr#cial an i!!#e among Malawian $#!ine!!men a! e(g( in Tan.ania(
The Team nonethele!! $elieve! that PSD co#l" $e intro"#ce" a! a
cro!!-c#tting i!!#e in the Malawian-Norwegian co-operation
"ialog#e( Thi! i! in line with the co#ntry !trategy (%&&;-&> an" co#l"
NORAD
PSD in Malawi Final Report Page 2&
al!o pave the gro#n" for increa!e" PSD co-operation in !#$!e-#ent
perio"!(
*.11.- Demand-driven $SD 6,und8
An alternative approach to the propo!al! li!te" a$ove wo#l" $e to
provi"e a financing mechani!m $a!e" on application! from Malawian
companie! an" organi!ation!, ear-mar+e" for PSD i!!#e!( A wi"e
range of propo!al! co#l" potentially -#alify, from financial 'o#rnali!m
an" economic re!earch to mar+eting, pro"#ct certification an" any
other i!!#e that wo#l" fall #n"er a PSD #m$rella to $e more
preci!ely "efine" at a later !tage(
Management of a Jf#n"K !#ch a! thi! !ho#l" prefera$ly $e
o#t!o#rce" to a tr#!tworthy $an+, in!tit#te or !imilar interme"iary( 6n
line with NORADI! PSD policy, mar+et "i!tortion! m#!t $e avoi"e"
thro#gh limitation! on !#pport to in"ivi"#al companie!(
*.11.. 2ducation
Malawi ha! a !hortage of !+ille" la$o#r, an" import! la$o#r at time!(
5"#cation co#l" therefore $e a potential area of co-operation, $#t
wa! not e1plore" f#rther "#ring the !t#"y $eca#!e re!pon"ent! from
the private !ector "i" not rate the h#man re!o#rce! i!!#e among the
mo!t important con!traint!(
5312 G$*-$r ss0$s
4en"er, 76BFA6DS an" 5nvironment are i"entifie" a! cro!!-c#tting
i!!#e! in the PRSP( Other "onor! who !#pport PSD have al!o
invo+e" gen"er a! a cro!!-c#tting i!!#e( 6n the TeamI! opinion, thi!
!ho#l" al!o $e the approach in a NORAD !#pporte" PSD
programme, if la#nche"(
NORAD
PSD in Malawi Final Report Page 2;
7 POTENTIAL FOR CO6OPERATION WITH
NORWEGIAN COMPANIES AND INSTITUTIONS
731 P&#$*#"' r&'$s
The mini!c#le !i.e of the Malawi economy (only /SC ;(@ $illionD a
!maller amo#nt than the ann#al t#rnover of Den nor!+e )an+ an"
it! lan"loc+e" location, to which tran!port acce!! i! e1pen!ive, are
evi"ence that a $roa" co-operation $etween Malawi an" Norwegian
companie! !ho#l" not $e e1pecte"( 7owever, opport#nitie! for
$#!ine!! in !electe", !peciali!t area! "o e1i!t(
Norwegian companie! an" in!tit#tion! can play three f#n"amentally
"ifferent role! in MalawiI! PSD !ectorD
A! e1porter! an" importer! of goo"! an" !ervice!, on
commercial term!D
A! inve!tor! in local $#!ine!!D
A! partner! in "evelopment co-operation program! for
technology tran!fer, etc(
Some of the!e po!!i$ilitie! are "i!c#!!e" $elow(
732 E=(&r#s #& "*- I)(&r#s 9r&) M"'"1
-.!.1 0he Donor +arket
The "onor mar+et i! pro$a$ly the mo!t relevant area of $#!ine!! for
Norwegian companie!( 6t i! fairly pre"icta$le, an" macro-economic
factor! !#ch a! e1change rate an" price fl#ct#ation! are le!!
infl#ential(
Official Development A!!i!tance (ODA to Malawi increa!e" from
/SC A2 million in ;:3> to /SC 23& million in ;::@(
Ai" to Malawi primarily goe! to general government con!#mption
an" only to a le!!er e1tent to !pecific inve!tment pro'ect!( A
cohe!ive overview of the ai" mar+et ha! not $een availa$le(
7owever, an in"ication can $e fo#n" in the plan! for #!ing the 76PC
"e$t-relief f#n"!, where priority i! towar"! health care (partic#larly
p#rcha!e of "r#g!, e"#cation (teaching material!, water ($orehole
con!tr#ction an" roa"!(
The "onor mar+et i! intere!ting for Norwegian !#pplier! of me"ical
e-#ipment, electrical e-#ipment, roa" con!tr#ction (partic#larly if the
Nacala Corri"or pro'ect i! la#nche", water !#pply !y!tem!,
con!#lting !ervice!, an" other pro"#ct! an" !ervice!(
Norway ha! al!o !#pporte" the energy !ector thro#gh the *ilongwe
Reha$ilitation an" Ref#r$i!hment of the Di!tri$#tion Sy!tem Pro'ect(
The programme co#l" $e finali!e" thro#gh the thir" pha!e(
NORAD
PSD in Malawi Final Report Page 2%
Some pro'ect! in the energy !ector are commercial via$le( 5ven if
Malawi an" 5SCOM have a !erio#! "e$t a commercial financial
arrangement might in !ome ca!e! $e con!i"ere"( 6t i! however a
con"ition that Malawi get! acce!! to the rea!ona$le Norwegian
g#arantee arrangement for *DC co#ntrie!(
-.!.! =ther e9ports
There are few mentiona$le e1port opport#nitie! to Malawi o#t!i"e of
the "onor !y!tem(
-.!.3 mports ,rom +ala4i
Malawi ha! yet to "evelop a f#ll #n"er!tan"ing of the opport#nitie!
provi"e" $y the 5)A an" A4OA "#ty reform!( Norwegian importer!
who wi!h to !t#"y !#ch po!!i$ilitie! L an" po!!i$ly tran!fer !+ill!
along the way L can $enefit from e1i!ting $#"getary provi!ion! within
NORAD( 6n an early pha!e, importer! may nee" to provi"e active
a"vice on pro"#ct "evelopment, certification, pac+aging, an" !imilar
i!!#e!( The 5)A an" A4OA !y!tem! have relive" the c#!tom!
$arrier!, $#t mar+eting an" pro"#ct--#ality $arrier! !till e1i!t( A
Norwegian company i! alrea"y e1ploring opport#nitie! within tra"e in
animal fee"!(
734 I*!$s#)$*#s * M"'"1
-.3.1 7eneral
Previo#! intere!t 6t i! "oc#mente" el!ewhere in thi! report that FD6 i! low in Malawi(
MalawiI! JanonymityK a! a "e!tination for inve!tment can $e rea"
clearly from the !mall portfolio! of company-oriente" PSD financing(
NORAD ha! only provi"e" !#pport to three pre-fea!i$ility !t#"ie! to
companie! intere!te" in !tarting #p $#!ine!! in Malawi( None of the
propo!al! have materiali!e"( A Norwegian company involve" in
!awmilling (Tree Farm! AS ha! with"rawn from Malawi( Telenor a!a
con!i"er! a pro'ect within the telecomm#nication! !ector(
Other DF6I! 6FCI! portfolio in Malawi i! only /SC <(> million, concentrate" in the
financial !ector an" !mallFme"i#m-!i.e" enterpri!e! in to#ri!m,
agri$#!ine!! an" health care( 6F/ (Denmar+ ha! one inve!tment,
"ating from ;:@A( S95DF/ND (Swe"en ha! no inve!tment in
MalawiD neither ha! NORF/ND( FMO (the Netherlan"! ha! no
inve!tment in Malawi( CDC (/nite" 8ing"om ha! ma"e three
inve!tment! L in tea, cement, an" agri$#!ine!!( NORSAD Agency
ha! one inve!tment in Malawi, within the tim$er $#!ine!!(
)a!e" on thi! e1perience, one !ho#l" not e1pect a $roa" inve!tment
co-operation $etween Malawi an" Norway( S#ch pro'ect! will remain
fragmente" an" confine" to !peciali!t !ector!(
-.3.! 2lectric $o4er
The 4oM are opening #p for 6n"epen"ent Power Pro"#cer! (6PP!
an" "i!tri$#tor! (6PD!( The private !ector in Malawi i! wea+ an" not
very pro-active, !tr#ggling with the micro economy challenge! an"
lac+ of infra!tr#ct#re in potential inve!tment area!( 7owever, the
NORAD
PSD in Malawi Final Report Page 2<
co#ntry ha! intere!ting potential! in "ifferent !ector!( Acce!! to
electricity i! normally a con"ition an" con!e-#ently electricity ha! a
high mar+et potential( To open #p tra"e thro#gh an interconnection
to the SAPP !ho#l" ma+e any economical analy!e! more intere!ting
for potential inve!tor!(
Norwegian companie! have earlier inve!tigate" the po!!i$ilitie! for
e!ta$li!hing an" inve!ting in "i!tri$#tion companie! in Africa( An
active an" intere!te" a"mini!trator will $e re-#ire" to !et #p an
arrangement with a po!!i$le local partner( A"mini!tration! of $oth
integrate" an"For i!olate" !y!tem! are a!+e" for( The po!!i$ilitie!
!ho#l" $e "i!c#!!e" with the Norwegian "i!tri$#tion #tilitie!(
A new mar+et priming programme for !olar energy #n"er R#ral
5lectrification initiative! anticipate! that a f#rther ;&(&&& PB-!y!tem!
will $e in!talle" an" the non-wor+ing !y!tem! reha$ilitate" in the
ne1t five year! in an attempt to increa!e acce!! to electricity in r#ral
area!(
%2
A profe!!ional Malawi $a!e" !ervicingFa!!em$lingF!#pplying
company !eem! to $e the an!wer! an" an opport#nity to "eal with
the earlier mentione" e1i!ting pro$lem!(
-.3.3 &onsulting services
Con!#lting !ervice! in Malawi are "irecte" at the "onor mar+et, $#t
e!ta$li!hing a local con!#lting company co#l" offer a"vantage! over
provi"ing !ervice! from a Norway-$a!e" office, partic#larly with
re!pect to price( There are not many international con!#lting
companie! in Malawi to"ay( 6n partic#lar, there co#l" $e a mar+et for
all-ro#n" an" generali!t a"vice on "evelopment-relate" i!!#e! !#ch
a! macro-economy, government policy, PSD i!!#e!, etc( A partic#lar
feat#re of Malawi, which the Team e1perience" "#ring e1ec#tion of
thi! !t#"y, i! the lac+ of relia$le an" con!i!tent information(
-.3.* Wood processing
Aro#n" one thir" of Malawi i! covere" with fore!t( A Norwegian
company (Tree Farm! AFS wa! involve" in a mo$ile !awmill #ntil
;:::, $#t with"rew "#e to a foc#! on Tan.ania( Nor!a"I! only
inve!tment in Malawi i! al!o in the woo" proce!!ing !ector( The
pro!pect! are not e1tremely favo#ra$le, however( 51port! from
Malawi are virt#ally r#le" o#t "#e to the "i!tance to over!ea!
mar+et!, an" the "ome!tic mar+et i! !mall with low price!( The woo"
proce!!ing !ector i! therefore an e1ample of the typical pro$lem!
that face Malawi(
-.3.- =ther areas
Tran!port, $an+ing an" agro-proce!!ing are #n"er"evelope" !ector!
in Malawi, $#t Norway ha! few internationally oriente" companie!(
24
4oMG 5nergy 9hite Paper an" Power Sector Reform Strategy(
NORAD
PSD in Malawi Final Report Page 22
735 D$!$'&()$*# ("r#*$rs/(s
-.*.1 De,inition
Thi! !ection refer! to the #!e of Norwegian competence in
"evelopment pro'ect!, initiate" $y NORAD( Norwegian !#pplie! to
other in!tit#tional "evelopment pro'ect! f#n"e" $y other "onor
agencie! are !een a! a part of the commercial J"onor mar+etK(
-.*.! 0ransport
Norwegian con!#lting companie! an" in!tit#tion! co#l" provi"e
a"vice on in!tit#tional !trengthening relate" to the Nacala corri"or
pro'ect an" other roa" pro'ect!, if !#pporte" $y Norway( Thi! co#l"
relate to "evelopment of environmental !afeg#ar"!, reven#e
collection, traffic !afety, an" other i!!#e!(
-.*.3 +acroeconomic control
Norwegian e1pert! co#l" contri$#te to p#$lic e1pen"it#re review!
an" other macroeconomic planning i!!#e!( Plan! for !#pport to an
in!tit#tional co-operation $etween National Stati!tic! Office an"
Stati!tic! Norway are at an a"vance" !tage, with reference to the
nee" to !trengthen the !tati!tical $a!e in Malawi( Stati!tic! Norway
al!o inten"! to a!!i!t National 5conomic Co#ncil an" Mini!try of
Finance an" 5conomic Planning in their wor+ on economic mo"elling
an" national acco#nt!, with po!!i$le cooperation from other
Norwegian in!tit#tion! li+e the Norwegian Mini!try of Finance(
-.*.* 2nerg% polic% development and regulation
Norwegian in!tit#tion! an" companie! have "#ring the la!t year!
$#ilt #p goo" rep#tation! in $#il"ing #p, reorgani!ing an"
re!tr#ct#ring #tilitie! an" in!tit#tion!, incl#"ing tran!fer of +now-how
an" policie!( NORAD ha! file" many !#cce!!f#l e1ample! thro#gh
their in!tit#tional co-operation programme! an" other a!!i!tance
initiative! in Angola, Malawi, Mo.am$i-#e an" other SADC co#ntrie!(
/tilitie!, mini!trie! an" "irectorate! have $enefite" from thi!
a!!i!tance( Their contri$#tion ha! improve" the performance of the
"ifferent entitie! a! well a! in"ivi"#al! in a"mini!trating an" !erving a
mo"ern energy !ector( 9e will con!e-#ently concl#"e that there i! a
potential for the Norwegian $roa" energy !ector to ta+e part in policy
"evelopment an" reg#lation!(
-.*.- 0rade relations
Norwegian e1perti!e in international tra"e regime! !#ch a! the 9TO
co#l" $e invo+e" to a!!i!t Malawi( The co#ntry ha! a partic#lar nee"
to $e informe" of any international tra"e reform! that affect the
to$acco mar+et(
-.*.. 0ourism
Norwegian in!tit#tion! can play a role in "eveloping e"#cation
program! for travel-!ector management, if !#ch an initiative i!
!#pporte"(
NORAD
PSD in Malawi Final Report Page 2>
-.*./ )inancial sector
Norwegian con!#ltant! an" N4O! with e1perti!e in micro-finance
co#l" provi"e tran!fer of +now-how within thi! fiel", altho#gh the
n#m$er of -#alifie" Norwegian a"vi!or! i! limite"( Al!o, in!tit#tion!
familiar with $#!ine!! "evelopment co#l" $e #!e" to "efine the
mo"alitie! of JPSD f#n"K a! "e!cri$e" in Chapter 2(
-.*.1 )isheries and agriculture
The re!o#rce! of !everal Norwegian in!tit#tion! with international
e1perience in fi!herie! an" agric#lt#re co#l" $e "rawn #pon for
programme! within the!e !ector!(
-.*.; +ining
Norwegian competence co#l" $e relevant e(g( within re!o#rce
mapping, an" within the "e!ign of licen!ing an" ta1ation regime!(
NORAD
PSD in Malawi Final Report Page 2A
ANNEX 1
MAP OF MALAWI

N"%"'" C&rr-&r
#& I*-"* O%$"*
!" M&D")>C0$
Pr&(&s$- (&1$r
#r"*s)ss&* '*$
M&D")>C0$6M"'"1
power
tran!mi!!ion line
Mo.am$i-#e-
Malawi
NORAD
PSD in Malawi Final Report
ANNEX 2
REFERENCESABIBLIOGRAPHY
SADC %&&;G JMining Sector Strategic Development, Final Draft, JSADC Mining Sector
Coor"ination /nit, A#g#!t 2, %&&;(
DF6D %&&%G JAi"e Memoir, CA)S Ann#al ReviewK(
National 5conomic Co#ncil, Strategic Planning Divi!ionG JAlternative! to To$acco for Malawi,
Bol( ;, Agric#lt#re an" Man#fact#ring(
National 5conomic Co#ncil, Strategic Planning Divi!ionG JAlternative! to To$acco for Malawi,
Bol( %, Mining To#ri!m an" Cro!!-C#tting 6!!#e!(
Magit Nolan 6D6, %&&;( JMalawi Private Sector Strategy 6nitiativeK(
MF5P %&&%G JMalawi Poverty Re"#ction Strategy Paper, Final Draft, April %&&%K, Mini!try of
Finance an" 5conomic Planning, Malawi(
9orl" )an+ %&&%G JPerformance A!!e!!ment Report, Malawi fi!herie! Development Pro'ect,
Cre"it no %%%> MA6K, March %&&%(
6mani Development %&&;G JOverview of MalawiI! Tra"e Relation! )oth Regionally an"
6nternationallyK( Prepare" $y 6mani Development Malawi *t" for the Royal Norwegian
5m$a!!y, Han#ary %&&;(
NORAD %&&&G J7an"$oo+ in 4en"er an" 5mpowerment A!!e!!mentK(
NORAD %&&&G Appropriation Doc#ment M96 %A&< NASFAM, Agreement no(;(
NORAD %&&;G JStrategy for the Norwegian Development Cooperation with Malawi %&&; L
%&&>,
Mini!try of Foreign Affair! Norway ;:::GKStrategy for Norwegian S#pport of Private Sector
Development in Developing Co#ntrie!K(
Nacala Development Secretariat /nit %&&;G JNacala Development Corri"or, a De!criptive
Doc#ment an" Progre!! ReportK(
4oM %&&%G JMalawi 5nergy Policy 9hite PaperK, Min( of Nat#ral Re!o#rce! an"
5nvironmental Affair!, Department of 5nergy Affari!, March %&&%(
4oM %&&%G JPower Sector Reform StrategyK, Min( of Nat#ral Re!o#rce! an" 5nvironmental
Affair!, Department of 5nergy Affair!, Malawi(
4oM MMG Paper on po!!i$le area! of cooperation in in"#!trial "evelopment( Mini!try of
Commerce an" 6n"#!try, Malawi(
4oM %&&&G Towar"! Re!pon!i$le Development of the Fi!herie! Sector in Malawi,
Department of Fi!herie!, Malawi, March %&&&(
/N %&&;G JCo#ntry Pre!entation for MalawiK, thir" /nite" Nation! Conference for *ea!t
"evelope" Co#ntrie!, May %&&;(
NORAD
PSD in Malawi Final Report
Agric#lt#ral Mar+et! in )enin an" MalawiG Operation an" Performance of Tra"er!(
6nternational Foo" Policy Re!earch 6n!tit#te, Decem$er %&&;
Memoran"#m of The Pre!i"ent of the 6nternational Development A!!ociation to the
51ec#tive Director! on a Co#ntry A!!i!tance Strategy of the 9orl" )an+ 4ro#p for the
Rep#$lic of Malawi, A#g#!t 2, ;::@
5R* %&&%G O$!ervation! on )#!ine!! O$!tacle! Confronting Man#fact#rer! in Malawi an"
Recommen"ation! for Action, 5conomic Re!o#rce! *imite" (Malawi, A#g#!t F Septem$er
%&&&
9TO %&&%D Tra"e Policy Review,
Nacala Development Corri"or, A De!criptive Doc#ment an" Progre!! Report, Nacala
Development Corri"or Secretariat /nit, %&&;(
/NDP %&&;G Malawi National 7#man Development Report %&&;, /NDP Malawi
Men. A( (e"( ;::>G The Fi!hery Potential an" Pro"#ctivity of the Pelagic 0one of *a+e
MalawiFNia!!a( Chatham, /8G Nat#ral Re!o#rce! 6n!tit#te, Over!ea! Development
A"mini!tration(
Private Sector Development Strategy, )a!eline S#rvey, Report S#$mitte" To Mini!try Of
Commerce an" 6n"#!try, Agric#lt#ral Policy Re!earch /nit, )#n"a College Of Agric#lt#re
Novem$er, %&&;
9TO ;:::G JFramewor+ Convention on To$acco Control, A primerK(
6/FF6T4AF)AT %&&& - Chil" *a$o#r in the To$acco 4rowing Sector in Africa, *(5l"ring et(al(
Nairo$i, Octo$er %&&&(Fafo-paper %&&&G%;(
4OM %&&%G Private Sector Development Pro'ect Concept Doc#ment( Mini!try of Commerce
an" 6n"#!try, Han#ary %&&%(
NORAD
PSD in Malawi Final Report
LIST OF INSTITUTIONS MET A**$= 4
I*s##0#&* C&*#"%# P$rs&* A--r$ss P/&*$AC$''( F"= E6)"'
)riti!h 7igh Commi!!ion *ilongwe Mr( Norman *ing
7igh Commi!!ioner
P(O( $o1 <&&2% *ilongwe < 33% 2&& 33% A>3 $hcVwi!!(co(mw
)#n"a College Dr( 5mman#el 8a#n"a
Senior *ect#rer A-#ac#lt#re
)#n"a College
)o1 %;2, *ilongwe
e+a#n"aVmalawi(net
Central Me"ical Store! Mr( 4( 8a"ewere
Chief Pharmaci!t
Cl#$ Ma+o+ola Mr( N( D#m$a
4eneral Manager
P(O()o1 >: Mangochi >:2 %22
CellG @<& &33
>:2 2;3 cl#$ma+Vmalawi(net
DF6D M!( Tr#"i Cra$$
Dep#ty Programme Manager
)riti!h 7igh Commi!!ion
P(O( )o1 <&&2%
*ilongwe <
33% 2&&
cellG@%> 3%;
33% A>3 t-cra$$V"fi"(gov(#+
5SCOM *t" Mr( D( van 9y+
Chief 51ec#tive
Mr T( 9 Chi!ale
Dir( Di!tri$#tion W C#!tomer!
5SCOM 7o#!e, 7aile Sela!!ie Roa",
P(O()o1 %&23
)lantyre
A%% &&&
CellG @2< 32&
CellG @%< @%@
A%< >A& "vanwy+Ve!commw(com
5#ropean /nion Mr 6ngmar Stelter
5conomic Section
5#ropa 7o#!e, P(O( )o1 <&;&%, *ilongwe 33< ;:: 33< ><2 6ngmar(!telterV"elmwi(cec(e#(int
6lovo S#gar
The S#gar Corporation of Malawi *t"(
Mr )( Stewar"!on Private )ag >@&, *im$e
Ch#rchill Roa", *im$e
A2< :@@ A2 &3A; $!tewar"!onVillovo(co(.a
6mani Development Malawi *t"( Mr( H( Mc4rath 6mani 7o#!e, ;; Cow *ane, )C A%@,
P(O( )o1 %@3< )lantyre
A3% @<&F :A;
cellG@%3 2@%
A32 >A& imanimalawiV!"np(org(mw
8a"ale Con!#ltant! Mr( H( Agar
Director
;; Cow *ane, Man"ala,
P(O( )o1 %&;: )lantyre
A3% :<<
cellG@%< AA:
A3< &%%
*O6TA 6nve!tment )an+ *t"( Mr( Charle! 7( De )( Carey *oita 7o#!e,
Cnr( Bictoria Av( W 7en"er!on Str(
P( )ag <@: Chichiri, )lantyre <
A%% A@;
cellG @<2 %2%
A%% A@< ccareyVloita(malawi(net
Malawi Confe"eration of Cham$er! of
Commerce an" 6n"#!try, MCCC6
Mr( H(7( 8oreia-Mpat!a
Pre!i"ent
P(O( )o1 %>@ )lantyre A3; :@@
CellG @%@ 3@;
A3; ;23 mcciVeomw(net
Malawi Congre!! of Tra"e /nion!,
MCT/
Malawi Development Corporation,
MDC
Mr( ?otam *ongwe
Director of Operation!
MDC 7o#!e,
P(O( )o1 >AA, )lantyre
A%& ;&& A%& >@2 m"cgmVmalawi(net
Malawi 6nve!tment Promotion Agency
M6PA
Mr( A( 8a$ele
4eneral Manager
A-#ari#! 7o#!e
P()ag <&% *ilongwe <
33& @&&
cellG @2; 2:<
33; 3@; mipallVmalawi(net
Malawi Stoc+ 51change Mr( Mpingan'ira
Managing Director
Ol" Re!erve )an+ )#il"ing, Bictoria Ave(
P()ag %3&, )lantyre
A%2 %<< A%< A<A m!eVwi!!mw(com
NORAD
PSD in Malawi Final Report
MA*D5CO Fi!herie! Mr( H(7( Mga!a
Operation! Manager
)o1 2> Mangochi >@2 <&&FA%A
CellG @%@ ::3
>@2 3%2 mal"ecoVmalawi(net
MAN6CA Malawi Mr( A( Chit!ime
Managing Director
Ma+ata 6n"#!trial Site, Mc*eo" Roa",
P(O( )o1 2A& )lantyre
A3A >AA
CellG @%% 233
A3; %:3 achit!imeVmanica(malawi(
net
Man#fact#rer! A!!ociation of Malawi Mr( Peter )arratt
Managing Director
P(O()o1 <&&3, Ali 7a!!an Mwinyi R"(
Chichiri, )lantyre <
A3; 3%%
CellG :>& <AA
A3; 2@A peter$arrattVafrica-
online(net
Mini!try of Commerce an" 6n"#!try Mr( C(C( 8achi.a
Director of in"#!try
Mr( 4( M+an"awire
Director of Tra"e
4emini ho#!e
P(O()o1 <&<AA Capital City
*ilongwe <
332 &@:
CellG @A> 2A3
@2% &23
33& A@& minciVmalawi(net
Mini!try of Finance an" 5conomic
Planning
Mr So+o, Dep#ty Chief 5con(
Mr 8amphale, Dep#ty
Director
Mr Here, Dep#ty Chief 5con
Mr Sitimawine
P(O()o1 <&&2: Capital 7ill, *ilongwe < 3@: <>>
3@: 22&
3@: ;3< FinanceVmin(finance(!n"p(org(
mw
Mini!try of Nat#ral Re!o#rce! W
5nvironmental Affair!,
Department of Fi!herie!
Mr( 7( Chipongwe
Planning Officer
Mr S( Mapila
Director
P()ag <>& *ilongwe < 3@: 2@@F2A<
CellG @3% @@%
3@@ A@: natre!o#rce!Vmalawi(net
Department of Mine! Mr( 4(9(P( Mal#nga
Director
Mr 5(S( 8a!e+o,
Ag Director of Mine!
P(O()o1 %>; *ilongwe 3>2 3@:
CellG @%: 3%2
3>2 3:< gwpmVV!"np(org(mw
Department of 5nergy Mr( Chitenye
Dep#ty Director of 5nergy
Mini!try of 9or+! an" Tran!port
Nacala Development Corri"or
Mr( 9ilfre" Ali
Pro'ect Manager
3@@ 3%A
CellG @<2 %A:
3@: <%@ TimigraVeomw(net
National 5conomic Co#ncil Dr M( 8#teng#le
Director Development
Capital 7ill, P(O()o1 <&;<A, *ilongwe < 3@@ @@@ 3@@ %23 8#teng#lemVmalawi(gov(m
w
National 6n!#rance Company , N6CO Mr( F( Ml#!#
Managing Director
Mr( T( Daniel!
N6CO 7o#!e, Stewart Street,
P(O()o1 >&; )lantyre
A%% A:: A%% <A2 flml#!#Vmalawi(net
National Smallhol"er Farmer!
A!!ociation of Malawi, NASFAM
Dr( D( Chi$onga
4eneral Manager
Mr( 8ali 0#l#
Regional Manager So#th
St( Martin! ho#!e, off 6n"epen"ence Drive,
City Centre, P(O( )o1 <& 3;A, *ilongwe <
33% @AA 33& @>@ gmVna!fam(malawi(net
Nor!+ 7y"ro Malawi Pvt( *t" M!( Bictoria 8eelan
Managing Director
Plot %:F;%& A#ction Floor R"( 8anengo
P(O()o1 <;<&; *ilongwe <
3;& %:%F&&:
CellG @%< &>A
3;& ;@>
3;; %>%
hy"roVmalawi(net
victoria+eelanVeomw(net
Nyi+a Chemical *t"( Mr( Peter n+ata
Managing Director
Chipem$ere 7ighway, Ma!elema
P( )ag 2<> Chichiri, )lantyre <
A2> A&& A2< 3%@ nyi+achemV!"np(org(mw
Pac+aging 6n"#!trie! Malawi *t" Mr( S(A( 6taye
Managing Director
P(O( )o1 <&><< Chichiri
)lantyre <
A3& 2><
CellG @%% ;@3
A3; %@< !itayeVmalawi(net
NORAD
PSD in Malawi Final Report
Pre!! Corporation *t"( Mr( M(A(P( Chi+aon"a
4ro#p Chief 51ec#tive
Mr C(9( 8in"inger
Dep#ty 4ro#p Chief 51ec(
Mr D(S(M( 8am$a#wa
4ro#p 51ec#tive Director
Chayam$a )#il"ing, Bictoria Ave(
P(O( )o1 ;%%3, )lantyre
A%2 %<A
CellG :A2 @@@
A%2 @>3 mapcVpre!!corp(com
Royal Norwegian 5m$a!!y Mr( Aril" S+Ora
Fir!t Secretary
Arwa ho#!e, City Centre,
P()ag ) <%< *ilongwe <
322 %;;
cellG @<> 3>;
3%% @2> aril"(!+araVnora"(no
Society of Acco#ntant! of Malawi
(SOCAM
Mr 7(C( Ma.engera
51ec#tive Director
P(O()o1 ;
)lantyre
A;& <&; A%2 <;%
National 5conomic Co#ncil Dr M( 8#teng#le
Director Development
Capital 7ill, P(O()o1 <&;<A, *ilongwe < 3@@ @@@ 3@@ %23 8#teng#lemVmalawi(gov(m
w
The 9orl" )an+ 9a!hington M!( *#"mila )#ten+o
Sr( Financial Analy!t
5nergy Team, Africa Region
9) 9a!hington %&% 23< %A<& %&% 23<
>;%<
l$#ten+oVwolr"$an+(org
The 9orl" )an+ Malawi Office Mr( T(4(Chapon"a
Co#ntry Office 5conomi!t
The 9orl" )an+ Malawi 7o#!e
P(O()o1 <&>>3 *ilongwe <
33& A;;
CellG @%@ <<3
33; ;>@
33< :&@
tchapon"aVworl"$an+(org
To$acco A!!ociation of Malawi, TAMA Mr( S(?(*( Chiram$o
51ec#tive Secretary
P(O()o1 <;<A&, Capital City, *ilongwe < 33< &::F%3A
CellG @%2 @>@
33< 2:< tamaVeomw(net
To$acco 51porter! A!!ociation of
Malawi *t"
Mr( 7( M( M$ale
4eneral Manager
P( )ag 2&<, 8anengo, *ilongwe 2 3;& AA<FAA@ 3;& AA@ to$acco-
e1porter!V!"np(org(mw
/NDP Malawi Mr( H( 9ayem
5conomic A"vi!or
P(O()o1 <&;<> *ilongwe < 33< >&&
CellG @<@ <@A
33< A<3 'ohn(a(wayemV#n"p(org
/nite" Nation! /niver!ity, Fi!herie! Training
Programme, Marine Re!earch 6n!tit#te,
Mr( T( TQma!!on (Ph(D(
Programme "irector
S+Rlagata 2, Rey+'avS+, 6C5*AND X<>2 >>% &%2& X<>2 >A%
<3:&
t#miVhafro(i!
/SA6D Malawi Mr( D( A( Smith 7ea" of
Programme 4ro#p
P(O()o1 <&2>>, *ilongwe < 33% 2>> 33< ;@; Dw!mithV#!ai"(gov
NOT5G Malawi i! in the proce!! of changing it! telephone prefi1e!( For fi1e"-line n#m$er!, the "igit ; will prece"e the n#m$er! !tate" $elow(
For cell#lar phone!, the "igit @ will prece"e the pre!ent n#m$er!(
The international prefi1 for Malawi i! %A>(
NORAD
PSD in Malawi Final Report
ANNEX 4
Terms of Reference
Study on
Private Sector Development (PSD) and Prospects for Norweian
Trade and !nvestment !nterests in "alawi (p#ase $)%
&ac'round
As part of the renewed emphasis on private sector development in its contries of co!
operation, "#$A% will, to&ether with "orwe&ian trade and indstr', nderta(e a two!
phased std' on )*% in +alawi, )hase - will focs on the ena.lin& environment for )*%
incldin& investment climate and private sector development policies as well as ph'sical and
social infrastrctre, and will ta(e into consideration present areas of co!operation and the
efforts of other donors, -t will inclde an assessment of areas of co!operation where
"orwe&ian private sector or&ani/ations or enterprises can enhance the development effects
in terms of povert' redction, )hase -- will assess investment or commercial opportnities
for "orwe&ian enterprises, not restricted to "orwe&ian 0overnmental development co!
operation, 1his 1o$ covers phase -,
-n phase one of the std' there is a need to e2plore the possi.ilities and constraints for .road
.ased economic &rowth in primar', secondar' and tertiar' sectors on a &eneral .asis and
within the &idelines &iven in the *trate&' for "orwe&ian *pport of )rivate *ector
%evelopment in %evelopin& 3ontries, %e consideration mst .e &iven to +alawis
national policies and national strate&ies, incldin& the )overt' $edction *trate&' )apers,
1he std' ma' consider new areas of co!operation .etween +alawi and "orwa' .e'ond the
sectors stated in the +emorandms of 4nderstandin& and other a&reements .etween the
two contries, if relevant, Areas of consideration in this respect are areas representin&
o.stacles for )*% where "orwa' ma' have special competence, "#$A% has the overall
responsi.ilit' for phase -, An adviser from the "orwe&ian trade and indstr' will participate,
1he o.5ective of phase two is to std' the possi.ilities for enhanced "orwe&ian investments
and trade relations with +alawi, )hase two of the std' will .e carried ot .' a team nder
the leadership of a representative from "orwe&ian trade and indstr' as represented .' the
3onfederation of "orwe&ian 6siness and -ndstr' 7"8#9, 1erms of $eference for phase
two of the std' on )*% will .e drawn p .' the "8# and commnicated to "#$A% for
persal and comments,
Purpose
1he team shall present an anal'sis coverin&:
1, A &eneral assessment of the +alawi;s resorce endowments and comparative advanta&e, its
investment climate and the indstrial and private sector development policies as well as
NORAD
PSD in Malawi Final Report
ph'sical and social infrastrctre
25
, incldin& .ottlenec(s and opportnities for private
sector development and possi.le areas of ftre co!operation for frther discssions with
&overnment and private sector representatives, 1he assessment shold comprise all levels
as identified in the "-*, i,e, the international level incldin& international mar(ets, the
national level coverin& the macro econom' and ph'sical and instittional infrastrctre, and
the micro or enterprise/entreprener level in the formal and informal sectors,
2, A more thoro&h assessment of areas of actal or potential co!operation .etween "#$A%
and +alawi incldin& assessment of the efforts of the +alawi itself as well as those of other
donors, endin& p with proposals for possi.le areas of increased "orwe&ian spport,
3, An assessment of relevant areas for possi.le contri.tion .' "orwe&ian .siness
or&ani/ations or enterprises as providers of competence enhancin& activities (a&ents for
service deliver'9 in order to stren&then the on&oin& "orwe&ian spport
26
,
*ince this is a standard mandate coverin& several contries, the e2tent and depth of std'
mst .e ad5sted to the sitation and the need of +A<A=-, *econd hand data from recent
stdies ma' .e tili/ed provided accepta.le validit' and relia.ilit',
"et#odoloy (implementation
1he team of phase - will comprise an e2ternal )*% consltant, an adviser with e2perience
from "orwe&ian trade and indstr', and "#$A% emplo'ees to .e desi&nated .' "#$A%
mana&ement,
1he team shall thro&h interviews and written material, collect data and information from
relevant sorces in "orwa', +alawi and in third contries, 1he team shall familiarise itself
with relevant policies and strate&ies in "orwa' and in +alawi as well as the crrent
pro&rams of development co!operation .etween +alawi and "orwa' that is of relevance for
)*%, 1he team shold consider consltin& written material .' "#$>4"%, 4" a&encies
sch as 4"%), =1#, 4"-%#, 4"31A%, -13, >A# and ->A%, academic circles involved
with )*% isses, the =orld 6an( 0rop and relevant re&ional development .an(s as well as
"orwe&ian enterprises and or&ani/ations present in +alawi, As informed a.ove, second
hand data ma' .e sed, and the e2tent and depth of std' mst .e ad5sted to the sitation
and the need in +A<A=-,
6efore leavin&, the team shall achieve a thoro&h (nowled&e of the "orwe&ian *trate&' for
)rivate *ector %evelopment and other relevant &idelines as well as the +alawi
0overnment;s )$*), and relevant strate&ies for private sector development, if availa.le, 1he
mem.ers of the team travellin& from "orwa' will meet in "#$A% #slo for a .riefin&
.efore departre,
25
1he assessment shold inclde policies on the restrctrin& of the p.lic sector, if relevant, and the roles and
responsi.ilities of the private sector and the &overnment, respectivel', 1he assessment is not limited to the
formal sector of the econom', and shold also inclde .ottlenec(s related to the mar(et strctres in relevant
sectors 7monopolies, oli&opolies etc,9 Also the international environment for )*% shold .e inclded, especiall'
with respect to e2ports,
26
Areas of co!operation are not restricted to p.lic partners, )rivate instittions sch as .siness associations,
cham.ers of commerce and trade as well as co!financin& with other .ilateral and mltilateral donors shold .e
considered, %irect spport to individal enterprises shold .e avoided .ecase of the ris(s of nfair competition
and possi.le mar(et distortions,
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PSD in Malawi Final Report
1he team shall ma(e sre that possi.le &ender differences in )*% are covered in the
interviews and .ro&ht forward in the recommendations,
1he "orwe&ian ?m.ass' in +alawi will .e responsi.le for ma(in& appointments for
interviews in accordance with re@ests from the team and ma(e transportation availa.le,
Time Sc#edule and Reportin
-n total, the assi&nments of the )*% consltant and the adviser of the "orwe&ian trade and
indstr' will comprise appro2imatel' 15!20 wor(in& da's incldin& fieldwor(,
"#$A% will receive a draft report not e2ceedin& 40 pa&es 7e2cldin& attachments9 for
comments not later than 20,06,2002, 1he final report shall .e s.mitted not later than 5
da's after comments from "#$A% have .een received,
1he report shall .e prepared in ?n&lish and will inclde an e2ective smmar', not
e2ceedin& 5 pa&es, comprisin& an overview of the assi&nment as well as ma5or findin&s,
conclsions and recommendations and a list of informants with e!mail addresses and
telephone nm.ers, 1he smmar' shall inclde findin&s and anal'ses re&ardin& the
development of the +alawi private sector and recommendations for possi.le ma5or areas of
ftre .ilateral spport .' the "orwe&ian 0overnment and a &eneral assessment of the
opportnities for investments and trade, 1he smmar' shall s&&est areas for enhanced
efforts .' "#$A% and other "orwe&ian instittions, and areas for frther investi&ation of
possi.le ftre interest .' "orwe&ian trade and indstr', )ossi.le areas of co!operation with
other donors shold .e pointed ot if relevant,
1he team will &ive de.riefin&s at the ?m.ass' .efore departre and in "#$A% #slo,
1he information and docmentation collected and persons conslted shold .e presented
and stored in a wa' that facilitate follow!p .' the team responsi.le for phase -- of the
std', other consltants, "#$A% #slo, the ?m.ass' and +alawi athorities,
21,05,2002
>A0/"*A*/3>B?+/C?
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ANNEX T) TER"S )* RE*EREN+E )N PR!,ATE SE+T)R DE,E-)P"ENT
AND PR)SPE+TS *)R N)R.E/!AN TRADE AND !N,EST"ENT !NTERESTS
!N "A-A.! (P0ASE $)
)perationalisation of Purpose1
1he main prpose of this std' is to provide the information deemed necessar' and sfficient
for a decision on scope and direction of frther assistance to )*% to .e inclded "orwe&ian
colla.oration with +alawi,
1he followin& docmentsD +)$*) of 2002, *trate&' for the "orwe&ian %evelopment
3ooperation woth +alawi 2001!2005 and "-* strate&' docment from +inistr' of >orei&n
Affairs in "orwa', shall .e ta(en as the std's point of departre,
Scope of .or'
1he std' and the or&ani/ation of wor( will follow the threefold prpose in the 1o$, 1he
detailed scope of wor( will in addition to the &eneral assessment to focs specificall' on
areas where "orwa' ma' have a comparative advanta&e,
1he std' of possi.le areas of co!operation shold cover
1he framewor( for )*% in terms of infrastrctre with focs on the ener&' sector 7distri.tion and
+#E!+=-!-nterconnection9 and transport sector 7"acala $ailwa's9
=ithin the primar' sector, discss areas of development and possi.le frther "orwe&ian assistance
%iscssion of the role of ! and colla.oration with ! nei&h.orin& contries li(e Eam.ia and
+o/am.i@e 7 "acala %evelopment 3orridor, power!transmission, EA+!+=-!+#E 0rowth
1rian&le9
6rief review the possi.ilities for "orwe&ian involvement in the minin& and fisher' sector
6rief review the scope for contri.tin& to the improvement of the fnctionin& of financial mar(ets in
+alawi
1he national, re&ional and international framewor( related to the potential for increased trade,
e2ports and international co!operation,
-n .road terms, the potential for increased e2port/import "orwa'!+alawi and indicate main
constraints .arriers,
Assess possi.le specific lin(a&es to competence in "orwe&ian companies and instittions which
cold contri.te to develop the private sector, instittions and p.lic sector in +alawi
%iscssion of possi.ilit' of commercial involvement of "orwe&ian companies
-n colla.oration with the ?m.ass' s&&est areas which will .e &iven more thoro&h
assessment, i,e, ener&'!sector, fisher'!sector, and propose isses which can .e ela.orated
phase 2,
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"et#odoloy(implementation
%e to time constraints and composition the team will .e constitted in 6lant're at the start
of field wor(, 1he ?m.ass' will thro&h consltants/firms provide anal'sis of .ac(&rond
information, 1his to&ether with the team!mem.ers own information collection and anal'sis
form the .asis from which the direction and strctre of the $eport will .e prepared, #n this
.asis interviews with private sector or&anisations/instittions/enterprisesD appropriate
athoritiesD .i! and mltilateral donors and financiers will .e carried ot,
Team composition
+r, Can ?ri(sen $e&ional Adviser )*% *othern Africa, teamleader
+r, *verre 1hrondsen +ar(etin& +ana&er, A66
+r, Cohan #lav 65er(e +ar(etin& 3oordinator, "orplan
+s, 6ritt 8ilde F5GlHs )ro&ramme #fficer, $o'al "orwe&ian ?m.ass' in <ilon&we
Time Sc#edule and Reportin
>ield wor(:
Iisit in +alawi will ta(e place in the period 28,05!06,06, 2002
"#$A% will from "orplan receive a draft report in Jsoft cop'K not e2ceedin& 40 pa&es
7e2cldin& attachments9 for comments not later than 20,06,2002, 1he final report shall .e
s.mitted not later than 5 da's after comments from "#$A% have .een received,
24/05/02/C?
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