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Speeches His Excellency Dr Bakili Muluzi, President of Malawi«Return To Speeches|
His Excellency Dr Bakili Muluzi, President of Malawi
1 May 2002
In this interview with Traders, President Muluzi gives an overview of his government’s development policy and his vision for Africa.
Is the government planning any major infrastructural developments in the near future?
The following are major projects that the Malawi Government is and will be undertaking in the near future:
Ongoing projects
Road maintenance and rehabilitation programme (POMARP) financed by World Bank amounting to US$30 000.
Karonga—Chiweta Road Construction
Msulira—Nkhota-kota Road Construction
Karonga—Chitipa
Approved projects
These are the projects to start in the near future:
Dwambazi Bridge
Masasa Golomoti Monkey-Bay Road
Pipeline projects (funds to be identified)
Jenda—Rumphi Road
Tsangano Mwanza Road
Malawi’s tourism sector shows great potential. Do any government initiatives exist to promote the development of this sector and if so, what opportunities exist for foreign investment?
The vision of my Government in relation to tourism is to turn the country’s natural assets into tourism opportunities that will eventually deliver benefits to all its citizens. My Government will develop tourism as a national priority by creating a favourable environment for the private sector involvement.
Major Government initiatives have been:
- The establishment of the Malawian Ministry of Tourism Parks and Wildlife to express a political will for development of tourism in Malawi. The role of the Ministry therefore is to translate that political will into tourism investment.
- The presentation of the current fiscal year budget included a special incentives package for the tourism sector, discussions on the details of the package have been finalised and await incorporation into the Customs Procedures Code. The package is intended to attract major investment into this sector.
- Pre-feasibility studies have been carried out for some locations for possible development as nature based tourist facilities.The results are most encouraging. These sites are Likoma Island, Nkhotakota and Majete Wildlife Reserves, Lake Malawi National Park and Malanje Forest Reserve. Government is working closely with the private sector in Malawi and abroad to promote investment in these areas.
- Ensuring that the hotel facilities in Malawi are comparable to hotel establishments in other countries in terms of the services provided and the rates being charged, a hotel grading exercise will be done soon, once the enabling legislation has been updated.
- My Government continues to review the visa requirements for major tourism source markets. I am pleased to say that recently visa exemptions have been extended to nationals of the following countries: France, Italy, Japan and Spain. These are in addition to an existing long list of countries whose nationals do not need visas when entering Malawi. Visas has been one of the major constraints to the development of tourism in Malawi.
- To regulate gaming activities in this country, my Government established a gaming board which is in the process of establishing an independent secretariat. Currently the secretariat is being provided by the Ministry of Tourism, Parks and Wildlife.To date two casino licenses have been issued for Blantyre and Lilongwe. Operations are expected to start soon.
- Today’s tourists like to experience other people’s cultures and this is a major growth area for tourism. Malawi has a rich and diverse culture which has earned us the accolade “Warm Heart of Africa”. To diversify the tourist product and capture the growth, my Government is establishing cultural villages to display Malawi’s cultural heritage in some districts.
Opportunities for investment in tourism include:
- Construction of the eco-lodges at Cape-Maclear, Likoma Island, Mulanje-Likhubula Forest Reserve, Majete and Zomta Mountain.
- Management of some protected areas
- Construction of a hotel at Malembo in Mangochi
- Construction of a hotel and conference centre, preferably near the lakes
- Introduction of tourist/cruise ship on Lake Malawi
- Establishment of Casinos.
What is being done to develop the export potential of Malawi’s products?
Efforts to develop the export potential of Malawi products are multi-dimensional, covering issues of macro-economic stability, infrastructure services and export promotion. The efforts are spearheaded by the Malawi Export Promotion Council, a parastatal under the Ministry of Commerce and Industry. The core activities are market development, product development, trade information service, trade facilitation and extension service.
Market development activities are aimed at market diversification and expansion concentrating on the priority markets in the region and abroad. The activities include trade fair participation buyer/seller meetings, contact promotion programme, trade missions and market research.
Product development entails identification and promotion of products with export potential. The activities include supply surveys, development of product profiles, product adaption and quality improvement. The focus is on priority products short-listed on the basis of their market and production potential.
Trade information service is aimed at developing a trade information system that is responsive to the business information needs of the private sector, within and outside the country. The information covered includes market opportunities in the region and some strategic markets overseas, product information market entry requirements and country profiles.
Trade facilitation entails regular review of the export environment with a view to making it more conducive. The activities include identification of export disincentives and recommendations for their removals, introduction of export incentives and streamlining of export documentation.
Extension service entails enhancement of exporter capacity at skills and production levels. The main activities are export training, on-the-spot export advice and formation of expert production groups.
At inter-governmental level, Malawi participates in bilateral, regional and multilateral trade negotiations with the object of a) improving the market access of the exports and b) modernising its economy through opening up its markets.
Which products have the best potential for export and why?
Besides the traditional export products of tobacco, tea, sugar and coffee, a wide variety of goods with export potential are produced. These products include Paprika, Chillies, Macadamia nuts, essential oils, Dhals, textiles and garments, lentils such as sugar beans, soya beans and peas, groundnuts, cotton, confectionery products, handcrafts, processed foods, mushrooms, fruits and vegetables. These products have the best potential because of assured markets and supply potential. The markets assured are particularly in the Eastern and Southern Africa sub-region under the trade arrangements of COMESA and SADC, as well as under the bilateral trade agreements (BTAs), specifically the Malawi/South Africa and Malawi/Zimbabwe Trade Agreements.
What is Malawi doing to attract foreign investment?
The Government of Malawi realised that the fundamental issue in attracting Foreign Direct Investment (FDI) is to create a conducive climate for investment. In this regard my government has put in place investment policies for attracting FDI. Such policies allow investors to invest in any sector of the economy without restriction to ownership, source of capital, or concern as to whether production is for the export or domestic market. Additionally, investors are allowed free repatriation of dividends, profit, loyalty fees, loan repayments and movement of capital upon disinvestments. Furthermore, regular exporters are also allowed to open Foreign Currency Denominated Accounts.
Government has also put in place an Export Processing Zones Programme (EPZ) whose objective it is to attract investors producing purely for the export market. Under the programme investors enjoy duty free importation of machinery and raw materials and are also accorded a zero percent corporate tax free rate. To date the EPZ programme is dominated by textile and clothing manufacturers.
In terms of institutional set up, Government created the Malawi Investment Promotion Agency (MIPA) a few years ago to assist investors in all aspects of investment processing. Recently Government granted MIPA a one-stop-shop status in order to further remove any bureaucratic and administrative delays. Under the one-stop-shop arrangement, the investment approval process only takes a maximum of ten calendar days to complete.
Malawi also believes that market access is one of the factors that attracts FDI. To this extent, Malawi is a member of various regional and sub-regional marketing arrangements and as such provides a gateway for foreign investors to have access to these markets. For example, Malawi is one of the countries now exporting to the United States under the Africa Growth and Opportunities Act (AGOA) initiative as well as the Everything but Arms (EBA) facility of the European Union.
In the spirit of compliance to Malawi’s regional and sub-regional commitments, Malawi is committed to the reduction of tariffs, and duty free importation of capital equipment and industrial raw materials. Malawi is also committed to the ideals of free enterprise, private sector development and liberalisation. To this extent Malawi is a member of the World Trade Organisation (WTO) which stands for a liberalised and rule-based multilateral trading system.
The Government of Malawi is continuously ensuring and maintaining macroeconomic stability in order to ensure the existence of an environment that does not erode investment capital. To this extent, Government efforts are geared towards lowering interest rates as well as Government expenditure so as to avoid crowding out the private sector. Furthermore, Government is putting in place programmes to improve infrastructure in the country in order to reduce the cost of doing business. Considering that Malawi is a land-locked country, the Malawi Government, apart from ensuring smooth transit of goods, also offers some allowances on international transport.
Malawi also recognised that investors require an assurance on investment protection. To this extent, the Malawi
Government has an independent judicial system available to investors should need arise. Furthermore, Malawi is a signatory to the Multilateral Investment Guarantee Agency (MIGA) of the World Bank which ensures impartial arbitration of investment disputes Finally, Malawi abolished the Forfeiture Act which was a disincentive in the previous administration.
Malawi’s Anti-Corruption Bureau has been criticised for its leniency towards government ministers. What is the Malawi Government’s policy towards the eradication of corruption?
The Bureau deals with corruption matters without being lenient to anyone, including government ministers. Since it began operation in 1998, the Bureau has been discharging its functions independently, without fear or favour. The Bureau has investigated government ministers, principal secretaries and members of parliament and where the Bureau has established that the Corrupt Practices Act has been violated, these were brought before the Court of Law. In other cases, the Bureau has requested the Director of Public Prosecutions to consider provisions in the Penal Court, with reference to abuse of office.
The Bureau enjoys operational independence under the Corrupt Practices Act, and operates within the constitutional authority that requires inter alia, respect for human rights, and the rule of law. In cases where public trust has been clearly undermined, ministers have been removed from their positions. This shows that the independent work of the Bureau is supported by the highest levels of State and government through both the court system and the administrative machinery.
With regards to the second part of the question: what is the government’s policy towards the eradication of corruption, I would like to provide the following background. In 1994, Malawi changed from one party to multiparty politics and a new constitution was adopted. Section 13(o) of the Constitution mandates the state to introduce measure which will guarantee accountability, transparency, personal integrity and financial probity and which, by virtue of their effectiveness and transparency, will strengthen confidence in public institutions. Section 13(m) mandates the state to promote law and order and respect for society through civic education, by honest practices in Government.
To meet these constitutional commitments, Parliament passed bills that became laws. Based on these laws the Government established a number of governance institutions including The Office of the Ombudsman; The National Compensation Tribunal; The Human Rights Commission; The Law Commission; The Malawi Electoral Commission and the Anti-Corruption Bureau. These institutions were established to strengthen the systems of checks and balances which make it possible to reduce incidents of human rights violations, including corruption.
In fighting corruption the Bureau employs a three-pronged attack consisting of civic education; corruption prevention and investigations and prosecutions.
The policy of the Malawi Government is that fighting corruption is a constitutional requirement, consolidates democracy, promotes good governance and is a “pro-poor” strategy in line with the Poverty Reduction programme which was implemented in 1994. This is why even the country’s development vehicle, Vision 2020 incorporates the important aspect of a corruption-free society.
The government’s position is that through an empowerment process involving all stakeholders in Malawi, through programmes in civic education and prevention in the frontline, coupled with vigorous investigations and prosecutions, people will be able to resist corruption, reject corruption, report corruption. Once corruption is out in the open, it can be given a fatal blow.
What is the status of the tobacco industry and are there any plans to diversify Malawi’s economy away from Tobacco?
Apart from Burley tobacco, tobacco production has been on the decline. Flue cured tobacco requires heavy capital and operational investments such as barns, grading sheds, firewood, pesticides and expertise.
Given its ecological diversity, Malawi produces many crops; the major of which are maize, cassava, sweet potatoes, rice, sorghum, millet, tobacco, cotton, groundnuts, beans, pigeon peas, soya beans, paprika. There has been a dramatic increase in the production of all the food crops except maize which relies heavily on expensive inputs for improved seeds and fertilisers etc. Many farmers are unable to get credit, primarily because of the high interest rates charged.
The Ministry of Agriculture and Irrigation and the Industry have doubled up their commitments in human and financial terms for increased production. Additional efforts will be made to assist flue-cured growers convert their barns from firewood—which is in short supply—to coal from Mchenga Mines. The Tobacco Exporters Association (Limbe Leaf, Dimon, Stancom, Africa Leaf) has started to assist many flue cured growers with fertilisers. That is why flue-cured tobacco has made a come back and it is expected that this support will continue and expand to include other tobacco types.
Through the Maize Productivity Task Force launched in September 1995, there has been a substantial increase in the number of seeds produced for the next season. The demand of the major maize production programmes such as TIP and APIP for next season will be met, except for beans. A programme to produce beans seeds will be implemented in the dry season under irrigation to make up for the shortfall.
There is sufficient tobacco seeds and from May 2002, a major tobacco seed sales campaign will be underway and free for dark fired growers upon registration. Fertiliser, timely delivery and price will still be a major challenge.
The seed production programme will continue to expand and diversify. Production targets and marketing arrangements are still being worked out and improved in collaboration with donors, NGOs and the private sector.
Is the recent entry of South African companies into Malawi a threat to Malawian competitors? What benefits do they bring?
South Africa remains the greatest source of FDI in the Southern Africa region and Malawi is happy to be one of the destinations of this investment. The coming of South African companies therefore has created jobs and contributes in offering Malawians the much needed choices which is part of the whole liberalisation process. It is Malawi’s belief that the coming of South African firms is testimony of the conducive environment existing in Malawi and that as such, this will assist in influencing other companies to invest in Malawi.
South African companies also assist in increasing production in Malawi, especially for those locally produced goods which find their way into the South African chain stores. We believe that the presence of these companies will assist Malawi get its products into other countries in the region, as well as introduce positive competition which will force the production of good quality products capable of competing.
The coming of South African companies has also meant that goods/services hitherto sourced from South Africa are now locally available. This saves on importation time and financial resources. These companies also bring expertise in various fields and thus improve the human resource capacity of Malawi.
Does the government have a privatisation policy and if so, what is its current status?
Following the first multi-party elections in 1994, the Government of Malawi decided to adopt a policy aimed at liberalising the economy. In line with this policy, the Government decided to reduce the size of its public enterprises sector by a programme of privatisation. This programme entails the disposal of the Government’s interests in commercial public enterprises to the private sector. The main thrust of this initiative is to accelerate economic growth and increase income per capita by achieving greater efficiency and productivity.
The privatisation programme is being undertaken generally in accordance with a divesture sequence plan. The current divesture sequence plan has been drawn up with two objectives in mind:
- There are a number of public enterprises that are in dire need of a fresh injection of capital. One overriding priority is therefore to privatise these enterprises so that strategic investors can resuscitate them by providing the much needed fresh capital but also managerial competence.
- It is also necessary to sell the good performing public enterprises so that the populace can readily appreciate the benefits of privatisation, as it is these entities that can be listed on the local stock exchange. Additionally, it is the good companies that can command good revenues with which to undertake development projects.
It is close to six years since the Privatisation Commission was set up to implement Government policy on privatisation. Within this time frame, about 45 privatisation transactions have been undertaken. Quite a number of these transactions have involved two or three phases.
The public enterprise sector stretches to virtually all sectors of the Malawi economy. Purely by way of illustration, there are public enterprises in the:
- Financial services sector such as the Malawi Rural Finance Company, which provides inputs to the rural population on a credit basis. With the majority of our people being rural-based, one needs not over-emphasise the great potential that this company has, given the fact that the Malawi Economy is predominantly agriculturally based. Another institution in this sector is the Malawi Savings Bank.
- Trading sector, the national airline comes to mind as an example of a public enterprise that could benefit from strategic partnership and additional equipment. The Plant and Vehicle Hire Organisation is yet another example of another enterprise in this sector.
- The agricultural sector boasts many public enterprises. Cold Storage Company Ltd operates two abattoirs in the country and is hardly able to provide the range of products that the country needs. Other public enterprises in this sector include farms and ranches.
Details of these organisations are available from the Privatisation Commission.
What is Malawi’s policy towards land ownership/property rights?
Government is preparing formal submission of the approved policy to Parliament for preparation of a new Land Act. This process will be done in two stages. In the first stage, there will be special studies commissioned and consultations on the appropriate bundle of land rights that need to be recognised under customary tenure to inform the drafting of a new Land Bill and corresponding regulations. Preparation of the regulations will involve consultations with professionals in the land administration and management field, public and private, and other stakeholders. In the second stage, the final draft bill will be submitted for debate and approval by Parliament, following the appropriate Parliamentary procedures for promulgating new legislation.
What is the level of unemployment in Malawi at present and where does the best potential for job creation lie?
Official statistics from the 1998 Malawi Population Census indicate that there were 4.51 million economically active people (also known as the labour force) in 1998, of which 4.46 million (about 99%) were working in different sectors of the economy. It follows therefore that only 50 361 people out of the 4.51 million were unemployed, representing a total unemployment rate of 1.1%.
Malawi’s economy is predominantly rural with agriculture providing a livelihood to over 85% of its population. About 90% of the labour force live in rural areas and out of these, 90% depend on subsistence agriculture for their livelihood. Out of the 4 million working people in rural areas, 86% are subsistence farmers. There is thus gross underemployment hidden in the low unemployment rates. The implication of this phenomenon is that there are abundant human resources eg school leavers in the country who are under-utilised and can be easily tapped by new and existing investors.
Agriculture still has potential for job creation if appropriate technologies are used. Productivity is agriculture can be greatly improved and employment increased if dependence on rain fed farming is reduced and alternative methods adopted. There are vast opportunities for investment in commercial farming.
What benefits does Malawi derive from being a member of SADC?
It should be noted that under the SADC Programme of Action, Malawi has benefited from a number of infrastructure projects which have been undertaken, such as rehabilitation of roads, railway lines and the airport. Projects include: the Beira and Nacala Transport corridor; the rehabilitation of the Nacala Port; the study on upgrading of the Mangochi—Mandimba Road and the upgrading of the Blantyre—Milange—Mocuba Road (which is basically a project that has benefited both Malawi and Mozambique); road lines from Balaka in Malawi to Uyole in Tanzania via Samima and Karonga; a feasibility study on the upgrading of Karonga—Chitipa—Nakonda—Mpulungu road (which will benefit both Malawi and Zambia); improvement of transport systems such as Malawi Railways; development of navigation on Lake Nlassa/Nyasa/Malawi (which is a project covering Malawi, Mozambique and Tanzania); study of digital equipment for the expansion of the tele-exchange in Blantyre, Lilongwe and Zomba.
Secondly, the integration process brought about by SADC is aimed at achieving development and economic growth, alleviating poverty, and enhancing the standard and quality of life of the people of Southern Africa. The regional initiatives, therefore, are complementing what has already been planned at the national level. However, in this age of globalisation it is important that countries work together as a grouping to derive maximum benefits from their undertakings. Under the SADC Programme of Action, there are a number of protocols that support the regional integration process. One such protocol is the Trade Protocol, the ultimate aim of which is to facilitate intra-regional trade, with each country producing according to its comparative advantage. These efforts will expand the market beyond the Malawi borders and will increase domestic cross-border and foreign direct investment, which the country needs. This would in turn boost levels of economic growth and contribute towards poverty reduction. Malawi recognises the importance of regional economic integration as a way towards the creation of new opportunities for the expansion of trade and investment. The country is therefore committed to a free trade area in the SADC region.
As chairperson of SADC, Malawi has made some peace initiatives in conflict situations in the SADC region. These efforts have been made with the conviction that development is not possible in a situation of civil strife and conflict. Indeed, the SADC region is well endowed in natural resources but their economic potential has not been realised due to armed conflicts in the region. In contributing to the peace process, individual countries benefit from one strong regional voice, something which is not possible when countries try to do it in their individual capacities.
What role do you see Malawi playing in the African Union?
As you know, it was the 36th Ordinary Session of the Assembly of Heads of State and Government of the Organisation of African Unity (OAU), held in Lome, Togo in July 2000 which adopted the Constitution Act of the African Union.
The adoption of the Constitution Act signified the collective determination of all African nations to establish a new and re-invigorated institutional framework that would effectively deepen and strengthen the unity, solidarity and the cohesion of the African peoples as well as the economic integration of the continent.
Malawi has been fully supportive of the formation of the African Union because there are a number of benefits that can be derived from closer co-operation under the union. The twin process of globalisation and liberalisation engender growing interdependence among countries of the world. In this respect, I was one of the African Heads of State to sign the Constitutive Act of the African Union in Lome on 12 July 2000.
Furthermore, just like all other members of the African Union, Malawi has an important role to play in building the Union.
For the African Union to become a reality, we need peace throughout the continent. There are conflicts in some parts of the continent which have led to destruction of infrastructure and wanton killing of innocent civilians. We can not progress if these wars continue.
Malawi will continue to play an active role in various peace initiatives. It will also join any regional and continental efforts aimed at conflict prevention.
On the economic front, Malawi will join all programmes aimed at integrating its economy with all economies of other African countries. In this respect, it will continue to play an active role in SADC and COMESA, which together with all other regional economic groupings on the continent, will constitute building blocks of the African Union.
What is your vision for Africa and what do you feel needs to be done to achieve this?
I would like to see Africa as a continent that is fully developed and integrated in the world economy and playing its rightful role in world affairs.
Africa today is a continent that is facing many challenges, the most serious of these being poverty and conflicts. As a consequence, the continent continues to experience various problems such as food insecurity, unemployment, poor health, poor infrastructure and political instability. Africa and her co-operating partners have, in the past, put in place mechanisms to address some of these problems, but to date, no tangible results have been forthcoming.
In is necessary that every effort be made to resolve the conflicts on the continent and ensure that there is sustainable peace and security. In this respect, the onus is on the people directly involved in the conflicts themselves, as well as we Africans in general. The International community, particularly the United Nations, has a critical role to play in this endeavour.
We have noted, for instance, that the United Nations peace-keeping operations have been very effective in African conflicts. It would be necessary to improved on this whenever peace-keeping organisations are required.
Poverty is a breeding ground for conflict. It is imperative that poverty be alleviated and eventually eradicated from the continent. The war against poverty can be waged from various fronts. First of all, productivity has to be tremendously increased on the continent. This calls for, amongst other things, hard work on the part of the work force on the continent. There is also need for increased capital flows to the continent in the form of direct foreign investment and massive foreign aid which does not trickle back to the donor countries.
Concrete steps should also be taken to ensure that debt relief materialises, particularly among highly-indebted African countries. Lastly, it is necessary that Western markets should be opened to African exports along the lines of AGOA.
These issues have been raised time and again but perhaps now they ought to be pursued in earnest with the envisaged coming into play of the African Union and the New Partnership for Africa’s Development (NEPAD). Among the many objectives, both the African Union and NEPAD aim at enhancing development, peace and stability, and integrating African economies as well as promoting trade among African countries. It is obvious that if these initiatives are put in place and implemented effectively, the future for Africa will be bright. What Africa needs is political will and stability. It is only when Africa manages to create peaceful. stable and secure conditions for its peoples, that it will be able to harness its vast human and material resources and re-direct them to sustainable socio-economic and political development. |
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