An official website of the United States government Here's how you know

Official websites use .gov

A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS

A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Executive Summary

The Government of Malawi is eager to attract foreign direct investment.  Opportunities are plentiful for investors comfortable operating in frontier markets. The Malawi Investment and Trade Center’s One Stop Center offers assistance on how to navigate relevant regulations and procedures, a process that can be challenging without local knowledge.  In general, there are adequate legal instruments to protect investors. Foreign investors generally receive national treatment.

Political risk in Malawi is manageable given that the country has been largely free of political violence since gaining independence in 1964.  Although divisions exist, Malawi has no significant tribal, religious, regional, ethnic, or racial tensions that appear would lead to violent confrontation.

Agriculture accounts for one third of GDP and 80 percent of Malawi’s exports but growth in the sector lags due to infrastructure constraints.  Nonetheless, many opportunities exist for investment in the sector, particularly in agribusiness and agro processing. The United States Government concluded in 2018 a USD 350 million effort to rehabilitate generation, upgrade electrical transmission lines, and assist in policy reform to attract additional investment from independent power producers.

Although the Government of Malawi has made some efforts to combat corruption, it remains a major obstacle to investment in Malawi.  Scarcity of skilled and semi-skilled labor is another serious impediment to doing business in Malawi. Shortages are most acute in occupations such as financial management, economics, engineering, law, IT, and medicine/health.

Infrastructure investment lags in Malawi and, as a land-locked country, it depends on its neighbors for port access. Formal and informal trade boundaries restrict both imports and exports yet the economy is heavily reliant on imports.  While power infrastructure has improved, power outages remain a regularity.

There is an established mediation process to work with parties to overcome disputes and preempt court proceedings.  Both foreign and domestic investors have access to Malawi’s legal system, which functions well and in an unbiased manner but is known to be slow.

All investors have the right to establish, acquire, and dispose of interests in business enterprises.  Foreigners require a business residency permit to carry out any business activity in Malawi. All new land acquisitions are under leases.  Lease terms for foreigners may be limited to 50 years, compared to 99 years for Malawians.

The Government seeks to ensure the availability of foreign exchange for business transactions and remittances in order to attract investors and spur economic growth.  There are no restrictions on remittance of foreign investment funds as long as the capital and loans initially came from foreign sources and were registered with the Reserve Bank of Malawi.

Table 1: Key Metrics and Rankings

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2018 120 of 180 http://www.transparency.org/research/cpi/overview 
World Bank’s Doing Business Report 2019 111 of 190 http://www.doingbusiness.org/en/rankings
Global Innovation Index 2018 114 of 126 https://www.globalinnovationindex.org/analysis-indicator 
U.S. FDI in partner country ($M USD, stock positions) 2017 $37 http://www.bea.gov/international/factsheet/ 
World Bank GNI per capita 2017 $320  http://data.worldbank.org/indicator/NY.GNP.PCAP.CD 

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

The Government of Malawi (GOM) desiresdomestic and foreign investment and generally grants national treatment to foreign investors.  Investors, both domestic and foreign, may invest in any sector of the economy, with no restrictions on ownership.

There are no restrictions on the size of investment, the source of funds, the investment sector, or on whether products are destined for export or for the domestic market.  However, the Malawi Stock Exchange limits an individual foreign investor to 10 percent of the shares of any one company during its initial public offering (IPO) and the aggregate of all foreign investors participating in the IPO is limited to 49 percent of shares.

The Malawi Investment and Trade Centre (MITC) is the GOM’s trade and investment promotion agency.  Established to promote Malawi as a destination for trade and investment, it maintains three websites (www.mitc.mw  , http://www.theiguides.org/public-docs/guides/malawi, and trade.mitc.mw  ) that provide information on potential sectors for investment and relevant regulations.  MITC also operates a One-Stop Service Centre in Lilongwe to help foreign and domestic businesses navigate relevant regulations and procedures.

The GOM encourages domestic and foreign investment with representatives participating in the Public Private Dialogue where participants discuss public service delivery and the investment climate. The Malawi Confederation of Chambers of Commerce and Industry (MCCCI), a partnership of enterprises and associations representing all sectors of the economy of Malawi, lobbies the government on behalf of the private sector on relevant issues.

Limits on Foreign Control and Right to Private Ownership and Establishment

The GOM does not impose restrictions on the ownership or location of investment. It permits foreign direct investment in all sectors of the economy except for those sectors or activities that may pose a danger to health, the environment or the security of the nation. Restrictions are not imposed on funds source, destination or final product.  There is, however, a requirement to appoint at least two Malawian residents as directors of companies registered in Malawi.

There are some limitations on foreign ownership of land.  Under the Land Act of 2016, neither Malawians nor foreigners are able to acquire freehold land; foreigners are able to secure lease-hold land for terms up to 50 years, and potentially longer.  In addition, foreigners can only secure private land when no citizen has made an offer for the land.

During the privatization of government assets, Malawian nationals are offered preferential treatment, including discounted share prices and subsidized credit.  A 2017 amendment to the Public Procurement and Disposal of Assets Bill includes an indigenization clause that calls for “the prioritization of all bids submitted to give preference to sixty percent indigenous black Malawians.”  The government has yet to draft implementing regulations to bring this into force.

There is no government policy to screen foreign direct investment.  However, such investors must register with the Malawi Investment and Trade Center (MITC, www.mitc.mw) and with the Reserve Bank of Malawi (RBM, www.rbm.mw  ) if investment capital through any commercial bank in Malawi exceeds USD 50,000.  Registration of borrowed invested funds from overseas allows investors to externalize profits to pay back loans contracted abroad.

Other Investment Policy Reviews

The World Trade Organization (WTO) last preformed a periodic Trade Policy Review of Malawi in April 2016.  The full report and recommendations can be accessed at https://www.wto.org/english/tratop_e/tpr_e/tp435_e.htm  

Business Facilitation

To facilitate the process of starting a business, the Malawi Investment and Trade Center (MITC) operates a One Stop Center.  It assists foreign and domestic investors of all sizes to navigate relevant regulations and procedures. It hosts representatives of the Registrar General, the Malawi Revenue Authority, the Department of Immigration, and the Ministry of Lands, Housing, and Urban Development.  MITC’s main website (www.mitc.mw  ), the iGuides (http://www.theiguides.org/public-docs/guides/malawi  ), and trade portal (www.trade.mitc.mw  ) provide further information.

In addition to MITC’s One Stop Center, businesses can register online at http://www.registrargeneral.gov.mw/  .  However, the website is often inaccessible.  To operate in Malawi, a business must register with the Registrar General, the Malawi Revenue Authority and often the Ministry or regulatory body overseeing their sector of activity.  For example, construction companies need to register with the National Construction Industry Council.

Outward Investment

The mandate of MITC is to promote outward as well as inward investment.  However, MITC rarely facilitates outward-bound investment. The Pension Act of 2010 and accompanying regulations do not allow for the investment of pension funds or umbrella funds abroad.

2. Bilateral Investment Agreements and Taxation Treaties

Malawi has signed bilateral investment treaties with Egypt (in force), Italy (in force), the Netherlands (in force), Zimbabwe (not in force), Malaysia (not in force), and Brazil (not in force).  Malawi is also a member of the Common Market for Eastern and Southern Africa (COMESA) Customs Union and the Southern African Development Community (SADC) Free Trade Area, governed by the SADC Protocol on Trade.  Malawi does not currently have a trade agreement or a bilateral tax treaty with the United States.

In the past year, the GOM made the following amendments to the taxation law under the Taxation (Amendment) Act of 2018:

  • Increased the tax-free bracket for salaried employees from USD 41/month to USD 48/month.
  • Imposed tax liability of non-resident tax on withholding agents who fail to withhold.
  • Imposed a general debt-equity ratio of 3:1 applicable to all sectors.
  • Introduced a USD 6,840.00 cap on the allowable deductions for individual donations.
  • Introduced a requirement for the registration of all salaried employees and subsequent issuance of Taxpayer Identification Number (TPIN) by the Malawi Revenue Authority.

3. Legal Regime

Transparency of the Regulatory System

The GOM continues to undertake various reforms to ensure that tax, labor, environment, health, or safety laws do not distort or impede investment.  The legal, regulatory, and accounting systems are partially transparent and consistent with international norms. However, procedural delays impede the business and investment environment.

Certain professional associations have sectorial rule-making power that amounts to regulatory power.  These professional bodies include the National Construction Industry Council, Malawi Law Society, Malawi Accountants Board, and the Employers Consultative Association of Malawi.  Some of these associations require the use of local labor, local contractors, or other means to achieve localization or skills transfer to Malawians. The rule-making process is not always transparent to firms that are new to the Malawi market.

The GOM uses a mix of fiscal, financial, and regulatory instruments to administer its investment policy, and thus management and responsibility spreads across multiple ministries and agencies.  Development of taxation policy is the jurisdiction of the Treasury Department in the Ministry of Finance. The Malawi Revenue Authority (MRA) is the main implementing agency for tax policy. Some regulatory incentives are within the jurisdiction of their respective ministries.  The RBM administers the market-based exchange rate of the Malawi Kwacha, as well as liberal exchange controls to allow free flow of capital and earnings — repatriation of dividends, profits, and royalties. The Ministry of Home Affairs’ immigration department administers the Employment of Expatriates Policy, Temporary Employment Permits (TEPs), and business residence permit.  The Ministry of Lands, Housing and Urban Development is responsible for land policy administration. Relevant government Ministries, Departments, and Agencies (MDAs) develop technical regulations and forward them to the Ministry of Justice for final review and gazetting.

In 2001, the Institute of Chartered Accountants in Malawi (ICAM) adopted the International Financial Reporting Standards (IFRS), designed as a common global language so that company accounts in Malawi are understandable and comparable across international boundaries.

Almost all proposed laws, regulations, and policies (including investment laws) are subject to public consultation before submission to the Cabinet, the Parliament, or the Ministry of Justice.  However, sometimes the public notice of such consultations come late, with the effect that only insiders engage. Parliamentary procedures call for debate on drafts in relevant committees before presenting the bill to the floor for a vote.  Rules allow fast-tracking bills as well.

Interested parties can generally purchase copies of recent laws from the government printing office or access them at the National Library and in the High Court libraries.  An increasing number of laws are also available online at www.malawilii.org  .  The GOM has no central repository for technical regulations.  Relevant government Ministries, Departments, and Agencies (MDAs) manage regulations.  The Ministries then publish the regulations in the Malawi Government Gazette after which they form part of the schedules to relevant acts.  MDA websites do not usually post these laws and regulations.

Regulations and enforcement actions are legally reviewable in the national court system.  However, periodic review of regulations is not a requirement. The Ministry of Justice and Constitutional Affairs provides oversight or enforcement mechanisms to ensure MDAs follow administrative processes for developing and implementing regulations.  If private individuals and entities believe MDAS did not follow procedures, they can bring a case against the government in court or seek redress through the Office of the Ombudsman.

Over the past year, the Malawi Parliament enacted the Trademarks Act of 2018, which came into force in October 2018. The Act, along with subsequent regulations, will regulate matters relating to registration and protections of trademarks, well-known marks, collective marks, certification marks and geographic indicators.

Relevant government Ministries, Departments, and Agencies (MDAs) develop technical regulations and forward them to the Ministry of Justice for final review. The MDAs then present the regulations to Cabinet for final approval and gazetting. Thereafter, relevant government Ministries, Departments, and Agencies enforce regulations under their purview.

There are no specific regulatory guidelines for reviewing regulations or conducting impact assessments, including scientific or data-driven assessments.  Moreover, there are no specific criteria for determining which proposed regulations are subject to an impact assessment nor is there a specialized government body tasked with reviewing and monitoring regulatory impact assessments conducted by other individual agencies or government bodies.

Transparency on public finances and debt obligations is mixed. Publically available budget documents provide a full picture of Malawi’s estimated revenue, including natural resources revenues, off-budget donor support, and expenditures.  However, the approved budget provides expenditure data at the level of ministry vote, and not beyond. End of year financial statements detailing actual revenues and expenditures are presented alongside the budget proposal for the following financial year. The government also makes public general information about debt obligations in its Financial Statement.  The Financial Statement is available at: http://www.finance.gov.mw/index.php?option=com_docman&Itemid=107  . The RBM also publishes public debt information in its quarterly economic reviews, published at: https://www.rbm.mw/Publications/EconomicReviews/#Quaterly  .

In contrast to the visibility into government finances, contingent liabilities are generally unknown to the public, as the financial records of State-Owned Enterprises (SOEs) generally remain closed.

The government shares additional debt information with the World Bank for debt sustainability analysis and with the IMF for evaluation of compliance with its Extended Credit Facility (ECF), and is made public through the IMF’s release of its ECF reviews.

International Regulatory Considerations

Malawi is a member of the COMESA Customs Union and the SADC Free Trade Area, governed by the SADC Protocol on Trade.  The government develops all new regulations roughly in line with the regulatory policy provisions set out by COMESA and SADC, but national regulations rule if there is a conflict.

As a member of both SADC and COMESA, Malawi is bound by their respective norms and standards.  One can find details on the organizations respective websites:

Since 1995, there is no record of Malawi providing notification on draft technical regulations to the WTO Committee on Technical Barriers to Trade.  The last time Malawi submitted a statement on implementation and administration of the WTO Agreement on Technical Barriers to Trade was in 2007.

Malawi signed the WTO Trade Facilitation Agreement (TFA) on July 12, 2017.  Malawi has made progress on implementing the TFA provisions through the launch of a trade information portal. The portal provides all regulatory information on cross-border trade including laws, regulations, prohibitions, restrictions, technical standards, applicable tariffs, fees, procedures for license and permit application and clearance, copies of all forms and plain language instructions.  One can access the portal at https://www.malawitradeportal.gov.mw/  .

Legal System and Judicial Independence

Malawi’s legal system is based on English Common Law.  The judiciary consists of local courts and a local appeals court in every district.  The higher tiers consist of the Supreme Court of Appeal, the High Court, and the magistrates’ courts.  A chief justice and four judges, appointed by the president, preside over the High Court. It has judicial authority over all civil and criminal cases.  Magistrates’ courts are located throughout the country. The High Court hears appeals from the magistrates’ courts and the Supreme Court of Appeal in Blantyre hears appeals arising from the High Court.  The Commercial Division of the High Court, presided over by a single judge, deals exclusively with disputes of a commercial or business nature. The Industrial Relations Court handles labor disputes and issues relating to employment.  One can access more information on the judicial system in Malawi at https://www.judiciary.mw/  .

Malawi does not have written commercial law or contractual law but has legislation that governs commercial transactions, which include the Sale of Goods Act, Companies Act, Employment Act, Hire Purchase Act, Insolvency Act, Control of Goods Act, among others.  By local standards, the Commercial Courts work efficiently. There is an established mediation process to promote agreements prior to court proceedings. Enforcement of judgments can be slow.

Both foreign and domestic investors have access to Malawi’s legal system.  Heavy caseloads, staffing limitations, and inadequate funding, however, can contribute to delays.  Critics have questioned the judicial system for the ease with which court-granted injunctions can contribute to backlogs.  The judicial system is independent of the executive branch and interference is not apparent to observers.

Regulations and enforcement actions are appealable and adjudicated in the national court system.  In the financial sector, regulations and enforcement actions are appealable through the Financial Services Appeals Committee.  If the decision by the Appeals Committee is not accepted, local and foreign investors are free to seek judicial review through the High Court of Malawi.

Laws and Regulations on Foreign Direct Investment

Key laws implemented last year include The Trademarks Act of 2018, The Corrupt Practice (Amendment) Act of 2019, The Reserve Bank Act of 2018, The Tobacco Industry Act of 2018, and The Mines and Minerals Act of 2018.  The Malawi Investment and Trade Center (MITC) operates a One Stop Center and assists foreign and domestic investors to navigate relevant regulations and procedures. MITCs website is at https://www.mitc.mw/index.php   .

Competition and Anti-Trust Laws

The government established the Competition and Fair Trading Commission (CFTC, www.cftc.mw  ) in 2005.  Since 2013, the institution has overseen 26 applications for merger and acquisition and dismantled five cartels.  The CFTC safeguards competition by regulating and monitoring monopolies, protecting consumer welfare, and ensuring fair market conditions.  So far, the CFTC has approved all mergers and acquisitions. CFTC decisions may be appealed, first to the Board and subsequently to the Commercial (High) Court.

Expropriation and Compensation

Malawi’s constitution prohibits deprivation of an individual’s property without due compensation.  There are laws that protect both local and foreign investment. However, measures that carry expropriation effects are occasionally imposed, including export bans (and implicit bans due to the government’s authority to require export licenses for any good at any time) for key commodities.  These restrictions apply equally to foreign and domestic investors.

The government can employ land acquisition procedures set forth in the Land Acquisition Act of 2016.  Accordingly, the government must justify its acquisition is in the public interest and pay fair market value for the land.  If the private landowner objects to the level of compensation, it may obtain an independent assessment of the land value. According to the Act, however, such cases may not be challenged in court; the Ministry of Lands, Housing, and Urban Development remains the final judge.  In most cases, land is expropriated to give way to development projects, most commonly, the construction of roads. Some have refused to relocate due to disagreements; however, these cases are usually settled amicably.

Dispute Settlement

ICSID Convention and New York Convention

Malawi has not ratified the New York Convention but has ratified the Convention on the Settlement of Investment Disputes between States and Nationals of Other States.  As a member of the International Centre for Settlement of Investment Disputes (ICSID), Malawi accepts binding international arbitration of investment disputes between foreign investors and the GOM.  Malawi’s current president is a former arbitrator for ICSID. The Investment Disputes (Enforcement of Awards) Act of 1966 makes provision for the enforcement in Malawi of awards of the Tribunal of the International Centre for Settlement of Investment Disputes.

Investor-State Dispute Settlement

The government is not a signatory to a treaty or investment agreement in which binding international arbitration of investment disputes is recognized, such as to the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).  Nor does Malawi have a Bilateral Investment Treaty (BIT) or Free Trade Agreement (FTA) with an investment chapter within the United States.  Since 1996, there have been no known major investment disputes involving U.S. companies.

The court system in Malawi accepts and enforces foreign court judgments registered in accordance with established legal procedure.  There are reciprocal agreements among Commonwealth countries to enforce judgments without this registration obligation. There is no such agreement between Malawi and the United States, but judgments involving the two countries can still be enforced if the judgment is registered appropriately in Malawi.  There have been no known extrajudicial actions taken against foreign investors in the recent past.

International Commercial Arbitration and Foreign Courts

With respect to litigation, cases commenced in the High Court of Malawi or a subordinate court must, where the defendant indicates an intention to defend, first go to mediation.  The Assistant Registrar of the High Court maintains a list of mediators and experts. A mediator chosen by agreement of the parties conducts the mandatory mediation. If the matter is not settled during mediation, the action will proceed in the court in which it was commenced.

Malawi does not have an arbitration body.  There is no statutory requirement for parties who have contractually agreed to arbitration to go through mediation.  Parties will only be required to go through mediation before proceeding to arbitration if their agreement stipulates it.  As in the case of Investor-State Dispute Settlements, the court system in Malawi accepts and enforces foreign court judgments that are registered locally.  Statistics and information on investment disputes involving SOEs are not readily available.

Bankruptcy Regulations

The courts govern all bankruptcies under the provision of the consolidated Insolvency Act of 2016.  The Act encourages alternatives to bankruptcy such as receivership and reorganization and gives secured creditors priority over other creditors.  Monetary judgments are usually made in the investor’s currency. Cross-border provisions of the Insolvency Act are modeled after United Nations Commission on International Trade Law model laws.

4. Industrial Policies

Investment Incentives

The GOM offers a wide range of tax and non-tax incentives, which apply equally to domestic and foreign investors.  These incentives apply to several sectors including manufacturing, agriculture, mining, and business more generally.  Some sectors enjoy customs and excise tax incentives on raw materials, machinery, and equipment. Specific incentives tend to vary from year to year.  A detailed list of investment incentives can be found at the MITC website: www.mitc.mw  .

Generally speaking, the incentives offered to investors are applied consistently, but many companies complain about long delays in accessing the accrued benefits.  Additionally, firms must negotiate their eligibility for these incentives with the responsible government entities. The GOM occasionally issues guarantees and joint financing on foreign direct investment projects, especially on projects that are of national importance.

Foreign Trade Zones/Free Ports/Trade Facilitation

Legislation for the establishment of export processing zones (EPZs) came into force in 1995.  Companies engaged exclusively in manufacture for export may apply for EPZ status. As of January 2019, 11 companies (down from 30 in 2000) were operating under the EPZ scheme.  Almost all of these are foreign owned companies, though the law does not discriminate on ownership. To resuscitate the EPZs, the GOM has revised EPZ regulations to allow export processing firms to sell 20 percent of their product on the local market.  The government is also in the process of establishing Special Economic Zones, which will have broader coverage than EPZs, allowing a mix of commercial activities including services.

Performance and Data Localization Requirements

Malawi employment and immigration laws and regulations require that local or foreign investors prioritize the hiring of nationals except in cases where skills are not locally available.  The appointment of at least two Malawian residents as directors is also required. These laws and regulations are enforced by the Department of Immigration when issuing Temporary Employment Permits (TEPs) to foreign nationals.

The process to obtain employment permits can sometimes discourage investors.  Expatriate employees who reside and work in Malawi must obtain a TEP. The government desires to make TEPs readily available, and mandates that processing times for TEP applications shall not exceed 40 working days.  In practice, TEPs take significantly longer and face bureaucratic delays (anecdotal reports of several months to a year are common).

There are a few legal restrictions on foreign investment based on environmental, health, biosafety, and national security concerns.  Affected sectors are firearms and ammunition; chemical and biological weapons; explosives; and manufacturing involving hazardous waste treatment/disposal or radioactive material.  Since industrial licensing in Malawi applies to both domestic and foreign investment, and is only restricted to a short-list of products, it does not limit competition, protect domestic interests, or discriminate against foreign investors at any stage of investment.  Retail operations in rural areas are limited to only Malawian citizens, although enforcement is weak.

Malawi does not set performance requirements for establishing, maintaining, or expanding an investment, nor does it place requirements on source of financing or geographic location.  While not discriminatory to foreign investors, investments in Malawi require multiple bureaucratic processes, which may include obtaining a business license, a tax registration number, and a land use permit.  These procedures can be time consuming, particularly when it comes to land permits, and may constitute an impediment to investment. Investors may also face bureaucratic hurdles in obtaining TEP and business residency permits.  There have not been reports of requirements for foreign IT providers to turn over source code or provide access to encryption, of obstacles to freely transmitting customer or other business-related data outside the country’s territory, and of any mechanisms to enforce local data storage within the country.

5. Protection of Property Rights

Real Property

Malawi has laws that govern the acquisition, disposition, recording, and protection of all property rights (land, buildings, etc.), as well as intellectual property rights (copyrights, patents, trademarks, etc.).  Currently, record keeping for registering land ownership is centralized and inefficient. Efforts are underway to computerize and decentralize recordkeeping.

Malawi has a limited housing finance sector.  As mortgage availability does not yet meet demand, most households still finance housing through savings or non-mortgage credit.  The lowest interest rate on a mortgage in Malawi as of January 2019 was 20 percent, with 10 percent down, the balance payable over 15-20 years.  The average mortgage size in Malawi is USD 17,632.

In 2016, Parliament passed a revised Land Act, which converted customary land tenure to leasehold title so that those currently using that land can have legal rights to it.  The new law prohibits freehold title going forward and all newly acquired land will be on a leasehold basis. Lease terms can be for up to 99 years, but the law generally restricts foreigners to 50-years.

The proportion of land without clear title in Malawi is considerable but the exact proportion is unclear.  According to the new Land Act 2016, Malawi has two categories of land, namely:

  •   Public land that comprises government land and unallocated customary land, and
  •   Private land that comprises freehold land, leasehold land, and customary estates.

The new Land Act prohibits granting of freehold to a person, but allows those that are already holding such land titles to continue. The Office of Commissioner of Lands administers and manages land issues such as making grants, leases and other dispositions.

The Land Act of 2016 gives provision to repossess private land under freehold title if the land sits idle for more than two years since registration.  However, the government has not repossessed land from a developer in any recentperiod.

Intellectual Property Rights

Malawi recognizes the importance of intellectual property rights (IPR) protection and enforcement but lacks the capacity to do so.  The Registrar General administers the Patent and Trademarks Act of 1948, which protects industrial IPR in Malawi. The Registrar General maintains a public registry of patents and patent licenses.  Patents must be registered. Trademarks are registered publicly following advertisement and a period of no objection.

Enforcement of IPR is inadequate.  However, general awareness of the importance of protecting IPR in all forms (copyrights, trademarks, patents, trade secrets, and others) has improved.  The Copyright Society of Malawi (COSOMA) administers the Copyright Act of 2016, which protects copyrights and “neighboring” rights in Malawi.

The Malawi Government approved Copyright (Levy on Storage Devices) Regulations in February 2018. Following the approval, COSOMA and the Malawi Revenue Authority began enforcement of a 5 percent levy on media storage devices to compensate rights holders.

While enforcement officials routinely seize counterfeit goods, Malawi does not have a systematic approach to track and report on such seizures so statistics are not available.

Malawi is not included in the United States Trade Representative (USTR) Special 301 Report or the Notorious Markets List.

6. Financial Sector

Capital Markets and Portfolio Investment

The Malawi government recognizes the importance of foreign portfolio investment and has made efforts to provide a platform for such investment through the establishment of a Malawi Stock Exchange (MSE, www.mse.co.mw  ).

The Malawi Stock Exchange (MSE www.mse.co.mw  ) hosts about a dozen listed companies with a total market capitalization of USD 1.76 billion as of December 31, 2018.  Most of these companies are local. The demand and supply of shares for existing listed companies is limited. The RBM regulates the MSE, which is governed by the Companies Act, Capital Market Development Act (1990), Capital Market Development Regulations (1992) as amended in 2013, and the Securities Act (2010).

Foreign investors can buy and sell shares at the stock market without any restrictions.  Trading in shares can either be direct or through any one of four established brokers. There is a secondary market in government securities, and both local and foreign investors have equal access to purchase these securities.

Malawi respects obligations under IMF article VIII and therefore refrains from imposing restrictions on making payments and transfers for current international transactions or from engaging in discriminatory currency arrangements or multiple currency practices without IMF approval.

Liquidity for stock market participation is not a major problem with a variety of credit instruments on hand.  Credit is generally allocated on market terms. The main problem is the cost of credit given high rates of inflation in recent years, though currently below 10 percent.  Foreign investors may utilize domestic credit, but proceeds from investments made using local resources are not remittable.

Money and Banking System

According to the Institute of Bankers in Malawi, only 25 percent of the adult population in Malawi uses banking services.  Access to credit remains one of the biggest challenges for businesses and particularly SMEs, mostly due to the cost of credit (the base-lending rates in March 2019 was 14.9 percent).  There is a huge potential for using mobile banking technology to increase financial access in Malawi.

Malawi has a generally sound banking sector, overseen and regulated by the RBM — the central bank. In 2018, there were nine full-service commercial banks with over 150 branches across the country.  The banking sector remained profitable and stable with adequate liquidity and capital positions throughout 2018. Prudential regulations have limited net foreign exchange exposure and non-performing loan rates continue to fall, though spreads continue to be high.  The sector, however, is highly concentrated. Total bank assets as of December 2018 were estimated at USD 2.2 billion, 46 percent of which fell under two banks, National Bank (USD 571 million) and Standard Bank (USD 434 million).

The RBM plays a critical role in ensuring efficiency, reliability, and integrity of the payment system in Malawi.  It is also a supervisory authority over commercial banks and other financial institutions including insurance companies.

There are no restrictions on foreign banks in Malawi.  The Banking Act provides the regulations applicable to commercial banks and other financial institutions and provides a supervisory mandate to the Reserve Bank.  As at December 2018, four of nine banks were foreign owned.

The RBM maintains correspondent banking relationships with almost all central banks across the world and 14 major banks in Asia, Europe, Africa, and the United States.  Major commercial banks in Malawi also maintain correspondent banking relationships with banks from Europe, Asia, the United States, and within Africa.

Malawian banks require that a foreigner possess a TEP or business residency permit before opening a bank account.

Foreign Exchange and Remittances

Foreign Exchange

Government policy seeks to ensure the availability of foreign exchange for business transactions and remittances in order to attract investors and spur economic growth.  Commercial banks may operate as forex dealers. Investors have access to forex with no legal limitation, both to pay for imports and to transfer financial payments abroad.  Specifically, there are no licensing requirements to import forex and full repatriation of profits, dividends, investment capital, and interest and principal payments for international loans is permitted, once the loan and/or investment is registered with the RBM.  Malawian investors seeking foreign financing must seek permission from the RBM before acquiring an international loan.

The Malawi Kwacha (MWK) is convertible into major world currencies such as the U.S. Dollar, British Pound, Euro, Japanese Yen, Chinese Yuan, and South African Rand, as well as key regional and trading partners’ currencies.  Since May 7, 2012, the value of the local currency, the MWK, has floated freely against major world currencies. Float aside, the MWK/USD rate has remained remarkably stable over the two years to April 2019. Foreign exchange is available throughout the year and Malawi’s official foreign exchange reserves, as of April 2019, are sufficient to cover approximately three months of imports.

Remittance Policies

Investment remittance policies in Malawi have not changed in the past year.  There are no restrictions on remittance of foreign investment funds (including capital, profits, loan repayments, and lease repayments) as long as the capital and loans were obtained from foreign sources and registered with the RBM (www.rbm.mw  ).  The terms and conditions of international loans, management contracts, licensing and royalty arrangements, and similar transfers require initial RBM approval.  The RBM grants approval according to prevailing international standards; subsequent remittances do not require further approval. All commercial banks are authorized by the RBM to approve remittances, and approvals are automatic if the applicant’s accounts have been audited and sufficient forex is available.

Sovereign Wealth Funds

Malawi does not have a Sovereign Wealth Fund or similar entity.

7. State-Owned Enterprises

Malawi has 67 fully government owned SOEs scattered across many industries/sectors including agriculture and agribusiness, education, construction, energy, finance, health, information and communication, media, public utilities, aviation, and services.  The GOM has been known to bail out commercially run SOEs when they have incurred heavy losses. Despite the significant role SOEs play in the Malawi economy, their finances are opaque and overall statistics are not readily available.

A list of these SOEs is available on request from the Office of the President and Cabinet, but the GOM does not publish the list in the media or online.

Private and public enterprises generally compete on the same terms and conditions for access to markets, credit, and other business opportunities, although in practice personal relationships can influence decisions heavily.  There are exceptions for some public works assignments where public enterprises tend to be given special preference by government.

SOEs in the agriculture, education, and health sectors spend more on research and development than local private sector players and they are seen as doing so for the public good rather than for profit.  Because local firms tend to be capital-constrained and because highly skilled labor (such as research scientists and engineers) is scarce, there is not a strong tradition of private sector-led research and development in Malawi.

Malawi’s SOEs are not required to adhere to the OECD Guidelines on Corporate Governance of SOEs.  Corporate governance for most SOEs follows the terms of the relevant Malawi law that established the entity.  All SOEs report to a line ministry and to the Department of Statutory Corporations in the Office of President and Cabinet, but also have a Chairperson and Board of Directors.  The boards are composed of politicians and professionals typically appointed by the president to be directors. Boards usually also have senior government officials as ex-officio/non-voting members.  The participation of members of the government as ex-officio/non-voting members on these boards, and of politicians as directors, creates a perceived and/or real conflict of interest.

Privatization Program

Malawi has about 67 remaining SOEs that are involved in commercial operations, particularly in the public utilities sector, agriculture, housing, finance, education, construction, energy, media, services, and aviation.  Following the recent privatizations of a bank and the national airline, the government does not have any immediate plans for privatization.

All investors, irrespective of ethnic group or source of capital (foreign or local) may participate in privatization bids, however, the government may offer domestic investors a discount on shares.  Privatization efforts currently focus on public-private partnerships and attracting strategic investors rather than outright privatization. These are handled by the Public Private Partnership Commission (www.pppc.mw  )

8. Responsible Business Conduct

There is a well-developed sense of Corporate Social Responsibility (CSR) in Malawi and most corporate entities make a point to publicize such activities in the local media.  There are no established laws or regulations governing CSR, nor does the government formally direct CSR to particular sectors. However, as part of its candidacy for the Extractives Industry Transparency Initiative, the GOM promotes responsible business conduct in the mining sector.

There are laws governing protection of the environment and waste disposal for producers and consumers.  Government expects all enterprises to follow all laws of Malawi regarding employment and compensation. Malawi has a number of labor laws governing employment, work environment, industrial safety, age limits, hours of work, and minimum wages.  However, the GOM lacks the resources to meaningfully enforce environmental, consumer, and labor laws and regulations. There is no history of the government waiving provisions of environmental, social, or labor laws to attract investment but at the same time there is no history of the government factoring responsible business conduct policies or practices into its procurement decisions.

The GOM has enacted accounting standards applicable to the private sector that conform to international standards.  The law requires all MSE-listed companies to publish their annual audited accounts in the local newspapers. Listed companies are also required to publicly declare their profits, dividends to be paid out, planned takeovers (or major portfolio investments in or out of the company), and all relevant information that shareholders need to make informed decisions.  They are also required to announce their annual shareholders meetings in the newspapers.

Several civil society organizations monitor and advocate freely for corporate social responsibility and responsible business conduct in Malawi, including the Institute for Policy Interaction (IPI), the Catholic Commission for Justice and Peace (CCJP), the Centre for Environmental Policy and Advocacy, Institute for Sustainable Development, and Natural Resources Justice Network.

In regards to mining, Malawi does not adhere to OECD Guidelines for Responsible Supply Chains of Minerals from Conflict-Afflicted and High-Risk Areas and does not have  any domestic measures requiring supply chain due diligence for companies that source minerals that may originate from conflict-affected areas.

The Extractive Industries Transparency Initiative (EITI) Board approved Malawi as a candidate country in 2015.  Following the conclusion of Malawi’s Validation of 2018, the EITI Board concluded that Malawi has made meaningful progress overall in implementing the EITI Standard. The Board also determined that Malawi has 18 months (until 27 August 2020) to carry out corrective actions regarding the findings of the initial assessment. Failure to achieve meaningful progress with considerable improvements across several individual requirements in the second validation will result in suspension in accordance with the EITI Standard. In accordance with the EITI Standard, Malawi may request an extension of this timeframe, or request validation earlier than scheduled.

9. Corruption

Corruption is a significant concern in Malawi, particularly in public procurements.  Giving or receiving a bribe — whether to or from a Malawian or foreign official — is a crime under Malawi’s penal code.  However, enforcement is insufficient, slow, and selective. Public sector corruption, including bribery of public officials and conflicts of interest are a major challenge for firms operating in Malawi.  There are regular reports of government corruption at all levels of government.

The Corrupt Practices Act established the independent Anti-Corruption Bureau (ACB) with a mandate to prevent corruption in Malawi.  The December 2018 Amendment to the Act now requires the Minister of Justice to advertise the position of ACB Director and convene a panel of seven drawn from the public and private sectors, civil society, and faith organizations that will forward a shortlist of two to three candidates to the President for selection.  The President appoints the ACB Deputy Director. The Corrupt Practices Act widened the definition of corruption to include, among other things, offences for abuse of office and possession of unexplained wealth. The Act provides for the investigation of cases not only for corruption but also for other offences uncovered during the course of investigating corruption.  The Act also provides protection for “whistleblowers.” Malawi’s ACB cooperates with other anti-corruption bureaus in the region and beyond.

The Public Officers (Declaration of Assets, Liabilities and Business Interests) Act of 2013 requires 48 categories of public officers – including all levels of officials from the president and members of parliament, down to specific categories of civil servants, including traffic police and immigration officers – to declare their assets and business interests.  The paper declarations are accessible to the public upon request.

The law does not extend to family members or to political parties. However, where evidence implicates family members or members of a political party in corruption, the Anticorruption Bureau has the power to build a case against the accomplices and bring them to court.

The Public Procurement and Disposal of Public Assets Act of 2016 requires all public officials to disclose any conflict of interest and not take part in any deliberation or decision making process in relation to a given matter.  However, there is no clear definition of what constitutes conflict of interest and the law is not regularly enforced.

Companies are encouraged to participate in the fight against corruption.  The ACB encourages institutions to develop and implement Corruption Prevention Policies as a way of mainstreaming anti-corruption initiatives into their operations.  At times, the business sector joins forces to collectively engage in the fight against corruption, but no formal mechanism exists. Internal controls have failed to produce evidence in any high profile cases.

Malawi is party to the United Nations Convention against Corruption, which it ratified in December 2004.

According to Malawian law, citizens have a right to form NGOs focused on anti-corruption or good governance and these NGOs are free to accept funding from any domestic or foreign sources.  Malawi’s civil society plays an important and visible role in fighting corruption.  The media also plays a central role in investigating and uncovering many cases of corruption.

Although progress has been made in addressing the issue, corruption continues to be viewed as a major obstacle to doing business in Malawi.  Specific firms with U.S. affiliations have noted irregularities in tender processes but have nonetheless continued to pursue business opportunities in Malawi.

Resources to Report Corruption

Mr. Reyneck Matemba
Director General
Anti-Corruption Bureau
Tel: +(265) 1 772 107
E-mail: lkondowe@acbmw.com
Website: http://www.acbmw.com  

Mr. Jeff Kabondo
National Coordinator National Integrity Platform
C/O African Institute of Corporate Citizenship (AICC)
Lilongwe, Malawi
Telephone: +(265) 1 775 787 / 691
Email: jeff@aiccafrica.org

10. Political and Security Environment

Malawi continues to enjoy a stable and democratic government.  Since the end of one party rule in 1993, it has organized six (counting the May 2019 election) peaceful presidential and parliamentary elections.  International observers have characterized elections in Malawi as generally “peaceful, free, transparent, and credible.”

Although divisions exist, Malawi has no significant tribal, religious, regional, ethnic, or racial tensions that could lead to violent confrontation.  Incidents of labor unrest occasionally occur, but these are usually non-violent. There are no nascent insurrections or other politically motivated activities of major concern to investors.

Spontaneous civil disturbances and demonstrations, primarily related to governance and economic issues can occur. However, democratic processes in Malawi are well established, and attempts to intensify unrest to undermine stability or the government’s hold on power are unlikely.

11. Labor Policies and Practices

A large majority of working age individuals in Malawi live in rural areas and are involved in subsistence agricultural.  Unskilled labor is plentiful. Skilled and semi-skilled labor is scarce. The informal economy covers 89 percent of the labor force.  Child labor remains a serious and widespread problem in Malawi. The 2015 Child Labor Survey found 38 percent of children aged 5-17 are active in child labor.

Occupational categories with skills shortages include accountants and related personnel, economists, engineers, lawyers, IT, and medical/health personnel.  The University of Malawi (a government-run university with five constituent colleges nation-wide) provides bachelors and masters degrees in economics, engineering, medicine, education, agriculture, and administration.  The Malawi College of Accountancy teaches accounting. Chancellor College, part of the University of Malawi system, operates the country’s law school. The government also recently expanded its network of vocational schools to address technical skills shortages. The higher education system cannot produce enough qualified graduates for the economy.

Malawi employment and immigration laws and regulations require that any local or foreign investor prioritize the hiring of nationals except in cases where skills are not locally available. The Department of Immigration largely enforces these laws and regulations.

There are no restrictions on employers adjusting employment to respond to fluctuating market conditions so long as such adjustments comply with employment laws and regulations.  There are also no social safety net programs for workers laid off for economic reasons nor are employers required to have employment insurance for their employees. In addition, there is no provision for labor laws to be waived to attract or retain investment in the country nor are there additional or different labor law provisions in the Export Processing Zones for the purpose of promoting manufacturing of export products.

In regards to collective bargaining, workers have the legal right to form and join trade unions.  There are 22 unions affiliated with the Malawi Congress of Trade Unions with membership of approximately 200,000 workers.  In 2016, only 13 percent of people in wage employment belonged to a union.

The Industrial Relations Court (IRC) has original jurisdiction over labor disputes and other issues relating to employment.  An aggrieved party may appeal the decision of the IRC to the High Court of Malawi but only on matters of law or jurisdiction.  Otherwise, on matters of fact, the decision of the IRC is final and binding.

The Labor Relations Act (LRA) governs labor-relations management in the Malawi formal sector.  The Act allows strikes and lockouts for registered workers and employers after dispute settlement procedures in collective agreements and conciliation have failed.  Employers, labor unions, and the government lack sophistication in regards to labor relations/disputes. Over the past few years there have not been any major strikes that posed any serious investment risk.

Despite the enactment of the Gender Equality Act in 2013, discrimination against women remains pervasive and they continue to have lower literacy and education levels and less access to employment opportunities than men do.  Children in Malawi can fall victim to the worst forms of child labor, most notably in agriculture, including on tobacco farms. While the government is a signatory to the ILO Convention protecting worker rights, enforcement is weak due to a serious labor inspector shortage.  The government approved the National Child Labor Policy in 2018 and is currently reviewing the Occupation Safety, Health and Welfare Act of 1997.

12. OPIC and Other Investment Insurance Programs

OPIC has collaborated with a U.S Department of Agriculture program in Malawi and signed a loan guarantee facility agreement with a commercial bank in Malawi.  The loan guarantee facility aims to increase agricultural trade through improving access to markets and financing. OPIC-supported equity funds also invest directly in Malawi’s agricultural sector.  In addition, OPIC is in the process of finalizing a loan agreement for an additional project. OPIC is actively exploring further opportunities in Malawi, including in the energy sector. Malawi has had an OPIC investment guarantee agreement since 1967.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2017 $6,341 2017 $6,303 www.worldbank.org/en/country   
Foreign Direct Investment Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2017 N/A 2017 $1* BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Host country’s FDI in the United States ($M USD, stock positions) 2017 N/A 2017 N/A BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data  
Total inbound stock of FDI as % host GDP 2017 N/A 2017 N/A UNCTAD data available at https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx    

*Note:  BEA data does not accurately reflect actual FDI stocks in Malawi from U.S. sources.


Table 3: Sources and Destination of FDI

Data not available.

Table 4: Sources of Portfolio Investment

Data not available.

14. Contact for More Information

U.S. Embassy
Economic and Commercial Section
40/24 Kenyatta Dr.
Lilongwe, Malawi
+265-1-773-166
LilongweECON@state.gov

2019 Investment Climate Statements: Malawi
Build a Custom Report

01 / Select A Year

02 / Select Sections

03 / Select Countries You can add more than one country or area.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future