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   Trade & Investment
Trade between Malawi and India
 
Trade between Malawi and India is as old as the relationship between the two countries. However there has been a trade imbalance in favour of India for along time. Bilateral trade between the two countries went up from US$ 63.34 million in 2004-05 to US$ 96.46 million during 2008-09. During 2008-09, India's exports to Malawi were US$ 89.38 million and imports from Malawi amounted to US$ 7.08 million. The trend was reversed in 2009-10 when Malawi exports to India were US$103.76 against US$81.36 Indian exports to Malawi. This means that for the first time the trade imbalance between the two countries was in favour of Malawi.
 
Trade
 
Malawi-India Import Export Figures (Figures in US$ million)
Fiscal
Year
Indian Export to Malawi %
Change
Malawi export to India %
Change
Total
Trade
2003-04 38.21   4.98   43.19
2004-05 58.26 52.49% 5.08 2.07% 63.34
2005-06 43.63 -25.1% 1.80 -64.57% 45.43
2006-07 42.57 -2.44% 5.01 178.41% 47.58
2007-08 64.34 51.13% 15.64 212.18% 79.98
2008-09 89.38 38.92% 7.08 -54.73% 96.46
2009-10 81.36 -8.97% 103.76 1,364.62% 185.12
Source: Government of India, Ministry of Commerce
 
India's exports to Malawi include textile yarns, fabrics, transport equipment, pharmaceuticals, machinery and instruments. Malawi's exports to India are mainly pulses and other agricultural commodities as Malawi is an agricultural economy.
Trade
Trade
Duty Free Tariff Preference (DFTP) Scheme
The India government announced the Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCs) and Malawi was one of the first countries to join the scheme. Under this scheme, Malawi is eligible to export to India approximately 94 tariff lines duty free. It is envisaged that Malawi will reap benefits of market access to India.
 
India-Africa Partnership Project
In furtherance and promotion of trade and investment between Malawi and India, Malawi has been an active participant in Confederation of Indian Industries- Export and Import Bank (CII-EXIM) Bank Conclave on India-Africa Partnership Project. At the 6th CII-EXIM Bank Conclave on India-Africa Partnership Project held in New Delhi in 2010, Malawi sent a sixty business persons delegation including, six cabinet ministers. The 7th Conclave on India-Africa Partnership Project was held in New Delhi, India from 27 – 29 March 2011.  Malawi sent a thirty-member Malawi delegation including two cabinet ministers to the Conclave.
 
Collaboration with Chambers of Commerce and Industries
The Mission has established close collaboration with the Confederation of Indian Industry (CII); the Federation of Indian Chambers of Commerce and Industry (FICCI); The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and the Gujarat Chamber of Commerce and Industry.
 
Africa-India Forum Summit
At the 2nd Africa-India Forum Summit held in Addis Ababa, Ethiopia, from 24 to 25 May 2011, a 32 point declaration, dubbed “Addis Ababa Declaration” was adopted. It reaffirmed mutual desire of Africa and India to expand economic cooperation and trade and investment linkages between the two blocs, in the true spirit of South- South engagement.

The 2nd Africa-India Summit created a platform for a review of the terms for the implementation of the 2008 New Delhi Declaration, and the Framework for Cooperation and the Plan of Action agreed upon in 2010. The Summit noted that significant progress had been made towards achieving the objectives set by the two parties.

Considering the progress made in the establishment of trade and investment linkages between Africa and India, the Summit agreed on the need for further efforts in establishing more partnerships. In this regard, it was agreed that the “India –Africa Business Council” be established to enhance efforts of deepening economic ties between the business communities of India and Africa and to expand trade between the two parties.

The Council will address issues that hinder the enhancement of economic and commercial relations between India and Africa, and develop a roadmap for business partnerships between the two parties. In this regard, India had taken the initiative to implement the Duty Free Tariff Scheme and Capacity Building and Technical Assistance Programmes. A Joint Study Group to examine the feasibility of a comprehensive Free Trade Area (FTA) with the Common Market for Eastern and Southern Africa (COMESA) was set up. 

Issues of infrastructure development, regional integration, capacity building and human resource development, were also discussed. In the true spirit of promoting  South-South engagement, as expressed in the Addis Ababa Declaration and the Framework for Enhanced Cooperation, India pledged its continued support to enhance regional integration, capacity building and human resource development. In that respect, US$ 5 billion was offered for the next three years under lines of credit, to help achieve Africa’s development goals.
 
   Investment Climate In Malawi
 

Click Here to Read About Investment Opportunities in Malawi

 

The Structure of the Economy

Malawi has an agro-based economy with the agriculture sector accounting for over 35.5 percent of GDP, employing about 84.5 percent of labour force and accounting for 82.5 percent of foreign exchange earnings. Agriculture is characterized by a dual structure consisting of commercial estates that grow cash crops and a large smallholder sub-sector that is mainly engaged in mixed subsistence farming. Maize, the staple food, accounts for 80 percent of cultivated land in the small-holder sub-sector. The main agricultural export crop is tobacco, followed by tea, sugar and coffee.

The manufacturing sector accounts for 11 percent of GDP and comprises of mainly agro-processing activities in the tobacco, tea and sugar industries. Distribution and services represent about 22 percent of GDP.

While Malawi is not endowed with mineral resources on the scale of its neighbouring countries, there is significant potential for natural resource extraction. Minerals that can be found include uranium, coal, bauxite, phosphates, graphite, granite, black granite, vermilite, aquamarine, tourmaline, rubies, sapphire and rare earths.

The Malawi Growth and Development Strategy

The Malawi Government's economic program is set out in the Malawi Growth and Development Strategy (MGDS). It is the overarching strategy for Malawi for the five years between 2006 and 2011. The overriding philosophy of the MGDS is poverty reduction through sustainable economic growth and infrastructure development. It identifies six key priority areas which define the direction Malawi intends to take in order to achieve economic growth and wealth creation which are critical for immediate improvement in the economic well-being of Malawians. These are:

  1. Agriculture and Food Security: The goal is to increase agriculture's contribution to economic growth, by not only increasing production for food security, but also for agro-processing and manufacturing for both domestic and export markets.

  2. Irrigation and Water Development: Irrigation and water development is key to Malawi due to its direct linkages with agriculture and energy. Irrigation will contribute towards reduction of the over dependence on rain-fed agriculture while proper conservation of water will also contribute towards the generation of electricity. Key strategies include construction and promotion of small and medium scale irrigation schemes to schemes to enhance food and cash crop production.

  3. Transport Infrastructure Development: The state of Malawi's transport infrastructure is characterized by poor road network, poor and limited access to ports, limited air links, inadequate freight and rail capacity. The inadequacy of the transportation infrastructure results in high costs of production, where transportation represents 55 percent of costs, compared to 17 percent in other developing countries. Efforts will be on improving mobility and accessibility of the population to key road corridors within Malawi and out of Malawi while facilitating the improved mobility and accessibility of rural communities to goods and services at low cost. Effort will also be made to improve inland shipping network that is active in local and international shipping, trade and tourism in a safe manner while protecting the environment. Plans are underway to navigate the Shire River so that the country could have direct access by water to the ports along the Indian Ocean through the Shire-Zambezi Waterway.

  4. Energy Generation and Supply: The provision of energy in Malawi is inadequate, unreliable and inaccessible to all who need it largely on account of lack of competition in the sector, non-functioning power plants and inability to generate sufficient amounts of energy. The goal is to reduce the number and duration of blackouts, increase access to reliable, affordable electricity in rural areas and other targeted areas, and improve coordination and the balance between the needs for energy and those of other high growth sectors such as tourism and mining.

  5. Integrated Rural Development: The Government of Malawi recognizes that broad based economic growth and development cannot be achieved if rural areas with potential for growth are sidelined. In this context, it will strive to promote the growth of rural growth centres. The objective is to re-distribute wealth to all citizens while also mitigating the negative consequences of rural-urban migration.

  6. Prevention and Management of Nutrition Disorders, HIV and AIDS: The MGDS incorporates strategies of the National Action Framework on AIDS and the UNAIDS 'three-ones' principles - one agreed action framework, one national AIDS coordinating authority, and one agreed country level monitoring and evaluation system. It seeks to not only halt and reverse the spread of HIV and AIDS but also to decrease the negative impact of the epidemic on people living with AIDS and reduce the economic and social consequences for those who care for people living with HIV and AIDS.

The MGDS also includes other focus areas, including the creation of an enabling environment for the private sector to increase domestic and foreign investment. To achieve this goal, Government will support, encourage and engage the private sector and all relevant stakeholders in result oriented dialogue to ensure tangible improvement in the business environment.

Government also intends to increase productivity, diversify the economy and achieve export led growth. To attain this, potential growth sectors will be positioned to realize the targeted economic growth and increase employment. These sectors include tourism, mining, and manufacturing. The Government will also put effort into turning Malawi from being a net importer to a net exporter and effectively integrate it into regional and international markets.

Conservation of the natural resources base is an important factor that will contribute to the achievement of sustained economic growth and development objectives of the MGDS. The goal is to improve management of fish species, forestry and wildlife biodiversity and reduce environmental degradation and conserve the natural resource base, while contributing to economic growth.

Other long-term goals include creation of wealth for all people through economic empowerment, especially for women, and to ensure tenure security ad equitable access to land for the attainment of broad-based social and economic development through optimum and ecologically balanced use of land and land-based resources.

Recent Economic Growth Performance

The Government of Malawi has invested significant political capital in restoring macro-economic stability. Fiscal discipline has been maintained since 2004, and has established uninterrupted three-year track record of good macro-economic management which has translated into improved macro-economic indicators. Real GDP growth was 7.9 percent in 2006 and 7.5 percent in 2007. Inflation reached 9.2 percent in January 2007, the first time it has hit a single digit in four years. As of December, 2007, inflation was at 7.5 percent. The Bank Rate also fell to 17.5 percent in August 2007 after reaching a record high of 45 percent in 2003/04.

This progress has been rewarded by the restoration of the Poverty Reduction and Growth Facility support from the International Monetary Fund (IMF) in August 2005 and the attainment of debt relief under the Heavily Indebted Poor Countries (HIPC) initiative in September 2006 and further debt relief from the IMF under the Multilateral Debt Relief Initiative (MDRI). Malawi is also the only country that qualified for a compact under Millennium Challenge Account (MCA) in financial year 2007/2008. The MCA is a U.S. development assistance program that rewards countries based on their performance in governing justly, investing in their citizens and encouraging economic freedom. (see Malawi's score http://www.mcc.gov/documents/score-fy08-malawi.pdf)

Basic Economic Statistics
Gross National Income (GNI) US$2.3 billion
GNI per capita US$170
Gross Domestic Product (GDP) US$2.2 billion
GDP growth (annual) 8.4%
Inflation 7.5%
Agriculture, value added (% of GDP) 35.5
Industry, value added (% of GDP) 19.8
Services, value added (% of GDP) 44.7
Export of goods and services (% of GDP) 28.0
Import of goods and services (% of GDP) 52.8
Gross capital formation (% of GDP) 16.3

Organization Reference:
The Malawi Investment Promotion Agency (MIPA)MALAWI Investment Guide
Lilongwe Office
The General Manager/Chief Executive
Malawi Investment Promotion Agency (MIPA)
Aquarius House - First floor
Private Bag 302
Capital City
Lilongwe 3
MALAWI
Tel : (265) 1 770 800 / 771 315
Fax: (265) 1 771 781
E-mail: mipa@mipamw.org
Web Address: http://www.malawi-invest.net/docs/Investors Guide/MIPA inv guide_inv guide.qxd.pdf

Blantyre Office
The General Manager/Chief Executive
Malawi Investment Promotion Agency (MIPA)
Unit House - Fourth Floor
Private Bag 131
Blantyre
MALAWI
Tel: (265) 1 821 222
Fax: (265) 1 821 621
E-mail: mipabt@mipamw.org
 
Malawi Confederation of Chambers of Commerce and Industry (MCCCI)
Masauko Chipembere Highway
Chichiri Trade Fair Ground
P. O. Box 258, Blantyre
MALAWI
Phone: (265) 01 871 988
Fax: (265) 01 871 147
E-mail: mccci@mccci.org
Web Address: http://www.mccci.org/
 
Malawi Stock Exchange (MSE)
Telephone: (265) 01 624 233
Fax: (265) 01 623 636
Email: mse@mse-mw.com
Web Address: http://www.mse.co.mw/
 
African Growth and Opportunity Act (AGOA)
Web Address: http://www.agoa.gov/
 
Southern Africa Development Community (SADC)
Web Address: http://www.sadc.int/index.php
 
Malawi Government
Ministry of Industry, Trade and Private sector development
Gemini House, City Centre, P.O.Box 30366, Lilongwe 3
Tel: +265 1 770 244
Fax: +265 1 770 680
E-mail: minci@malawi.net
Web Address: http://www.malawi.gov.mw
 
Reserve Bank of Malawi (RBM)
Reserve Bank of Malawi
Convention Drive City Centre, Lilongwe
Box 30063, Capital City, Lilongwe 3 Malawi
Telephone: +265 1 770600
Telefax: +265 1 772752 / +265 1 774289
E-mail: webmaster@rbm.mw
Web Address: http://www.rbm.mw/
 
Shire-Zambezi Waterway Project (PDF Document)
Web Address: http://www.malawi.gov.mw/publications/shire-zambezi waterway.pdf
 
Malawi Law Society
MALAWI LAW SOCIETY
MASM House, Ground Floor, Left Wing, Lower Sclatter Road
P. O. Box 1712, Blantyre
MALAWI
Tel./Fax: (265) 1 824 635
E-mail: mls@sdnp.org.mw
Web Address: http://www.malawilawsociety.org/
 
Malawi Expo USA
Malawi Exposition
C/o Hilton Hotel San Bernardino
285 E. Hospitality Lane
San Bernardino CA 92408
Web Address: http://www.malawiexpo.com

MalawiExpo
P.O. Box 11663
San Bernardino CA 92423 USA
 

Download/View June 2008 - Standard Chartered Bank, ResearchEconomics newsletter on Malawi: New risk-management tool to enhance food security strategy.

 
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