Investing in MALAWI 2013 the Conference Is Supported By

investing in MALAWI 2013 The conference is supported by

Conference Hosts Foreword

Foreword By Michael Nevin Her Majesty’s High Commissioner to Malawi

s commercial agriculture, energy, mining, coal-producing Tete in Mozambique, with one tourism, and physical infrastructure opportunities in the service, banking, who development, including information and retail and other sectors as a result. communication technology (ICT). I sense returnedA to a new seriousness in Malawi to open up Malawi also offers stability. There is no Malawi only a to business and to create the conditions history of civil war. It is a functioning few months for private sector led development, democracy, with an independent judicial ago, after some increasingly moving the emphasis from system, including special commercial years away, it is aid to trade. courts. Malawians are known regionally a great pleasure and internationally for their hard work. to welcome you all to this Second To attract investment, Malawi is gearing The country has a varied but wonderful UK-Malawi Investment Forum here in itself towards creating an enabling climate. There are challenges, which the London, United Kingdom. environment for doing business. This Government is aware of and increasingly includes providing business incentives focused on. But like many of the The First UK-Malawi Investment Forum in and streamlining cumbersome business opportunities currently being developed 2008 ignited a lot of interest and enthusiasm. processes. I have heard Her Excellency in Africa, it is important for companies It generated further dialogue between The President on several occasions to realise the potential early in order potential investors and government challenge her government to promote to take advantage of market presence officials. New British investments in Malawi into the top 100 of the World and knowledge. agriculture (sugar, fruit processing, crop Bank’s “cost of doing business” index farming) and mining located Malawi as an within the next five years. This Forum could not have taken place investment destination. at a better time than now. It could also As well as promoting macro-economic not have been held in a better country Since 2008 there have been, as we all stability, the government is also investing than the United Kingdom, a country with know, issues which have caused rifts in heavily in infrastructure, especially which Malawi has enjoyed warm relations Malawi’s relations with the international in improving export corridors and over many years and which remains a key community. However, in April of last electricity generation and supply. In development partner for the country. year Joyce Banda was duly sworn in as this regard, Malawi’s membership of When I presented my credentials to the new President of the Republic. Her the Southern African Development President Banda last year, I promised Government swiftly published Malawi’s Community (SADC) is an asset (a SADC her that I would champion Malawi. This Economic Recovery Plan (ERP) as an Infrastructure Master Plan was agreed Forum helps champion Malawi’s cause, intervention to stimulate growth in the by the Community’s Heads of State late and its opportunities. economy in the immediate, short and last year). I agree with Malawi’s strategic medium term. approach to regional integration as the I would like to express my gratitude to catalyst to the country’s development Her Excellency The President and her Related to the ERP is the recently agenda. I believe that investors should Ministers and officials for making the launched Export Strategy. The strategy look at Malawi’s potential not just within journey to London and to Developing sensibly seeks to build on Malawi’s the confines of its own borders, but as Markets Associates for their great work existing commercial base. Agri-produce, a regional gateway. Mozambique, Tanzania, in putting this forum together. I trust mining and manufacturing are among Zambia are just some of the countries that this is only the beginning of a those sectors set to benefit from whose economies are doing well. Yet, productive relationship. increased government and private in some cases, English-speaking Malawi sector promotion. Malawi is setting in is a more convenient base than capitals Michael Nevin train a transformation of the economy, of the countries concerned. Blantyre, Her Majesty’s High and actively seeking investment in for example, is the closest major city to Commissioner to Malawi

2013 INVESTING IN Malawi 1 Introduction and welcome By Atam Sandhu, CEO, Developing Markets Associates

n also impacts on youth employment, it potential Malawian partners, those is mainly at the subsistence level, and companies which have taken the time it is inevitably exposed to the vagaries and trouble to come to London with this of nature, both drought and flood. in mind. You will also hear from outside Obehalf of Nevertheless, government programmes companies which have established Developing of fertiliser subsidies have dramatically themselves in Malawi in the last few Markets boosted output in recent years, making years, and of their experiences. All in all, Associates may Malawi a net food exporter. Meanwhile I hope that the day will provide you with I welcome you mining and construction have recently an update on a country in the process of all to Draper’s begun to account for a larger share in change from the perspective of business. Hall. May I also extend an especially warm the economy. welcome to the delegation from Malawi, More than that, though, I hope that it will led by Her Excellency, Dr Joyce Banda, In very recent years, too, there have been contribute to setting aside preconceptions President of Malawi, for being prepared issues of difficult relations with donor and indeed trigger an interest to go and to come to London to meet investors countries, notably the US and UK, with explore opportunities for yourselves. As when there are many pressing issues the International Monetary Fund and the Chinese proverb tells us, the journey facing the government. A welcome too, with neighbouring states. All of these are of a thousand miles begins with a single to the Malawi companies which have well documented. However, President step. Investment decisions are not made chosen to come to the Forum today Banda’s government has already reached lightly and not made hastily. If however in order to seek potential partners. out to its neighbours, with positive effect. today marks the single step to begin that The concept of partnership – be it a There is the government’s national journey then it has achieved its objective, joint venture between companies or development plan, the Malawi Growth for the delegation, for the companies the introduction of new investment to and Development Strategy (MGDS II, here today, and for DMA. help boost economic development – is 2011-2016), which identifies nine key the essence of what DMA’s trade and priority areas, some of which you will hear I wish you an interesting and investment events are all about. about today. And there are possibilities productive day. for new areas of development, such as Malawi remains one of the world’s for example eco-tourism. In addition, poorest countries and has faced growing looking ahead, Malawi should benefit macroeconomic management challenges from new links to the outside world for several years. The economy performed – essential for a landlocked country – well over much of the last decade, with through the infrastructure master plan growth of around 7.0%, well above the of the Southern Africa Development sub-Saharan Africa average, but that has Community (SADC). slowed in the last two years. Nevertheless the figure is still expected to be at 5.3% Today’s Forum provides an opportunity Atam Sandhu in 2013. Agriculture continues to be the to connect not only with representatives Chief Executive main economic activity, an issue which of the new government but also with Developing Markets Associates

2 Investing In Malawi 2013 Contents

Contents 01 Foreword 02 Introduction 03 Contents 04 Overview 10 Agriculture 14 Infrastructure 18 Extractive 22 Tourism 25 Programme 26 Our Partners 28 Map

Publisher: Chris Gerrard Contributors: Jonathan Levack, Natalia Debczak-Debski, Brian Naughton, Roger Murray Art Director: Steven Jones Conference Team: Deanne Lintorn, Frazer Lang, Rebecca Isaacs, Alison Hamilton Conference Directors: Leon Isaacs, Atam Sandhu, Roger Martin Correspondence Developing Markets Associates Ltd (DMA), 150 Tooley Street, London, SE1 2TU email: [email protected] | web: www.developingmarkets.com | www.moneymove.org | www.sendmoneypacific.org DMA acknowledge the assistance of all the individuals and organisations who have contributed to this publication. The views expressed herein are the opinions of the authors, and do not necessarily represent the High Commission of Malawi, the Government of Malawi or DMA. All rights reserved. No part of this publication may be reproduced or transmitted in any form without the written permission of the publisher. Published by Developing Markets Associates Ltd (DMA) Printed by Woodrow Press Picture credits: i-stockphoto.com

2013 INVESTING IN Malawi 3 Economic Overview by Jonathan Levack Economic Overview

fter years of economic maintain average per annum growth of Furthermore, despite growth, Malawi turmoil, Malawi’s 6.7% through to 2017 – both above the remains in a vulnerable position. Overly prospects have changed for average for sub-Saharan African. reliant on agriculture and foreign aid, the better. The unexpected the landlocked country is susceptible transitionA of power in the capital A Vulnerable to the whim of mother nature, global Lilongwe in April 2012 offers real Starting Point commodity prices and international hope for the country and its 16 million donors. Agriculture has long been the citizens. The new government led by On the surface, Malawi’s economic backbone of the Malawian economy. President Joyce Banda has embarked performance over the last decade 80% of the population are engaged in on an ambitious programme of reform has also been encouraging. Growth the agricultural sector, which accounts for that has the potential to reset the averaged 6% per annum over the 82.5% of export earnings but less than country’s economic outlook. The period from 2004 to 2011. Agriculture 40% of GDP. Tobacco is the country’s main reform programme seeks to address has performed well and new mining export commodity, accounting for a half of macroeconomic and structural challenges projects have come online to boost GDP. export earnings on its own. And this has in order to facilitate a rebalancing of the Indeed, Malawi outstripped sub-Saharan its risks – take 2010 and 2011; growth fell Malawian economy – a major task but African growth in the four years sharply in 2010 to 6.5% from 9% in 2009 the signs are promising. The devaluation between 2008 and 2011. While the after a poor harvest. In 2011, growth was of the local currency, transition to market country’s recent performance has been estimated to have fallen further to 4.3%. In based foreign exchange system, lifting of impressive, growth has not been broad 2011 Malawi was hit by problems with the price controls and efforts to diversify based and has been built on vulnerable IMF Extended Credit Facility programme are starting to bear fruit. Following a sectors. In fact, growth was, in part, that led to reduced donor inflows, foreign rocky couple of years, the International predicated on debt relief through exchange difficulties and shortages of Monetary Fund (IMF) now predicts real the Heavily Indebted Poor Countries essential commodities such as fuel and GDP growth will reach 5.7% in 2013 and (HIPC) initiative. inputs for manufacturing. The situation was

4 Investing In Malawi 2013 Economic Overview

made worse by disappointing earnings abrupt circumstances. The first female Malawi that were neglected under the from tobacco, on which the country is President in Malawi’s history assumed previous administration. Facing acute so dependent. office following the sudden death of fuel and foreign exchange shortages, Presient Mutharika from a heart attack in the government launched its Economic Malawi’s vulnerability to external April 2012. But President Banda inherited Recovery Plan within five months of shocks has been compounded by power from a regime that was unpopular assuming office. The ambitious 18-month structural challenges that have been at home and abroad. International donors plan introduced a number of essential left unaddressed. The country has long – on which Malawi has been so reliant reforms that aim to address many of the suffered from a shortage of foreign – withdrew support in protest at the country’s macroeconomic and structural exchange, impacting on Malawi’s ability Mutharika administration’s dismal human imbalances. It has largely succeeded. to purchase essential goods, such as rights record, poor economic governance According to IMF Managing Director fuel and medicine, and investment in and extravagant spending – the former Christine Lagarde, “President Banda and capital goods. Access to electricity and President was pillared for the purchase of a her team moved quickly, moved boldly, water are scarce – the World Bank ranks private jet, while the population struggled in and moved on many fronts. In short, they Malawi as one of the lowest countries poverty. Malawi’s largest donors, including managed to turn the situation round and in the world in terms of power supply, the UK, the United States, Germany, restore stability.” with less than 15% of the population Norway, the European Union, the World having access to electricity. Transport Bank, and the African Development Bank The cornerstone of the plan was a costs are also high; landlocked Malawi’s (AfDB), all reduced or suspended financial devaluation of Malawi’s currency, the nearest port, Nacala in Mozambique, is aid. His propensity towards populism and Kwacha. Malawi suffered from chronic over 500 miles away. The vast majority budget deficits also worried international shortages of foreign exchange and heavily of goods are transported by road, with some estimating that transport costs alone constitute 30% of the country’s “The new government led by President total import bill. In addition, the country’s Joyce Banda has embarked on an manufacturing sector remains nascent ambitious programme of reform that has and industrial capacity is limited. the potential to reset the country’s Malawi’s challenging economic environment is reflected in many economic outlook international indicies. The World Bank’s Ease of Doing Business report ranks Malawi at 157th of the 185 countries investors – government interventions in restricted foreign exchange transactions. it surveyed in 2013. The country ranks the market were frequent and wide ranging. Pegged to the US dollar, the government especially poorly in terms of access At home, the withdrawal of international devalued the Kwacha from MK 167 to to energy and the cost of enforcing donors impacted on growth and stability. MK 250 to the US dollar in May 2012 contracts, which impacts on Malawi’s and it was subsequently floated. In competitiveness. Indeed, the country ranks It is fair to say that the political transition addition, the government moved towards 129th out of 144 in the World Economic in Lilongwe has resulted in a genuine a flexible market based exchange rate Forum’s annual Global Competitiveness change of fortune. President Banda system, removing restrictions on foreign Report. The report highlights Malawi’s lack has quickly set about addressing many exchange transactions by banks and of infrastructure, poor access to foreign of the structural challenges facing foreign exchange bureaus. According to exchange and the difficulties of accessing finance. While the country scores poorly on economic indicies, it performs more favourably on governance indicies. The Mo Ibrahim Index ranks the country 17th of 52 African countries assessed in the annual Index of Governance Performance in Africa. The country also ranks a respectable 88th in the latest version of Transparency International’s annual Corruption Perceptions Index – a significant improvement on Malawi’s ranking in 2011. A change of fortune

2012 may well mark the year when Malawi’s fortunes changed categorically. President Joyce Banda rose to power in

2013 INVESTING IN Malawi 5 the IMF, “this stopped the overvaluation [of the Kwacha] and eased strains on “Not only does the Economic Recovery foreign exchange.” Plan address the value of the Kwacha, but it also looks to tackle economic Not only does the Economic Recovery Plan address the value of the Kwacha, imbalances and reengage but it also looks to tackle economic international donors imbalances and reengage international donors. The Reserve Bank of Malawi has been given more autonomy to implement monetary policy, with increased relations with key international partners Christine Lagarde approved of the independence to set interest rates. Price with much success. The UK government government’s efforts and praised its controls on petroleum products and agreed to reinstall its High Commissioner current policy direction: “I believe the electricity tariffs have also been eased or to Malawi, former US Secretary of State government’s Economic Recovery Plan removed, allowing for more cost efficient Hilary Clinton promised to resume lays the foundation for higher and better distribution. The ease of doing business discussions on a US$350mn energy quality growth.” She also drew attention was also partly addressed. Various deal and the EU Commission agreed to the inclusive nature of President taxes impeding the private sector were to release a total of EUR98 million in Banda’s plans for growth. Quoting the removed, including the minimum tax on funding. Three months after taking office, President, the IMF Managing Director turnover, taxes on gains from the sale of President Banda’s administration signed said: “President Banda understands this shares and VAT on a number of services. a three year US$157mn extended well. Consider how she puts it: ‘Growth To encourage exports, allowances were credit facility programme with the IMF. is about growth and prosperity for all, also increased by 10% to 25%. Local The programme aims to achieve and opportunity for all, happiness for all, production and exports have also been maintain macroeconomic stability and the political and economic freedom for all’”. encouraged, through the removal of implementation of policies and structural Lagarde went on to confirm the IMF’s import duty, import excise and VAT on reforms to spur growth, diversify the continuing support for Malawi, underlining raw materials. economy and reduce poverty. The the Fund’s commitment to helping the programme marked the return of budget country restore stability, boost growth, Perhaps most importantly, President Banda support from international donors. build capacity and strengthen institutions. sought to reengage the international community. Shortly after taking office, The IMF underlined its support for the Malawi’s business community is broadly President Banda went about repairing country in January. In a visit to Malawi, in favour of the current policy direction

6 Investing In Malawi 2013 Economic Overview

as well. The President of the Malawi Confederation of Commerce and Industry (MCCI), Matthews Chikankheni, said that the Economic Recovery Plan had released the economy from its “reverse gear” and delivered “much needed confidence.” But many have noted that the economy is still dependent on foreign support. While the return of international donors has been vital, President Banda has stated that the ultimate aim is to become less reliant on foreign aid. In short, she has said she is working to replace “aid with trade”.

But President Banda’s Economic Recovery Plan is not without consequence and opposition. The devaluing of the Kwacha resulted in a spike in inflation due to rising import costs. Inflation rose to over 30% in the last of quarter of 2012, with real wages facing marked downward pressure. Coinciding with a poor harvest, the devaluation of the currency has seen the price of essentials rise sharply: the price of maize has almost doubled, while the cost of electricity has jumped by almost a third. The impact has been widespread. The Malawian Centre for Social Concern estimates that the cost of living for low income families rose by 20% in 2012. In February 2013, Malawi’s civil “Shortly after taking office, President servants took to the streets to demand a 60% wage increase to compensate Banda went about repairing relations for falls to real wages. The country’s with key international partners with 120,000 state employees withdrew their labour, resulting in the closure of much success many services, including schools and the country’s two international airports. The government eventually ceded to attract investment. Indeed developments consumption in Africa) and livestock the two week industrial action and in agriculture, mining, oil and gas and as areas for future growth. The Banda signed a memorandum of understanding infrastructure, all have the potential to administration is, too, keen to improve with unions to address the problem. benefit both Malawians and investors. agricultural production across the board. Wage hikes ranged from 61% for the The government has committed to lowest paid to 11% for the highest paid, Much of the country’s workforce diversify and upscale the production with a commitment to keep the situation remains glued to agriculture – and is of key crops that have potential for under review. likely to do so moving forward. But export markets, including groundnuts, this presents a strong base from which rice, coffee, sunflower, soya, pigeon peas, Future food production can grow, generating cotton, cassava and sugar. To this end, Prospects wealth and addressing food insecurity. the government has also identified the Cash crops, such as tobacco, tea and need to incentivise commercial scale No doubt the transition to greater sugar, have long been mainstays for the farming through legislative reform and stability and prosperity will continue to be country’s exporters and will continue improvements to irrigation. challenging. But, by most accounts, reform to be. However, Malawi has started to efforts are starting to have a positive diversify away from overreliance on just The Banda administration is targeting impact. A more stable macroeconomic a few crops, with success producing tourism as another sector for potential climate has allowed the government to groundnuts, sugarcane, cotton and coffee. growth, seeing it as having “the potential to start looking towards the medium term According to the AfDB production of the generate revenue, employment, improve and pursue a strategy targeting broader four crops grew by 69.8%, 24.6%, 285% infrastructure, and promote Micro Small based, more sustainable development. To and 15% respectively from 2006 to 2010. and Medium Enterprises (MSMEs) as well this end, the government have set out a The US State Department identifies as conserve wildlife and culture.” With clear programme of projects to generate soya bean processing, dairy (Malawi has areas of genuine natural beauty, including growth, diversify the economy and one of the lowest levels of dairy product Lake Malawi, rich fauna and flora, nine

2013 INVESTING IN Malawi 7 national parks and ‘big 5’ potential, the of GDP, but the government aims to have suggested that the rock beneath the country has plenty to offer adventurous increase this proportion to at least 10%. Lake may well harbour hydrocarbons of tourists. But the sector lags behind some Uranium is a relative success story in this significant potential. The government has of its East African neighbours’ tourism regard. Discovered in the early 1980s, the granted the rights to explore for oil and industries due to a lack of infrastructure country’s uranium resource is a key asset, gas in Lake Malawi to British Surestream and until recently, lack of marketing. estimated to be 11,600 million tonnes Petroleum and South African SacOil. In To address this gap and promote the strong. Paladin Energy has developed sum, the government’s commitment to industry, the government is introducing a uranium mine at Kayelekara where ensuring transparency is encouraging; if measures as part of the Economic production is expected to ramp up to oil or gas were to be found, it is vital that Recovery Plan. These include steps to 1500 tonnes of uranium per year. Since is soundly managed in the interest of the restock wildlife reserves and develop opening in 2009, the mine has played a population at large. support infrastructure, promote Malawi significant role in the country’s growth. as a holiday destination, particularly to The government is keen to replicate this Malawi’s infrastructure will have to European markets, and simplify visa success in other areas with the mine alone undergo a significant upgrade to facilitate application and train more staff to fill any expected to increase exports by 25% over growth in the abovementioned sectors. skills shortages that currently exist. its lifespan. Under the Economic Recovery Malawi’s energy supply is intermittent Plan, the government intends to incentivise and unreliable. Consequently, activity in The mining sector is also attracting both new investment in mining by updating the manufacturing and mining suffer. President domestic and international attention, relevant legal framework, training the local Banda’s government has targeted energy registering 30% growth over the workforce to address skills shortages and supply as its leading medium term last five years. Malawi has significant ensure transparency throughout. priority. Hydroelectric power (Malawi is natural resources that have so far been blessed with abundant fresh water), coal underexploited for several reasons, East Africa has become of increasing and renewables such as solar and wind including inadequate energy supply interest to the oil and gas industry. From are under consideration, with public infrastructure. These include bauxite, Kenya, to Tanzania and Mozambique, private partnerships (PPP) touted as a heavy mineral sands, monazite, coal, explorers have found substantial oil and potential funding mechanism. Transport uranium, precious and semi-precious gas reserves throughout the region. links both within and out of Malawi will stones, limestone, niobium, dimension Malawi too, hopes to join its neighbours in also need attention, with the government stones and rock aggregates. Currently developing potential prospects underneath acknowledging that “poor transport the sector contributes less than 5% Lake Malawi (Nyasa). Geological surveys infrastructure continues to impinge on domestic and international trade and therefore poses major challenges to economic growth and development.” Efforts are in place to develop the transport corridor to Nacala as well as the Mtwara corridor, linking Tanzania, Zambia and Mozambique.

The Banda administration’s programme to address macroeconomic and structural imbalances, restore relations with the international community, attract foreign investment, remove market distortions and diversify the economy is extremely positive. The challenges addressed, and still to be addressed, are wide reaching but the initial outcomes are beginning to take effect. Growth is expected to be robust, outstripping the regional average over the next five years. As the government have set out, the country will require foreign investment and support to facilitate growth. But this, too, brings opportunity across a number of sectors. Agriculture will continue to represent the mainstay of the economy, but opportunities in mining, infrastructure, tourism and, potentially, oil and gas have the potential to create broad based growth. In turn, the country should be less vulnerable to external shocks. Indeed, if the country continues its newfound path, the future looks positive.

8 Investing In Malawi 2013 Economic Overview

Table 1 GDP Growth (%) 2007 2008 2009 2010 2011 2012 2013 projected average 2014-2017 Real GDP 9.5 8.3 9 6.5 4.3 1.9 5.7 6.7 Sources: IMF, figures for 2013 onwards are projections.

Table 2 External Sector 2007 2008 2009 2010 2011 2012 2013 projected average 2014-2017 Current Account 1 -9.7 -4.8 -1.3 -5.9 -4.1 -1.4 -2.8 Balance (% of GDP) FDI (US$ millions) 88.1 108 100 111 150 Sources: IMF, COMESA

CHART 1 Exports (2011) CHART 2 Imports (2011)

9.1% 14.4% 8.9%

11.5%

73.8% 80.6%

Source: WTO Source: WTO

Agricultural Products Agricultural Products Fuel and Mining Products Fuel and Mining Products Manufacturates Manufacturates

CHART 3 Export Destinations (2011) CHART 4 Import Sources (2011)

5.4% 5.3%

8.2% 9.3% 25%

29.8%

8.6% 11.5%

8.8% 12.6% Source: WTO Source: WTO

Eu (27) South Africa South Africa China Canada USA EU (27) USA Zimbabwe India

2013 INVESTING IN Malawi 9 Agriculture by Brian Naughton Agriculture in Malawi

anking among the It is fair to say that 2012 presented In terms of foreign direct investment world’s most densely significant challenges for Malawi’s (FDI), Malawi is also a signatory to populated and least agriculture sector. According to the international treaties for the protection developed countries, the World Food Programme (WFP), erratic of foreign investment, and its legal system RSoutheast African Republic of Malawi is rains and prolonged dry spells led to (based on English common law) protects a predominately agrarian society, with poor harvests in many areas and, even investment regardless of ownership. an estimated 82% of the population where food was available in local markets, living in rural areas. Agriculture accounts it was often too expensive for the In spite of the poor growing conditions for more than one-third of GDP and poorest households. Maize retail prices experienced in 2012, there have approximately 90% percent of export rose nearly 100% from the previous been some recent good news stories revenues. In recent years, tobacco year. Almost two million people were for agriculture in Malawi, including a production has been central to economic identified by the Malawi Vulnerability resumption in the exporting of peanuts growth – accounting for more than half Assessment Committee as food insecure (or groundnuts, as the crop is known in of all export revenues. Annual production and significant international assistance was much of Africa). Exports of groundnuts levels of tobacco reached 175,000 required in order to avert a humanitarian from Malawi dried up in the 1970s tonnes in 2011 but stalled in 2012 due crisis. Furthermore, other factors such as because of high levels of aflatoxin in part to both poor weather conditions. the political turmoil following the death contamination. Since then, more stringent Other important export crops include of President Mutharika, the impact of the European limits on aflatoxins in grains tea, coffee, macadamia nuts, groundnuts global economic crisis, climate change and and nuts have excluded many growers (peanuts), sugar, cotton, soya and timber. extreme poverty have all hindered recent across Africa, costing the continent an According to a 2009 study by the growth in the agricultural sector. But with estimated US$750mn per annum in United Nations Food and Agriculture a free market economy and a recently lost export revenues. Recently, however, Organization (UNFAO), the top ten reaffirmed commitment to democracy the National Smallholder Farmers’ agricultural products available for local and good governance, significant Association of Malawi (NASFAM) consumption are: maize, potatoes, cassava, international development funding has has been working in partnership with sugar, pulses, groundnuts, rice, plantains, begun flowing into the country, helping to farmers, trade organisations and scientific wheat and beans. ease many of Malawi’s historic problems. institutions such as the International Crop

10 Investing In Malawi 2013 Agriculture

Research Institute for the Semi-Arid Tropics (ICRISAT), to tackle the aflatoxin problem. Much has been achieved to re- establish groundnut production; exports resumed in 2005 and this important cash crop is now on the road to recovery. Best practices and new seed strains have also been adopted by farmers in Zambia, Mozambique and Uganda.

At the grass roots level, recent good news stories include a project spearheaded by the Global Forum on Agricultural Research (GFAR), working in conjunction with women in Malawi to set up Smallholder Enterprise Development Schemes (SEDS) designed to improve the efficiency of the fishing industry, which supports the livelihoods of 1.5 million people in Malawi and contributes about 4% to the national GDP. With funding from the Norwegian Ministry of Foreign Affairs through the Lake Chilwa Climate Change Adaptation Programme, GFAR has implemented a series of pilots that have dramatically improved the livelihoods of actors in the fish value chain. Historically, 30% of the fish caught have been lost post-harvest due to poor processing and packaging. But with Agricultural research institutions in the sufficient multi-stakeholder participation, country have developed cotton varieties the lessons learned from these pilot programmes can be adopted more suitable for local climatic conditions widely, providing a much needed boost to and yields are improving” an important local industry.

High level political efforts to improve the agricultural sector in Malawi include Investment the aforementioned agricultural crops the Agricultural Sector-Wide Approach Opportunities under irrigation; and suggests that this is (ASWAp), a joined-up initiative by an area ripe for investment. Horticultural the Malawian government – working Background products such as vegetables, flowers, in conjunction with development fruits and rice can be grown using surface, partners – to support priority activities Malawi provides some strong investment gravity, pump, river diversion and sprinkler in the agricultural sector that increase opportunities for foreign investors in its irrigation systems. MIPA estimates that, agricultural productivity, reduce hunger agribusiness sectors. Specific mention out of the 400,000 ha of land suitable and enable people access to nutritious should be made of cotton, where for irrigation, only 14,000 ha is under foods, as well as increasing the contribution investment opportunities include: cotton smallholder farmer irrigation and 48,000 of agro-processing to economic growth. growing; cotton processing, including ha under estate irrigation. This indicates a ASWAp directly supports the objectives ginning, spinning, weaving and knitting; huge gap that can be addressed through of the Malawi Growth and Development and the manufacturing of textiles and further investment. Strategy (MGDS) of reducing poverty garments. Other significant opportunities and transforming Malawi from an are to be found in the production of tea, Cotton importing and consuming economy into coffee, macadamia nuts, cut flowers, rice, Production a manufacturing and exporting economy. vegetables, fruit and fruit juice processing, It also supports the MGDS in the areas aquaculture, dairy and livestock farming, Malawi has been a cotton growing of food security, irrigation and disaster sesame processing, soya bean processing, country since the colonial era. The cotton risk reduction. The central emphasis of and the manufacturing of rubber products sector was vibrant for many years but ASWAp is to increase the contribution of and phosphate fertilizer. started to slump in the early 1990’s due agriculture to economic growth through to the decline in global prices for cotton the production of food crops and The Malawi Investment Promotion Agency and the increasing cost of cultivation, agricultural processing activities for both (MIPA) highlights the fact that Malawi has which eroded the profitability of the domestic and export markets. not fully exploited the production of crop for many smallholder farmers.

2013 INVESTING IN Malawi 11 Increasing capacity and moving up the marketable products. Opportunities range value chain are two major issues for from the development of commercial CASE STUDY the cotton sector in Malawi. There macadamia estates to providing post- Large-Scale Cotton Production are less than 10 gins in the country, harvest handling and processing facilities MIPA invites investors to start large- which are run by the state owned for smallholder farmers. scale cotton farming estates. Presently, Agricultural Development and Marketing cotton is mostly grown by smallholder farmers. The lower Shire valley districts Corporation (ADMARC) and other Arabica Coffee of Chikwawa and Nsanje produce private companies. With existing ginneries Production and about 31,144 tonnes of cotton out using only 25% of their ginning capacity, Processing of a national total of close to 50,000 there are opportunities for investors to tonnes. However, the cotton produced help increase productivity and add value Arabica coffee is the fourth most is not enough to meet the ginning to the cotton crop by converting it from important export crop in Malawi. capacity that is available in the country. raw cotton into other cotton products. Exports are made to European markets, The three existing ginning companies Asia markets and American markets. – Great Lakes Cotton Company, Clark Tea Production Coffee offers more profits than most Cotton and Iponga – use only 30% of other crops. their processing capacity. and Processing

Small Ginneries: Tea is the second most important export Coffee production favours the highland Oil Processing Plants crop for Malawi and it contributes areas of Misuku Hills, Phoka hills, Viphya Just like soya beans, cotton has a lot around 8% of total export earnings. north, Nkhata bay highlands and Southeast of byproducts that can be processed Tea is exported to European, Asian and Mzimba. Other areas include Dedza, further. Apart from the cotton lint, American markets. Ntchisi, Chiradzulu and Mulanje. In order the cottonseed can be crushed to to boost production, the government has make cooking oil and the leftover can Since tea is a major forex earner, privatised the Smallholder Coffee Trust, be turned into animal feed. Malawi therefore hopes to empower local additional investments are necessary which empowers smallholder farmers to Malawians to own small-scale ginneries through joint ventures with Malawian control coffee production. and oil extracting plants, since these do companies in the processing of tea and not require heavy capital investment. other byproducts and also in the actual Opportunities for investment exist farming of the crop. New opportunities in form of joint ventures in production also exist in the processing of green tea and processing of coffee into for East Asian markets. marketable products. More recently, things have been looking up. Agricultural research institutions in The Tea Association of Malawi coordinates Soya Bean the country have developed cotton information on the production and Processing varieties suitable for local climatic processing of tea in Malawi. conditions and yields are improving. It Malawi produces more than 35,000 metric is hoped that, with the introduction of Macadamia Nuts tons of soya beans per year. Most of the soya foreign investment and expertise, yield Processing bean is exported raw and little is processed levels can be increased from a current for food domestically. Malawi’s soil is estimated 800 kg/ha to as much as 3,000 Macadamia is among the most important very conducive to soya bean cultivation kg/ha in coming years. cash crops in Malawi. The nuts have a and farm gate prices are internationally variety of uses, ranging from usage in competitive. There is a growing demand, Investment opportunities exist in the confectionery products, eaten raw or both locally and internationally. commercial cultivation of cotton through roasted as dessert nuts. They are also contract farming, village adoption, used for household oil extraction and cooperatives and associations etc. These cosmetic manufacturing. Macadamia help to improve the production and products are exported to both Asian and quality of cotton with the objective of European markets. CASE STUDY providing raw materials to the textile The best location for a soya bean processing plant in Malawi is Kasungu, industry for its preferential markets under The current total area under macadamia where it is grown in huge quantities. the African Growth Opportunity Act cultivation is 2,200 hectares. Production The district produces 17,000 tons (AGOA), and the EU. of macadamia nuts is by both smallholder of soya per annum. Kasungu Boma farming and large-scale estates. The (CBD) has adequate infrastructure to There are also larger-scale opportunities, cost per hectare in Malawi is very low. support a processing plant. Additionally, such as the call for an investor to establish So far, macadamia bodies have been Kasungu is ideal because it is centrally a second spinning, weaving and knitting established and two processing plants located between the high soya plant in the country – to meet the demand are already operating. producing districts of Ntchisi (17,000 of garment manufacturing companies tons) and Mzimba (18,000 tons). operating under Export Processing Zone However, due to increasing demand for Therefore, it is economically viable to (EPZ) status. The investor will address the product, more foreign investment is transport soya from these districts to Kasungu. the issue of inadequate raw materials, being sought to boost the production particularly of knitted fabric. and processing of the nuts into various

12 Investing In Malawi 2013 Agriculture

the city of Lilongwe and surrounding districts where cut flowers can be directly CASE STUDY exported by air to Europe. Livestock Farming • Hay production through growing of The livestock industry in Malawi is not Rhodes grass and stocking it for sale to fully developed, evidenced by the huge farmers Fruit importations of dairy products, currently at • The manufacture of cooling tanks and Processing and around 50%. Opportunities exist in cattle collection equipment (e.g. milk churns) Canning Plant farming for beef and meat products, as well • Service provision, e.g. artificial as in milk and milk products, such as cheese insemination, the operation of dipping Malawi currently has no processing and yoghurt. Mzimba District in Northern tanks, administration of drugs and plant using local fresh fruit. Malawi has Malawi is highly recommended for the beef transportation of raw milk to processing a favourable climate for the production and dairy industry because of the existing plants. of a wide range of fruits that include cattle population and culture. Particular pineapples, tangerines and mangoes. The The Rehabilitation and Expansion areas such as Mzimba Boma, Champhira local market for these products is good of Northern Dairies Limited and Euthini have been earmarked for the and there are export opportunities to development of the beef/dairy industry The owner is seeking a loan to finance the South Africa and other regional markets. because they have the basic infrastructure rehabilitation and expansion of the dairy. needed for industrial development, including This includes the acquisition of a milk electricity, roads (or planned secondary collection tanker, processing equipment An investment opportunity exists to set roads) and water/sanitation. and general rehabilitation of the factory. In up a fruit juice processing plant in the addition, the company intends to increase southern region of Malawi. The estimated Dairy Industry the population of dairy cows to meet its project cost is US$5mn and the expected Malawi has about 4,000 registered dairy processing capacity through adequate return on investment is 33%. farmers producing approximately 6,500 supplies of raw milk. The project would also tonNEs of milk annually. Malawi’s milk enable the dairy to increase its product consumption is the lowest in Africa at range to include the manufacture of cheese Conclusion 5 litres per capita – against Africa’s per and sterilised milk. capita consumption of 80 litres and the It is clear that Malawi has vast untapped World Health Organization (WHO) Mini Dairy potential in terms of the development recommended intake of 200 litres. This Investors may also explore the possibility of of agribusiness. It has good transport shortfall underlines the opportunity for opening up another dairy in the Northern connections for exports to both regional investment. Key areas for investment at region of Malawi. Mzimba and Karonga are and international markets and an primary production level include: preferred locations because they have a underserved, indigenous market. It also ready market and infrastructure to support has preferential access to major markets • Cattle breeding this kind of development. represented by COMESA, SADC, LOME • Feed growing and feed production IV and AGOA.

Much of what needs to be achieved relates The government is encouraging increased production and processing of sesame oil to adopting best practices, improving growth, production and utilisation of soya into marketable products. efficiency and increasing economies of beans. As such, investment opportunities scale. Foreign investment brings with exist in the processing of soya beans Cut Flower it not only capital but also international into soya milk, soya oil and other Production expertise; enabling Malawi to make much secondary products. more of its agricultural resources, not Investment opportunity exist in the only in terms of scaling up production but Sesame production of cut flowers exclusively in terms of moving up the value chain into Processing for the export market in Europe. agro-processing, where higher prices for There are already some firms that are commodities can be achieved. Sesame, locally known as Chitowe, is used successfully exporting to Europe and in Malawi both for consumption purposes additional investment in this sector will There are clearly challenges to overcome, and as a cash medium in some rural areas. create economies of scale and hence such as the need for strategic investment It is used in confectionery products, for make Malawi’s cut flower industry more into irrigation to counter the problems seasoning side dishes, and in soap making competitive on the international market. associated with the recent volatility of and cooking (including sesame oil). Malawi has a favourable climate and the seasonal rainy spells, but there’s weather for the production of cut flowers. no denying the raw potential. With The crop grows along the lakeshore, competitive investment incentives, a in the Shire valley and on the warm Since flowers do not do well in cold seasons stable political environment, a liberalised plateau areas of Lilongwe, Mzimba, in Europe, Malawi has an advantage over economy and an English speaking labour Rumphi and Chitipa. Estimated annual producers in Europe during the festive cold force, the future of agriculture in Malawi production has averaged 205 tonnes seasons of November-February in Europe. should indeed be bright. over the past 10 years. The Government Investments are likely to yield high returns is encouraging increases in the and an initial investment capital might be [A special thanks to: Richard Chirombo, a journalist production of sesame and therefore no more than US$2mn. Sufficient labour at The Sunday Times (Blantyre Newspapers Ltd), opportunities exist in both the is readily available for such a project within for contributing material referenced in this article]

2013 INVESTING IN Malawi 13 Infrastructure by Natalia Debczak-Debski Infrastructure in Malawi

ver the past decade, poverty through sustainable economic of the country, Malawi is in need of greater infrastructure has growth and infrastructure development. investment in transportation infrastructure contributed 1.2% to the It follows the implementation of the to release its huge potential capacity. annual per capita growth of country’s first medium-term strategy, OMalawi’s gross domestic product (GDP). MGDS I, which was implemented Roads According to the African Development between 2006 and 2011. Furthermore, Bank (AfDB), raising the country’s the development of infrastructure is one During the mid-2000s, Malawi spent infrastructure endowment to that of of the five priority pillars of President close to US$200mn per year, about half the region’s middle-income countries Joyce Banda’s administration’s Economic of which went to the transport sector. could increase that contribution by 3.5%. Recovery Plan (ERP). However, road expenditure has fallen Although Malawi has had some success since and is short of what is needed to in infrastructure development – including President Banda has highlighted the preserve the network in good condition. reaching its Millennium Development importance of the sector, stating “a reliable Furthermore, fuel shortages and some Goal (MDG) for water almost a decade and modern transport infrastructure and imported basic commodities have ahead of the target and making GSM network is crucial for any country’s socio- affected the implementation schedules of telephone signals widely available without economic growth and development.” As major road construction projects, leading public subsidy-there are a number of a landlocked country, the government to huge costs for the projects, which were challenges that still remain. recognizes that Malawi is heavily dependent predominantly financed by international on effective road, rail and air transport donors. Currently, over 70% of Malawi’s In order to keep up with the demands networks, which are critical in supporting its public road network, just under 15,500 of sustained economic growth, the key economic activities, including agriculture kilometers is unpaved. This includes a government of Malawi has actively taken and tourism. Although steps towards large proportion of secondary roads steps to address its infrastructure needs improving the transportation network (approximately 87%), and almost all the through a number of policies, including are already taking place, poor transport tertiary and district roads. Despite the The Malawi Growth and Development infrastructure continues to impinge on poor condition of roads, road transport Strategy (MGDS II) which is the domestic and international trade as well as is the dominant mode of transport in overarching medium-term strategy from on the country’s development. With such a Malawi, accounting for 70% of all domestic 2011 to 2016 aimed at further reducing wealth of natural resources in remote parts traffic and 95% of all external trade.

14 Investing In Malawi 2013 Infrastructure

In December 2012, the government invited Expressions of Interest from consulting firms that were keen to provide supervision services for the construction of the Jenda–Edingeni–Euthini road, in the north of the country. The project will rehabilitate the 52km section and will be co-financed by the Malawi government together with the Abu Dhabi Fund for Development. Meanwhile, the 160km Lilongwe-Nsipe road, which is part of Malawi’s longest road running from the northern to the southern border is progressing. The project is mainly contracted by Portuguese multinational Mota-Engil and is being financed by the European Union. The government has also contracted Mota-Engil to reconstruct the Blantyre–Zomba road. The project is being financed by the AfDB as part of the Nacala Road Corridor Project, which falls under the Nacala Development Corridor, a development initiative involving areas in Malawi, Mozambique and Zambia.

The government also remains committed to doing as much as it can to improve “As a landlocked country, the the country’s road infrastructure in areas of tourist attraction as tourism is government recognizes that Malawi is another key sector identified in the ERP, heavily dependent on effective road, with the Minister of Transport and Public Infrastructure, Sidik Mia, noting that the rail and air transport networks, which government is “prioritising roads that are are critical in supporting its key in touristic areas such as in Mangochi”. economic activities Rail

Malawi Railways was the national rail the railway line and related infrastructure Aviation network in Malawi until it was privatized as well as creating connections to ports and airports in 1999, when the Central East African and thus to industrial sites and regional Railways (CEAR) consortium began and international markets. Malawi has a relatively small air transport operating the network. Although some market. In a 2010 report by the Africa improvements have been made since Malawi’s links with the rest of the Infrastructure Country Diagnostic, it privatisation, the CEAR’s performance continent are steadily improving. In was reported that the domestic market does not compare favorably with rail December 2011, Brazilian mining group accounted for no more than 167,000 networks in neighboring countries. Vale Logistics Limited signed a concession seats, while the international market Malawi’s rail network, which totals 797km contract with the government of Malawi came to 435,000 seats. of single track, much of which is in poor to rehabilitate and operate the existing condition, has relatively high freight tariffs railway, the Nacala Railway Line to the In late 2012, Air Malawi Limited, the and slow transit times. Improving Malawi’s port of Nacala in Mozambique, Malawi’s state-owned national airline of Malawi, rail capacity is thus seen as essential for shortest route to the sea. The project was placed in voluntary liquidation, after regional development and trade. As will provide a cheaper alternative to road two previous restructuring attempts President Banda noted; ‘”transport costs transport and facilitate an annual freight failed. Since then, it was agreed in March constitute about 60% of the landed cost of 5.1mn metric tonnes of exports and 2013 that Ethiopian Airlines would of goods in Malawi. If we are going to be imports. Furthermore, the construction control a 49% stake in Air Malawi with competitive regionally and internationally itself represents a US$1bn investment in the Malawian government holding 20%. we need to bring those costs down.” Malawi over three years and the project The remaining 31% has been open to is expected to create over 3,000 jobs. Malawian citizens who can either as As part of Malawi’s ERP, the government The railway line is to be completed in individuals or institutions invest in the has hopes to reduce transport costs by 2014 and once it is fully operational, the national airline. In the short to medium making rail transport more efficient and government will earn US$8mn annually term, encouraging, indeed achieving competitive by rehabilitating and expanding from concession fees. investment is crucial to improving the

2013 INVESTING IN Malawi 15 capacity of the country’s aviation sector and will provide it with reliable service to “As part of Malawi’s ERP, the government regional hubs. For the time being, although has hopes to reduce transport costs by Air Malawi Limited remains financially making rail transport more efficient unstable, regional airlines, including South Africa Airways and Kenya Airways, also and competitive serve the landlocked country.

In the 2011/2012 fiscal year, the government reported that it had Inland Water has calculated that when the new port completed the rehabilitation of the Transport becomes fully operational, Malawi may runway at Kamuzu International Airport save US$175mn of its total annual import as well as the rehabilitation of the Water transport is generally cheaper than bill. The project will open the country terminal building. The Malawi government other forms of transport and provides a to ports along the Indian Ocean and it has also recently signed a Memorandum viable alternative for transporting goods is anticipated that the reduced transport of Understanding with China Harbour domestically as well as internationally. costs will facilitate increased production Engineering Company (CHEC) for With a wealth of lakes and navigable of agricultural crops including maize, the upgrading of Kamuzu International rivers, Malawi has an advantage in cassava, sweet potatoes and rice. Airport, in Lilongwe, and the building water transport, yet the country’s water of a new airport in the resort town transport system is not fully developed ICT of Mangochi. and faces a number of challenges including dilapidated port infrastructure; an ageing The dismantling of regulatory barriers Furthermore, the government is fleet of vessels; and capacity problems. has allowed the private sector to expand optimistic that the establishment of a GSM services throughout the Malawi, new independent airports management The government has stated in the MGDS which has resulted in the country’s GSM company, the Malawi Airports Authority, II that the development of Nsanje World signal coverage reaching over 94% of the which is expected to be operational by Inland Port and Shire Zambezi Waterway, population. Currently a duopoly is held by July 2014, will provide the country with construction and rehabilitation of ports Bharti Airtel and Telecom Networks in a unique opportunity to support and along Lake Malawi and acquisition of Malawi, but with the addition of a third improve its ageing infrastructure. vessels will be a priority. The government operator, Celecom, which is expected to

16 Investing In Malawi 2013 Infrastructure

be launched in April 2013, competition will be increased.

Malawi’s Internet sector is reasonably competitive with 15 licensed ISPs, however, with high costs and limited availability of broadband access, growth has been slow and prices have remained relatively high. However, this is all set to change as the government is in the process of seeking a private partner to gain access to international submarine fiber optic cables for the first time when a transit link via neighboring countries is completed, which will reduce the cost of international bandwidth as well as broadband marketing. Water and Sanitation

The Government of Malawi, through the Ministry of Agriculture, Irrigation and Water Development, leads efforts to deliver improved water and sanitation in throughout the country and has made progress in providing access to safe water and sanitation to an increasing number of its people. According to the World Health Organization/United National’s Children Fund (WHO/UNICEF) Joint Monitoring Program (JMP), Malawi was one of only five sub-Saharan African countries to already have reached its MDG for water in 2006. In 2012, the WHO/UNICEF JMP reported that 83% of the population had “The government of Malawi is access to an improved drinking water determined to facilitate the necessary source. Despite these achievements, there has been less progress made in investment to key infrastructure sanitation, and Malawi remains off-track sectors and create an essential, yet from achieving its sanction MDG target favorable environment for investors with only 51% of the population having access to an improved sanitation source. to ensure that the economy However, with the development of the continues to flourish National Water Policy and National Sanitation Policy, the government hopes to stimulate improvements across water and sanitation facilities. becoming increasingly involved in the investment to key infrastructure sectors construction and repair of water supply, and create an essential, yet favorable Currently, the financing of water and irrigation and sanitation facilities. And environment for investors to ensure sanitation programmes is predominantly increasing investment opportunities in that the economy continues to flourish. provided by donors through agencies such this vital sector – partly through Public Specific measures have already been as NGOs, UNICEF and the government Private Partnerships (PPPs) – are being enacted in order to deregulate the itself. For example, up to 850,000 promoted by the government. private sector and create new investment Malawians are expected to benefit opportunities including the elimination from UK government’s Department for Conclusion of price controls and the termination of International Development’s (DFID) import restrictions and import licenses. US$33.3mn Malawi Integrated Water According to estimates by the AfDB, and Sanitation Programme, which seeks addressing Malawi’s infrastructure deficit 2013 is certainly looking promising for to improve access to safe water, hygiene would require sustained expenditures Malawi’s infrastructural development and and sanitation in the country’s least of almost US$600mn per year between a great deal of progress is being made served districts by 2015. Progress is also 2006 to 2015. The government of Malawi with a number of key developments on being made through the private sector is determined to facilitate the necessary the horizon.

2013 INVESTING IN Malawi 17 Extractive Industries by Roger Murray Extractive Industries in Malawi

alawi hosts a variety Geological data indicates that Malawi also For oil and gas exploration purposes, the of minerals – including hosts potentially large recoverable oil and government divided Lake Malawi into uranium, coal, gold, gas deposits beneath Lake Malawi (Lake six blocks and invited bids for acreage niobium, rare earth Nyasa), and three exploration licences in 2010. Two four-year exploration elementsM (REEs) and graphite – of which have been granted so far. However, licences have been awarded so far: to only two, uranium and coal, are currently drilling for hydrocarbons will not proceed South Africa’s SacOil (Block 1) and the mined. Malawi is generally under-explored until an agreement has been reached UK’s Surestream Petroleum (Blocks 2 but in recent years a growing number of with Tanzania on the delineation of their and 3). Surestream is initially conducting foreign firms and local Malawian investor common border through the lake. Malawi an environmental and social impact partners have been granted prospecting claims it runs along the Tanzanian shore, assessment (ESIA), while SacOil plans rights, and exploration now underway while Tanzania claims the border should to spend US$2mn on the acquisition is likely to result in the development of run through the middle of the lake. of gravity and magnetic to evaluate the several new mines, especially for niobium petroleum potential of its block. and REEs. Thankfully, both governments have agreed to mediate the territorial dispute; Government Mining currently accounts for only around in January 2013 the Forum of Former to revamp 2% of GDP, with tobacco, sugar and tea African Heads of State and Governments current laws remaining the main exports by value. chairperson and previous Mozambiquan However, the start of uranium production President Joaquim Chissano accepted Exploration and mining licences are in 2009 by the Kayelekera mine has the Malawi and Tanzania governments’ granted in accordance with the provisions diversified Malawi’s export base: uranium December 2012 submission of a joint of the Mines and Minerals Act, 1981; exports were worth Kw19.4bn (US$76 application of mediation for negotiation exclusive prospecting licences (EPLs) mn) in 2011, an 8% share of total exports of the Lake Malawi boundary. Both are allocated for an initial three years, (Kw236bn), and will have further increased governments have committed to finding renewable for further two year periods. in 2012 due to higher production that year. a peaceful solution to the dispute. Mine production rights are negotiated

18 Investing In Malawi 2013 Extractive Industries

through specific mining development funded by the European Union, French Mining and agreements, usually lasting for ten years. government, World Bank and the exploration The system has been well-regarded by European Union. The project will facilitate mining investors as providing a transparent the development of infrastructure Uranium regulatory and licencing regime. for generation and distribution of reliable geological information and the Australia’s Paladin Energy owns However, it lacks some of the desirable development of policy instruments to an 85% interest in the Kayelekera aspects of a modern investment regime, steer good governance and growth of uranium mine near Karonga in northern particularly in respect of provisions the mining sector. Malawi in partnership with the to encourage local participation and government (15% interest) under a ten downstream value adding. In consequence, Promotion of local and foreign year mining development agreement President Joyce Banda announced a investors in the mining industry signed in 2007. Kayelekera was officially comprehensive review of the regulatory, The government has put in place opened in April 2009. Uranium oxide fiscal and investment regime for the mechanisms to promote the (U3O8) is sold to global utilities under mining and oil sectors in her February participation of local and foreign contracts negotiated by Paladin for 2013 State of the Nation address. investors in the mining industry as use as fuel for nuclear power plants. a means of generating income and Initial operational problems have been As a first step, the former Ministry of creating employment for poverty successively overcome and Kayelekera Mines and Energy was split into two reduction. The government is assisting operated close to its design capacity ministries at the end of 2012, involving the small scale miners by mobilising mining of 3.3 million pounds (1,497 tonnes creation of a separate Ministry of Mining. artisans into cooperatives and building (U3O8)) per year in 2012. Production The Minister of Mining is John Bande, the their capacity in mining so that they was 1,298 tonnes (U3O8) last year, up former Minister of Trade and Industry, add value to their mineral products. 30% on 2011. with Leonard Kalindekafe appointed as Permanent Secretary. Dr Kalindekafe is the former director of the Malawi Geological Survey and holds a PhD from the University of Dundee Centre for “Geological data indicates that Malawi Energy, Petroleum, Mineral Law and Policy. also hosts potentially large recoverable oil and gas deposits beneath Lake Malawi President Banda said the review is designed to create an enabling (Lake Nyasa), and three exploration environment for a conducive, transparent licences have been granted so far and accountable mining regime in the country. She stated: “My government will ensure that the mineral resources benefit Malawians”, adding that “chaka chino ndi chaka chamayankho” (the year will be marked with breakthroughs) as the government implemented the 18-month Economic Recovery Plan (ERP) launched in mid-2012. She also emphasised the importance of improving the legal and institutional framework, enhancing mining and oil exploration activities and promoting foreign and local investors along with small-scale artisanal miners. Planned improvements in infrastructure (such as roads and railway connections) as well as in the energy sector will also have a positive impact on mining.

She outlined the following priority projects of the Ministry of Mining:

Establishment of legal and institutional framework – the government is reviewing the Mines and Minerals Act, Petroleum Policy and Petroleum Act. The government has also launched (on January 22, 2013) the Mining Growth and Governance Support Project,

2013 INVESTING IN Malawi 19 Operating profitability has been adversely affected by the depressed uranium price since the March 2011 tsunami- related damage to Japan’s Fukushima nuclear power plant. To counter the impact of events over which the firm had no control, it is implementing a cost reduction programme aimed at driving down Kayelekera’s high unit costs. This is focussed on optimising processing efficiencies, expanding acid output from the on-site plant to further reduce import requirements and a power connection to the national grid. It also involved the temporary retrenchment in January 2013 of 130 employees (110 Malawians and 20 expatriates).

The grid connection is scheduled for September 2013 and is expected to achieve two-thirds of the targeted reductions by ending the need to use expensive on-site diesel generation. Paladin anticipates unit costs will be cut to around US$35-38 per pound U3O8 during its 2013/14 (July-June) financial year; at the prevailing uranium price of just over US$40 per pound this “The government has put in place would enable Kayelekera to run at an mechanisms to promote the participation operating profit. of local and foreign investors in the Niobium mining industry

The most advanced new mining development is the Kanyika niobium project at Mzimba, north of Lilongwe, Kanyika would comprise an open pit (JOGMEC; 67%), a quasi-government with production of ferro-niobium mine and refinery (costing an estimated company, through Spring Stone expected to start in 2015, with a 20- US$220mn), with a production capacity Exploration, with Japan’s Mitsui year mine-life. The project is owned of 3,000 tonnes per year of niobium Mineral Development Engineering Co. by Canada’s Globe Metals & Mining, in metal and 4,500 tonnes per year of (MINDECO) conducting exploration which state-owned East China Mineral ferro-niobium. The current financial under a technical services agreement. Exploration and Development Bureau model (which may be adjusted by the (ECE) is the majority (53%) shareholder. DFS) indicates a base case net present No resource estimate has yet been ECE has invested A$48mn to take value (NPV) of US$301mn and a 23% completed but sample analysis showed Kanyika through to final feasibility and internal rate of return (IRR). The Kanyika good potential for extracting REEs the environmental impact assessment deposit contains 60 million tonnes through leaching. A US$4mn phase (EIA) for the project was approved by grading 0.29% niobium, including a high- two drilling began in August 2012, with the government in late 2012. grade component of 21 million tonnes the aim of moving to pre-feasibility by grading 0.41%. mid-2013. MINDECO is to conduct Negotiations on a mining development metallurgical testing to determine agreement with the government are REEs REE leachability. Phase one drilling in expected to be completed by mid-2013 2011 located a surficial horizon of REE- and once in place the firm says it is ready Canada’s Gold Canyon Resources bearing clays, with drill core analysis to take an investment decision to start is exploring the 1,050 square revealing heavy REE enrichment. construction of a mine, as a definitive kilometre Chambe Basin clay-hosted Initial leach testing indicated that REE feasibility study (DFS) of the project is REE deposit at Mount Mulanje in recovery may be possible through ionic nearly finished. The firm is also working southern Malawi, one of the few of the solution leaching. Exploration work was with Chinese niobium and tantalum ion-adsorption type occurrences temporarily suspended in late January mining firms to discuss opportunities known to exist outside China. 2013, after the local community obtained for developing a joint venture to assist The project is a joint venture between a court injunction, owing to concerns in optimising production processes for Gold Canyon (33%) and Japan Oil, that the project would affect tourism in Kanyika once it is in production. Gas and Metals National Corp. the area.

20 Investing In Malawi 2013 Extractive Industries

production at Mwaulambo, following the installation of a new mining plant. This is expected to more than double capacity from 10 tonnes per hour to 25 tonnes per hour of washed coal.

In January 2013, Australian Intra Energy Corp. (IEC) acquired coal mining and exploration licences, including the operational Nkhachira colliery, through its US$0.8mn purchase of Consolidated Mining Industries and a loan to the local company of US$150,000. Intra Energy has formed a joint venture company, Malawi Coal Co. (Malcoal), in which it owns a 90% interest and CMI a 10% free-carried interest, to which the licences have been transferred. Three exclusive prospecting licences (EPLs) are located in northern Malawi at Livingstonia, Mwapu and Mwenewenya.

On completion of the transaction, the IEC chairman, Graeme Roberston, said the firm’s objective was to develop “an international standard coal mine to supply existing industrial markets and Another Canadian firm, Mkango Africa’s Mintek. Mkango completed the support coal-fired electricity generation Resources, is focussed on the exploration first US$750,000 tranche of a US$2mn in the country”. IEC completed geological and development of REEs and associated private share placement in March 2013, mapping and exploration drilling as part of minerals in Malawi, via its 100% interest the proceeds of which will fund further due diligence in 2012; its immediate focus in the carbonatite-hosted Songwe Hill metallurgical test work, mine planning, will be expanding output at Nkhachira deposit, Phalombe district, Southern environmental studies to move the by introducing mechanised operations, Region. The firm has located a near project through pre-feasibility. with a contract mining agreement already surface resource thought to be sufficient negotiated with a local contractor. for a 20-year mining operation. An initial Coal (October 2012) code-compliant mineral Other minerals resource estimate for 469,200 tonnes of Malawi hosts a number of known total rare earth oxides (TREO) covers bituminous and semi-bituminous coal The UK’s Britannia Mining (49.3% the the deposit’s northeast portion; 213,100 deposits, the greater number (13) of Carpe Group, 49.3% Elsworth and Fen) tonnes is classified as indicated at a which are located in northern Karoo is exploring high-grade iron ore and 1.62% TREO average grade, and 256,100 basins. About 70,000 tonnes per year coal resources on licences at Nthale tonnes inferred, grading an average are produced for the domestic and (Mindale Hill) and Ntcheu in southern 1.38%. The resource is mainly above regional (Kenya and Tanzania) markets, Malawi, and Mphwamphwa in the north. 200 metres’ depth and mineralised ore with active plans in hand to expand Its main Nthale iron ore project close to deeper than 350 metres has yet to be production. Currently operating mines Blantyre has existing road and rail links to drill-tested. include Mwaulambo colliery on the Mozambique’s Nacala port. Johannesburg- Lufira coal field and Mchenga colliery on based geological consultants Bastion Scoping and metallurgical test work on the Livingstonia field, both in northern Resources have been contracted to ore samples are underway by South Malawi. Eland Coal Mining is set to double conduct further exploration, with Blue Mantle Partners appointed to complete environmental studies.

Another UK firm, South East African “The most advanced new mining Mining (SEAM), has begun exploratory development is the Kanyika niobium drilling for gold and base metals at its South Dwangwa project in central project at Mzimba, north of Lilongwe, Malawi. Drilling is being conducted jointly with production of ferro-niobium with Portuguese engineering group Mota-Engii, focussed initially on the expected to start in 2015, with a Kadyalumba Hill and Kamwala-Mtenthela 20-year mine-life primary targets.

2013 INVESTING IN Malawi 21 Tourism by Brian Naughton Tourism in Malawi

f you were an enthusiastic So perhaps Malawi is a destination that lives and agriculture accounting for more than traveler planning your next exotic up to the hype after all? Well, it is certainly one-third of GDP and almost 90% of holiday location and you happened true that investors are beginning to reassess export revenues. It has historically relied to chance upon the landlocked this small African country and growing heavily on cash crops such as tobacco IRepublic of Malawi in a glossy holiday numbers now perceive it to be a viable, and tea as sources of foreign exchange brochure, you would be forgiven for investable, eco-tourist destination. With but in recent years the government has thinking that you had stepped into the bags of untapped natural potential, recent made concerted efforts to diversify the rarified world of an ad man’s over-fertile investments into its wildlife reserves by the country’s economy into other sectors – imagination. In such brochures, Malawi is likes of the World Bank, a largely English and tourism is a priority sector. invariably lauded as “the warm heart of speaking population and a liberalised, free Africa” and its central attraction – the market investment environment, it’s not A thriving tourism sector will not only 500km-long Lake Malawi – is emphatically hard to see why serious tourism money provide a welcome, additional supply described as the “lake of stars”. Emotive is starting to take a renewed interest in of foreign exchange but it will attract though the promotional language may Malawi – it is beginning to look like a safe much needed foreign direct investment be, it’s not altogether misleading. Malawi bet from a risk-reward perspective. There (FDI), which will in turn facilitate a does indeed have an unrivalled reputation are of course still challenges to overcome, more sustainable form of ‘grass roots’ for hospitality and friendliness, and a including those that relate to the lack of development; including, for example, magnificent, shimmering lake stretching infrastructure and the negative impacts new employment opportunities for poor, along its mountainous, eastern borders of climate change and rural poverty, but rural communities, and sustainable forms with Tanzania and Mozambique. Malawi the general trend is definitely towards an of tourism that will facilitate and fund also has its fair share of wildlife (even increasingly vibrant tourism sector; capable the protection and preservation of the by African standards), including an of competing with some of the more natural resources that they rely on. opportunity to see the ‘big five’ (lions, established African tourist destinations leopards, elephants, rhinos and Cape such as Kenya and South Africa. Tourism is considered a key strand in buffalo) in the Majete Wildlife Reserve Malawi’s poverty reduction strategy, plus a host of other wildlife opportunities, Malawi’s economy is currently based especially as the country can attract high- including exploring the abundant aquatic primarily on agriculture; with over 80% of spending tourists as an eco-destination. life in its great lake. its 15 million people living in rural areas, According to the government, 5% of

22 Investing In Malawi 2013 Tourism

the income generated by tourists visiting national parks is already redistributed to local communities for economic and social projects, including investment into schools, healthcare clinics and local agricultural programmes. In other words, the tourism sector is already having a significant impact on socio-economic development at the local level.

As previously mentioned, in terms of established tourism, Malawi’s biggest attraction is its great lake -– a vast stretch of crystal water lying beneath its mountainous eastern borders with Tanzania and Mozambique. Lake Malawi is the third largest lake in Africa – and the ninth largest in the world. Small villages adorn its northern shoreline and the stunning Liwonde National Park lies on its southern shores. Over 500 species of fish are to be found in its clear blue waters, making it an excellent destination for freshwater diving “Tourism is considered a key strand and snorkelling. It is also home to some in Malawi’s poverty reduction beautiful beach resorts, offering a wide variety of activities, including swimming, strategy, especially as the country snorkelling and diving, boat trips, kayaking, can attract high-spending tourists sailing, water skiing and sailboarding. as an eco-destination But Malawi as a tourist destination has much more to offer than just water sports and beach holidays. It has world class cultural and historical sites such as Northern Region: Rumphi, Nyika Plateau, wildlife reserves, including opportunities missionary graves and slave trade villages. Chisanga Falls, Nkhata Bay to see the ‘big five’ in their native habitat, as well as some of the finest hiking routes Areas within the tourism sector which Central Region: Nkhotakota Hot Springs, in Africa, with a wonderfully diverse have huge potential for investment and Nkhotakota Rain Forest Game Reserve, range of landscapes, from the rolling hills development include the following; Deza Rain Forest Eco-Lodge and high altitude grasslands of the Nyika Plateau, to the rugged, sheer escarpments Development of tourism facilities near Southern Region: Mulanje Likhubula and dramatic peaks of Mount Mulanje, to Lake Malawi: construction of lodges, Dam, Game Lodge within the Liwonde the breathtaking scenery, rich history and transport facilities (including cruise National Park, Zomba Plateau (Williams culture of the Lower Shire Valley. ships) and recreational activities Falls), Mangochi (Cape Maclear), Nsanje (Majete Game Reserve) Investment Cultural Tourism: potential to develop Opportunities the rich cultural heritage, which would Likhubula Falls include showcasing of arts and crafts, Eco-Tourism The government of Malawi is traditional dances and historical sites Project actively encouraging the growth and such as slave trade villages development of the tourism sector under An opportunity exists for construction of the Strategic Tourism Development Plan, Spas: exploiting the potential at hot twenty-five eco-tourism accommodation placing emphasis on the development springs in Nkhotakota, Liwonde and units at Dziwe Lankhalamba Pool, at an of eco-tourism, the construction of along the northern lakeshore to elevation of 1,000 metres, on the western international conference facilities, hotels, develop spas slopes of Mount Mulanje. lodges, recreational facilities and the development of tourist camps around Recreation Facilities: development Manchewe Falls the country’s numerous hot springs. of cinemas, casinos, water sports, Prospective investors may invest in some horseback riding and nature walks. The site is four kilometres from the of Malawi’s unique areas of natural beauty historic Livingstonia Mission in northern around Lake Malawi, Mulanje mountain Multiple regional areas have been Malawi. Investment is needed to slopes, Nyika Plateau, protected areas earmarked for high quality, eco-tourism construct a two-storey eco-lodge with such as national parks, wildlife reserves projects, many of which offer significant fifteen double rooms, accommodating up and nature sanctuaries, as well as in opportunities for investors. to thirty people.

2013 INVESTING IN Malawi 23 on an ambitious plan to make the country a leading eco-tourism destination over the medium-term, with an emphasis on sustainable development and making the most out of its inherent strengths – its abundant wildlife and its stunning landscapes, including its vast lake and its mountainous plateaux.

Malawi has recently had some major tourism-related wins, including being crowned runners up in the 2012 Safari Awards “Best Africa Tourist Board” category – beaten only by Kenya, which has long been deemed the gold standard for African safaris. The recent introduction of leopards and lions into the 70,000 hectare Majete Wildlife Reserve – to compliment the existing elephants, Cape buffalo, sable and black rhinos – has been the focus of much industry and media attention, and “Malawi has recently had some major it marks a significant milestone in the tourism-related wins, including being rehabilitation of the reserve, as part of an ongoing conservation success story that crowned runners up in the 2012 is enabling Malawi to compete with the Safari Awards “Best Africa Tourist likes of Zambia, Tanzania and Kenya for Board” category safari tourism dollars. In the east of the country, approximately US$850,000 is being invested by Likoma Island Land & Lake Safari is seeking a joint The World Bank into the 700 square Projects – venture partner to build, develop and mile Nkhotakota Wildlife Reserve, Chiponde Site run a tourist lodge in Lilongwe, within in order to conserve and protect the protected confines of the Lilongwe wildlife and develop strategies to The Chiponde site is on the southeast Nature Sanctuary. This is one of the drive sustainable tourism. The investment, shores of Likoma Island. Likoma has a tourism projects that the government is which includes training for local diversity of attractions and the market working on with the private sector under people in both guiding and natural envisaged for the unit is both local, a concessionary agreement. resource management, is expected to regional and international. significantly boost visitor numbers and The Malawi Development Corporation interest in the region. Ulisa 1, 2 and 3 (MDC) intends to construct and operate a game lodge within the Liwonde National In addition to investment in wildlife, Ulisa is on the western shore of Likoma Park, this can be investment opportunity Malawi is benefiting from gradual Island where sandy bays are protected by for investors. Hotels can be built along the improvements to its infrastructure, granite rock outcrop. beautiful Lake Malawi as it is a popular including better airline links to Europe. tourist destination. Its sandy beaches and Ethiopian Airlines, for example, has Maleri Islands unique species of fish offer tourists and recently introduced an improved summer other visitors exciting holidays. schedule from London Heathrow to These are three islands in the northern Lilongwe. With more tourism money part of Lake Malawi National Park. Conclusion flowing into Malawi each year, it is likely A multi-purpose structure incorporating that other airline operators will soon a restaurant/bar/lounge with 20 In summary, it is fair to say that the follow suit. Over the last 18 months, independent grade separated units built tourism sector in Malawi is already well the country’s tourism industry has with natural materials would be suitable. established and growing. In spite of recent been further boosted by significant global challenges, such as the high cost of investments from high profile operators Other travel, and more local problems, such as and accommodation providers such Investment the provision of adequate tourist facilities as Robin Pope Safaris and Saga. With Opportunities and basic infrastructure, it is clear that the big players finally getting involved and potential for growth in Malawi’s tourism plenty of scope for structured forms A total of four sites have also been sector is considerable – especially in the of investment on the ground, Malawi’s identified for eco-tourism development rapidly growing, high-value area of eco- tourism sector looks set to develop in the Nkhotakota Wildlife Reserve. tourism. The government has embarked rapidly from here on in.

24 Investing In Malawi 2013 Programme

Programme UK – Malawi Trade & Investment Forum London, 20th March 2013

8.00am – 9.00am 11.30am – 1.00pm Registration and Refreshments Investing in Energy, Mining and Infrastructure

9.00am – 9.20am Chair – Leon Isaacs, Managing Director, IAMTN Opening of the Forum • Hon John Bande MP, Minister of Mining, Government of the Republic of Malawi Atam Sandhu, Chief Executive, Developing Markets Associates • Rob Mills, Energy Economist, World Bank • Alexander Lemon, President, Mkango Resources Rt Hon David Mundell MP, Parliamentary Under Secretary for the • Dean Lungu, Chief Executive, Bwanje Cement Office of Scotland Q & A session

Hon Ephraim Chiume MP, Minister of Foreign Affairs and 1.00pm – 2.30pm International Cooperation, Government of the Republic of Malawi Networking lunch

9.20am – 9.40am 2.30pm – 4.00pm Keynote Speech: Her Excellency Dr Joyce Banda, President Investing in Key Sectors of the Republic of Malawi Chair – Richard Dowden, Director, Royal African Society 9.40am – 11.00am • Hon Sosten Gwengwe MP, Minister of Industry and Trade, Economic Outlook and Opportunity Government of the Republic of Malawi • Clement Kumbemba, Chief Executive Officer, Malawi Investment Chair – Henry Bellingham MP, Former Minister of State for Africa and Trade Centre • Hon Sosten Gwengwe MP, Minister of Industry and Trade, • Eric Ichikowitz, Executive Director, Trans Africa Capital Government of the Republic of Malawi • Charles Harman, Chief Executive, BXR Partners • Clement Kumbemba, Chief Executive Officer, Malawi Investment • Prince Kapondamgaga, Farmers Union of Malawi and Trade Centre Q & A session • Charles Mudiwa, Managing Director, Standard Bank • Graeme Robertson, Chairman, Malcoal Mining 4.00pm – 4.15pm Q & A session Closing Remarks: Hon Sosten Gwengwe MP, Minister of Industry and Trade, Government of the Republic of Malawi 11.00am -11.30am Refreshments break 4.15pm-5.30pm Gala Reception

2013 INVESTING IN Malawi 25 Our Partners Malcoal Mining Limited Intra Energy Corporation Limited of the Eastern Africa strategy of IEC to by no later than end 2016. The project (IEC) is an Australian-based mining and be a major coal producer for regional scope includes the design, engineering, energy company with major thermal demand from industrial users and energy construction, operation and maintenance coal assets in Eastern Africa. In Malawi, development. of the power plant and its ancillary Malcoal Mining Limited (Malcoal) is a infrastructure and IEC is considering joint venture between IEC and its local IEC is in the prefeasibility stage of potential expansion to 200MW (net) or partner, Consolidated Mining Industries developing a minimum 120MW (net) doubling capacity with a second plant of Limited (CMI). Malcoal is an integral part coal fired power plant at Chipoka, Malawi 120MW.

The Kemet Group The Kemet Group is a group of private Tin, Iron Ore, Bauxite, Tungsten, Gold, an interest in Gabonese Forestry and companies that invests in and manages Potash, Phosphates, Oil, Forestry and sustainable development. The group is a range of natural resource, mining, and Commercial Agriculture across seven also engaged in a number of Ferrous energy projects across sub-Saharan East, Central and West African countries. Metal exploration and beneficiation Africa. The Kemet Group presently has Through SFMA and the Mayumba initiatives in Gabon. producing or development assets in Development Company, Kemet has

Trans Africa Capital Trans Africa Capital is a diversified private development, logistics, manufacturing, The Group has operations across sub- equity group with interests in aerospace, commercial agriculture, agri-industry, Saharan Africa. wireless communications, property retail and mid-stream oil and gas.

Globe Metals and Mining Globe is an African-focused resources recently released Mineral Resource with East China Mineral Exploration company, with a strategy to become the indicates Kanyika could support a 20 and Development Bureau (ECE), a major niobium and tantalum producer year mine life. Globe’s corporate head Chinese State Owned Enterprise with in southern and eastern Africa. Globe’s office in Perth, Australia is supported by extensive mining operations in China primary focus is the advanced multi- regional operational offices in Lilongwe and overseas. ECE is now the major commodity Kanyika Niobium Project and Maputo. The Company has been shareholder in Globe, and a key partner in Malawi, which will produce niobium listed on the ASX since December 2005 for Globe’s exploration and development pentoxide and tantalum pentoxide, key (ASX:GBE). In April 2011, the Company programme in Africa. additives in sophisticated steels. The entered into a strategic partnership

BXR Group BXR Group, headquartered in Amsterdam, alongside similarly minded partners in BXR Agro seeks to address the increasing Netherlands, is an international private its investee companies. The group has demands of a growing global population investment group with a 15 year an established track record of accessing through the introduction of modern track record of superior investment the international debt and equity capital farming techniques, land development performance across a variety of industry markets for large and high profile and soil correction to create efficient sectors. While BXR Group’s reputation was transactions. operations of scale in a way which is built on its founders’ successful investment sustainable and sensitive to the needs of performance in Central Europe, today BXR Group’s investment philosophy local communities. BXR Group became the group has a diverse range of global is based on a partnership approach, the majority shareholder in fruit producer interests, including Western Europe, the working closely with highly motivated Malawi Mangoes in January 2013; Americas, Africa, Asia and Australasia. management teams and well-trained, providing funding for the construction incentivised workforces. BXR Group of a processing facility, expansion of BXR Group seeks majority control currently employs over 35,000 people agricultural operations and irrigation of positions or significant minority stakes through its portfolio companies. 1,000 more hectares near Salima.

26 Investing In Malawi 2013 Our Partners

The Standard Bank Group Standard Bank (also trading as Stanbic Bank) capacity and global distribution reach Standard Bank Malawi, previously is Africa’s largest banking group by assets with an understanding of financial systems The Commercial Bank of Malawi, was and earnings. The Group has been at the the bank is well positioned to provide registered as a commercial bank on 15 forefront of South Africa’s financial system solutions that are fit-for-purpose and March 1969. The business of the bank is for 150 years and is now operational in 18 highly relevant. divided into two main units: Personal and African countries, and in select emerging Business Banking Division and Corporate markets outside Africa. With an extended network throughout and Investment Banking Division. Standard Africa, their local insight and proven Bank in Malawi operates from 26 points They serve the needs of individuals, SMEs, experience in emerging markets means of representation across the country and Corporations and financial institutions, they are uniquely placed to connect has a staff complement of just over 650. providing the full range of financial products clients with opportunities across Africa and services they require. Combining their and beyond. specialist product expertise, strong local

Paladin (Africa) Ltd Malawi currently hosts one significant in Canada. The group holds 85% of the adding $US357mn to Malawi’s export mining venture, the Kayelekera Uranium equity in PAL with the Government of earnings – uranium oxide exports now Mine, located 52km west of the provincial Malawi holding a 15% equity stake. accounting for 12% of Malawi’s total town of Karonga in northern Malawi and exports. Since the inception of mining in 575km north of the capital city, Lilongwe. Paladin has invested over $US500mn 2009, PAL has paid more than $US25mn in Kayelekera, which commenced operations to-date building and operating a state- taxes and royalties to the Government of in 2009, is owned and operated by Paladin of-the art mine and processing plant at Malawi; spent $US16.3mn on community (Africa) Limited, a Malawian company Kayelekera. Currently, some 822 people projects in the northern region and incorporated in August 2000. are directly employed in the Operational expended US$4.7mn on exploration, workforce at Kayelekera – 724 (88%) of searching for additional uranium resource The Paladin Energy Group of Companies whom are Malawian nationals. in Malawi. is a public company, listed on the Australian Securities Exchange (ASX) As of 31 January 2013, Kayelekera has and the Toronto Stock Exchange (TSX) exported 6.8 million lb of uranium oxide,

Mkango Resources Ltd Mkango Resources Ltd. (MKA) is a holds a 100% interest in two exclusive Mkango delivers extensive world class Canadian TSX.V listed mineral exploration prospecting licenses in Phalombe and knowledge, experience and technical and development company focused on rare Tambani, which cover a combined area of expertise related to rare earth mineral earth elements and associated minerals in 1,751 km² in southern Malawi. exploration, investment and development the Republic of Malawi. It is a pioneering in Malawi. Mkango has also begun company in the natural resources The Company’s primary focus is the implementing a successful early-stage sector of Malawi, as it is the first natural Songwe Hill Project, a near surface social responsibility program, which is resources company to list on a recognised carbonatite hosted deposit situated focused on reducing poverty and hunger. international stock exchange with only within the Phalombe license area. Malawian mineral exploration licences. It

Conquiro Conquiro is an aerial imagery, surveillance user products allowing customers to exploration, environmental monitoring and risk mitigation company specialising in formulate an intelligent and cost effective and a plethora of other uses based on the use of Unmanned Aerial Systems (UAS). approach to their unique issues. With a current needs. proven record during years of successful Conquiro provides bespoke land and use, the versatility of Unmanned Aerial Conquiro is committed to helping maritime packages mainly for clients Systems can be applied on land or at national governments and organisations overseas, focussing in East and West Africa, sea, providing a pivotal asset in a range of ensure security against threats such Eastern Europe, Russia and the Middle applications. Our highly experienced team as terrorism, criminality, civil unrest or East. We supply an all-encompassing of consultants are able to advise, plan and threats from unstable boarder countries approach; providing aerial imagery assets, implement the use of Unmanned Aerial as well as helping in the development of risk mitigation teams, analysts and end- Systems in security, agriculture, mining and commercial and environmental activities.

2013 INVESTING IN Malawi 27 32° Tunduma 34° 35° 36°

MALAWI Chitipa

zi li a b M u Karonga ur Chisenga k u

10 10 ° C . K MALAWI ° H N A IT R I O i P N h A L s G be A m A Cha

Nyika K Plateau Katumbi RUMPHI E Bolero Rumphi UNITED REPUBLIC 11° 11° uru OF uk R

. NORTHERN S Ekwendeni TANZANIA Chikwina Kafukule Mzuzu tu i ZAMBIA Euthini s

a Y K Nkhata vuma A Ru B Bay

a y MZIMBA e A w T Chintheche u L A MALAWI Mzimba H Chizumulu K 12° Edingeni M 12° N Likoma

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g a A w y n ng a a a w D s u W a L KASUNGU ua B N NkhotakotaI K Kasungu H MOZAMBIQUE 13° O 13° T

CENTRAL K NTCHISI O Lichinga T

Ntchisi a Mponela d n e MCHINJI DOWA Dowa g SALIMA Makanjila u Chipata L Mchinji Chilobwe Salima LILONGWE Namitete Chipoka 14° e Lilongwe Monkey 14° g w Bay n Nathenje o DEDZA l i L Dedza MANGOCHI Mandimba Mangochi N Lake Lake T Malombe Amaramba C H E SOUTHERN U Lake Chiuta e Ntaja

r MOZAMBIQUE Ntcheu i Balaka h MACHINGA S 15° Liwonde Nayuchi 15° Machinga National capital

è Domasi Lake Regional headquarters o ZOMBA b Neno Chilwa ú v Zomba District headquarters e MWANZA R i z Lirangwe Namadzi Town, village e Nambazo d Lanzu ond é Mwanza Airport C BLANTYRE Chiradzulu International boundary CHIRADZULU Phalombe Blantyre MULANJE Regional boundary Chikwawa Mulanje 16 C THYOLO 16 ° District boundary H ° I K Thyolo Milange W Main road Tete A W Thekerani Secondary road A N'gabu Railroad The boundaries and names shown and the Bangula Z N S designations used on this map do not imply a S h m A i b N r official endorsement or acceptance by the e J e 0 25 50 75 100 km zi E United Nations. Nsanje 17° 0 25 50 75 mi 32° ZIMBABWE 33° 34° 35° 36°

Map No. 3858 Rev. 3 UNITED NATIONS Department of Peacekeeping Operations January 2004 Cartographic Section

28 Investing In Malawi 2013 The conference is supported by

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