mwi sluttrapport

8/11/2019 MWI Sluttrapport

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The Norwegian Agency for Development Co-operation (NORAD ha! "#ring the perio"May-Septem$er %&&% reviewe" it! !#pport of private !ector "evelopment in ma'orpartner co#ntrie! The co#ntrie! are )angla"e!h an" Sri *an+a in A!ia, an" Malawi,Mo!am$i#e, Tan.ania, /gan"a, an" 0am$ia in Africa

The aim of the review! wa! to e1plore the po!!i$ilitie! of improving an" e1pan"ing the

!#pport of private !ector "evelopment within the g#i"eline! given $y the Strategy forNorwegian S#pport of Private Sector Development in Developing Co#ntrie!

The !t#"ie! have $een #n"erta+en $y team! con!i!ting of an e1ternal con!#ltant onprivate !ector "evelopment, a re!o#rce per!on from the Norwegian private !ector, an"a"vi!er! from NORAD, O!lo, an" the Norwegian em$a!!ie! The fin"ing!,interpretation!, an" concl#!ion! e1pre!!e" in the !t#"ie! are entirely tho!e of theteam! an" !ho#l" not $e attri$#te" to NORAD

The !t#"y of the private !ector in Malawi i! n#m$er 2 in the !erie! of 3 co#ntry !t#"ie!


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LIST OF ABBREVIATIONS

Anti Corr#ption )#rea#

Agric#lt#ral Development an" Mar+eting Corporation

African 4rowth Opport#nity Act

Agric#lt#re Re!earch an" 51ten!ion Tr#!t)#!ine!! Development Service!

Common Approach to )#"get S#pport

Co#ntry A!!i!tance Strategy

Comprehen!ive Development Framewor+

Co#ntry 5conomic Memoran"#m

Common Mar+et of 5a!tern an" So#thern Africa

Con!#mer Price 6n"e1

Department for 6nternational Development

Diagno!tic Tra"e 6ntegration St#"y

5verything )#t Arm!

51port Promoting 0one!

5nhance" Str#ct#ral A"'#!tment Programme

Framewor+ Convention on To$acco Control

Foreign Direct 6nve!tment!

Fi!cal Re!tr#ct#ring an" Dereg#lation Programme

4lo$al 5nvironmental Facility

The 6celan"ic 6nternational Development Agency

6ntegrate" Framewor+ for Tra"e Relate" Technical A!!i!tance

6ntegrate" 7o#!ehol" S#rvey

6nternational *a$o#r Organi!ation

6n"epen"ent Power Pro"#cer6n"epen"ent Power Di!tri$#tor

Malawi Development Company

Malawi R#ral 5lectrification Programme

Malawi Social Action F#n"

Malawi Confe"eration Cham$er! of Commerce an" 6n"#!try

Malawi Development Corporation

Malawi 51port Promotion Co#ncil

Micro Finance 6n!tit#tion!

Malawi 6nve!tment Promotion Agency

Malawi Proc#rement A#thority

Malawi Poverty Re"#ction Strategy

Malawi Reven#e A#thority

Micro, Small an" Me"i#m Scale 5nterpri!e!

Me"i#m Term Competitive Strategy

Me"i#m Term 51pen"it#re Framewor+

Malawi 8wacha

National Ai"! Control Programme

National Smallhol"er Farmer A!!ociation

Nor"ic Development F#n"

National Foo" Re!erve Agency

Norwegian Agency for Development CooperationNational Stati!tical Office


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P#$lic Acco#nt! Committee

Poverty Alleviation Programme

P#$lic 51pen"it#re Management

P#$lic 51pen"it#re Review

Poverty Re"#ction 4rowth Facility

Poverty Re"#ction S#pport Cre"itPoverty Re"#ction Strategy Paper

Private Sector Development

Re!erve )an+ of Malawi

Renewa$le 5nergy Technology

So#thern Africa C#!tom! /nion

So#thern African Development Comm#nity

Str#ct#ral A"'#!tment Programme

To$acco A!!ociation of Malawi

Malawi Tra"e Policy Review

/nite" Nation! Conference on Tra"e an" Development

/nite" Nation! 6n"#!try Development Organi!ation

9orl" Tra"e Organi!ation


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KEY FACTS ABOUT MALAWI

PEOPLE 1996 1999 2000Pop#lation million! :,2 ;&,; ;&, %,; %,;

*ife e1petancy at $irth ?ear! -%2 ;>, year! %3,@ %,; %>,>

6lliteracy rate, female = of female! over ;> year! >3,@ >2, >

ECONOMY 1996 1999 20004ro!! Dome!tic pro"#ct )illion /S %,2 ;,@ ;,3

4N6 per capita /S per capita ;:& ;:& ;3&

4DP growth = over prece"ing year 3,< 2 ;,3

6nflation 4DP "eflator, ann#al = >@,: 2%,% %2,>Agric#lt#re, val#e a""e" = of 4DP

Total "e$t !ervice = of e1port reven#e ;>,> ;%,3 ;;,3

Ai" per capita /S per capita >%,; 22,% 23

/r$an !anitation = of #r$an pop w acce!! :

TECHNOLOGY AND INFRASTRUCTURE 1996 1999 2000

Fi1e" telephone line! per ;,&&& people 2,; ,% :

Per!onal comp#ter! per ;,&&& people ; ;,%

6nternet #!er! Total n#m$er ;&&&& ;>&&&

Pave" roa"! = of total %& ;@,>

Aircraft "epart#re! Total n#m$er && 22&& 2@&&OTHER FACTS

Pre!i"entG)a+ili M#l#.i (!ince %; May;::2

7ea" of 4overnment)a+ili M#l#.i (!ince %; May;::2

*a!t electionG ;> H#ne ;:::

Main e1port! To$acco, tea, !#gar, cotton, coffee, pean#t!, woo" pro"#ct!51port tra"ing partner!(;::: So#th Africa ;=, 4ermany ;=, /S ;>=, Netherlan"! 3=, Hapan

Main import! Foo", petro pro"#ct!, !emiman#fact#re!, con!#mer goo"!, tran!port e#ip6mport tra"ing partner!(;::: So#th Africa 2=, 4ermany >=, 0am$ia, Hapan, /S

*owe!thighe!t point H#nction Shire River$o#n"ary with Mo.am$i#e


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Official lang#age! 5ngli!h an" Chichewa

ACKNOWLEDGEMENTS

The team mem$er! wo#l" li+e to e1pre!! their !incere gratit#"e tothe many private !ector repre!entative!, government official! an"e1pert! in Malawi who have !hare" their +nowle"ge with the team 6npartic#lar, we wo#l" li+e to than+ 6mani Tr#!t for all their effort!

Finally, the team mem$er! wo#l" li+e to than+ the !taff of theNorwegian 5m$a!!y in Malawi who wa! availa$le to a!!i!t the teamwith preparation!, !ervice! an" +nowle"ge


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EXECUTIVE SUMMARY

Is Pr!"#$ S$%#&r D$!$'&()$*# +PSD, *$$-$- .

Malawi i! the !malle!t of NorwayI! main partner co#ntrie! in Africa 6tocc#pie! an area a little larger than 6celan", mainly on the we!tern$an+! of *a+e Malawi, an" it i! lan"loc+e" $etween Mo.am$i#ean" 0am$ia 6t! ;& million inha$itant! now !#ffer from wor!e !ocio-economic con"ition! than !een in mo!t of !#$-Saharan Africa

MalawiI! economy i! the !econ" mo!t ai"-"epen"ent in !#$-SaharaAfrica - after Mo.am$i#e; 6t i! al!o $y far the economy in the worl"that "epen"! mo!t on to$acco for non-ai" foreign e1changeearning! - ahea" of 0im$a$we 6n ;::@, Malawi receive" /S 23&mn in Official Development A!!i!tance (ODA an" earne" /S


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A main concern of the Team ha! $een to i"entify way! in whichMalawiI! !mall an" me"i#m-!i.e" companie! can evolve into more!ophi!ticate" entitie! that can provi"e ta1 income, e1port earning!,an" varie" employment to the co#ntryI economy

MalawiI! !mall economy p#t! an effective !i.e cap on it! "ome!tic

companie!, who m#!t cater to a mini!c#le "ome!tic mar+et that i!al!o prone to #n!ta$le macro-economic factor! 51change rate!,inflation rate! an" intere!t rate! have fl#ct#ate" $a"ly The co#ntryI!lan"loc+e" po!ition ha! confine" e1port! to to$acco an" a few otherca!h crop! More preci!ely, inflation ha! e1cee"e" %&= pa in all$#t one of the la!t ten year!, an" anti-inflation mea!#re! have only!#ffice" to $ring it to a c#rrent level of ;@= pa Nominal commerciallen"ing rate! are !till at 2>=-2@= pa, implying that re"#ce"inflation ha! create" e1tremely high real intere!t rate! The c#rrencye1change rate ha! $een thro#gh !everal "eval#ation !hoc+!, mo!trecently in %&&&, when the Malawi 8wacha (M98 fell 2&= again!tthe /S Dollar 6n a recent worl"wi"e !#rvey among $#!ine!!men,Malawi wa! one of only two African co#ntrie! where inflation wa!rate" a! the n#m$er one o$!tacle to "oing $#!ine!!

6n !hort, MalawiI! private !ector !#ffer! from a wea+ "ome!tic mar+et($eca#!e of it! !mall !i.e an" volatile macroeconomic con"ition!,an" from a "iffic#lt e1port mar+et ($eca#!e it i! lan"loc+e" Thecon"ition! in Malawi are in many way! !imilar to tho!e of it! clo!e!tneigh$o#r! the ea!tern part! of 0am$ia an" the north-we!tern part!of Mo.am$i#e L $oth of which are among the lea!t "evelope" in0am$ia an" Mo.am$i#e, re!pectively

W/%/ "r$ #/$ &((&r#*#$s .

The ;::&! wa! a Jlo!t "eca"eK for Malawi in term! of economic"evelopment The co#ntry entere" the "eca"e with !everala"vantage! (i a peacef#l tran!ition to "emocracy an" a !ta$lepolitical !y!tem (ii comparatively well f#nctioning in!tit#tion! (iiilow la$o#r co!t! (iv well a"vance" !tr#ct#ral reform! an" (v!#$!tantial !#pport from "onor! De!pite the!e promi!ing feat#re!,Malawi emerge" into the new Millenni#m with a 4ro!! Dome!ticPro"#ct (4DP that wa! #nchange" !ince ;::& in c#rrent price! Lie a real re"#ction when inflation an" pop#lation growth are ta+eninto acco#nt

The po!itive a!pect! of Malawi !till e1i!t 7owever, the co#ntryI!pace in !tr#ct#ral reform! ha! $een !#rpa!!e" an" Malawi can nolonger offer a more !ta$le inve!tment climate than other co#ntrie! inthe region which compete for inve!tor attention

6n the TeamI! analy!i!, it wa! a!!#me" that Malawi will mo!t li+elycontin#e to !#ffer from a pro$lematic $#!ine!! framewor+ "#ring thene1t ;-< year! The Team $elieve! that thi! perio" will $echaracteri!e" $y con!i"era$le "onor !#pport to the !ocial !ector!,$oth to alleviate the foo" cri!i! an" to mitigate other wor!ening!ocial i!!#e! The co#ntryI! Poverty Re"#ction Strategy Paper(PRSP, which wa! p#$li!he" in April %&&%, will $e the g#i"ingin!tr#ment "#ring thi! proce!! 6t may $e "iffic#lt to improve macro-economic !ta$ility at the !ame time, a! foo" !hortage an" infl#1 of


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"onor f#n"! ten" to !tim#late inflation an" "i!tort the c#rrencymar+et 6t i! al!o li+ely that "ome!tic tran!port capacity will $e tie" #pan" that the high tran!port co!t! will $e !#!taine"

D#ring thi! perio", PSD pro'ect! are mo!t li+ely to !#ccee" if theyare !tr#ct#re" to $e ro$#!t again!t macro-economic in!ta$ility an"

co!tly logi!tic! S#ch !ector! co#l" incl#"e electricity generation an""i!tri$#tion, con!#lting !ervice!, an" !#pplie! to the "onor-finance"mar+et

6n the longer r#n (ia, after


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Monitor co-financing po!!i$ilitie! within the Nacala Corri"orPro'ect

Develop pilot )OT)OO mo"el for infra!tr#ct#re provi!ion

Co-financing with 9orl" )an+ Privati.ation an" /tility ReformProgram

Monitor co-financing po!!i$ilitie! within the Mo.am$i#e-Malawi

Power 6nterconnection Pro'ect

Con!i"er !econ" pha!e of NASFAM pro'ect or other involvementin agric#lt#re an" fi!herie!

Micro-finance

)#!ine!! Development Service!

Deman"-"riven PSD Jf#n"K

Mapping of mining re!o#rce!

S#pport to e"#cation in travel-!ector management

Con!i"er TA to help Malawi in international tra"e negotiation!(9TO, etc

W/"# %"* N&r$"* %&)("*$s "*- &r"*s"#&*s -& .

9hile Malawi offer! all of the opport#nitie! of an #n"er"evelope"mar+et, it! !mall !i.e an" volatile macro-economy limit! the n#m$erof opport#nitie! where Norwegian partner! can reach Jcritical ma!!Kfor pro-active pro'ect wor+ 6n the TeamI! opinion, it i! mo!t reali!ticto e1pect that Norwegian competence can $e #!e" in !peciali!t,niche area!, with an empha!i! on the "onor mar+et

S#ch opport#nitie! e1i!t ia in the energy $#!ine!!, in con!#lting, inwoo" proce!!ing, an" in import into Norway of pro"#ct! that have

$ecome more availa$le within the 5)A an" A4OA "#ty an" #otareform! A Norwegian gro#p i! alrea"y inve!tigating tra"e in animalfee"!

Norwegian firm! an" organi!ation! can al!o contri$#te a!"evelopment partner! in "onor f#n"e" pro'ect! Thi! co#l" relate toalmo!t all of the potential propo!al! li!te" $y $#llet point! a$ove6n"ee", intro"#cing the Norwegian $#!ine!! comm#nity to Malawi $yfo!tering !#ch partner!hip! co#l" $e among the mo!t efficient ro#te!towar"! a $roa"er commercial co-operation $etween Malawi an"Norway in the long r#n


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TABLE OF CONTENTS

1 INTRODUCTION33333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

2 GENERAL COUNTRY INFORMATION333333333333333333333333333333333333333333333333333333333333333333333333333333333333333%; 4eneral information

%% 7i!tory

%< The 5conomy

%2 Foo" cri!i!

4 THE PRIVATE SECTOR AGENDA3333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333


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2< Strategy for the Norwegian Development Cooperation

2; The Nacala Corri"or 2>% Roa"!

2 6mproving macroeconomic !ta$ility2; CA)S 2% CFAA

23 Overcoming limitation! in the "ome!tic mar+et

23; )OT)OO 6nnovation2@ 5nhancing relia$ility of 6nfra!tr#ct#re

2@; 5nergy2@% Privati!ation

2: Promoting Foo" Sec#rity an" Commerciali!ation of Agric#lt#re

2:; Commerciali!ation of Agric#lt#re2:% Fi!herie!

2;& Creating new !o#rce! of foreign e1change reven#e!

2;&; Mining 2;&% To#ri!m 2;&< Tra"e relation!

2;; C#r$ing lan" !hortage (other propo!al!

2;;; Pro$lem "efinition 2;;% Micro finance2;;< )#!ine!! Development Service! 2;;2 PSD a""ition! to e1i!ting NORAD !#pport 2;;> Deman"-"riven PSD Jf#n"K 2;; 5"#cation

2;% 4en"er i!!#e!

7 POTENTIAL FOR COOPERATION WITH NORWEGIAN COMPANIES ANDINSTITUTIONS33333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333333

>; Potential role!

>% 51port! to an" 6mport! from Malawi

>%; The Donor Mar+et>%% Other e1port! >%< 6mport! from Malawi

>< 6nve!tment! in Malawi

>2 To#ri!m >23 Financial !ector>2@ Fi!herie! an" agric#lt#re>2: Mining

APPENDICES8Appen"i1 ;G Map of MalawiAppen"i1 %G Reference! an" )i$liographyAppen"i1


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1 INTRODUCTION

Origin of !t#"y Thi! !t#"y i! a re!#lt of an initiative ta+en $y the Norwegian Mini!terfor Development Cooperation, 7il"e Fraf'or" Hohn!on, to review thepotential for Private Sector Development in main partner co#ntrie!receiving Norwegian "evelopment a!!i!tance

Thi! report cover! Pha!e 6 of the private !ector review an" foc#!e!on inve!tment climate an" private !ector "evelopment policie! a!well a! phy!ical an" !ocial infra!tr#ct#re, ta+ing into con!i"erationpre!ent area! of co-operation an" the effort! of other "onor! 6tf#rther incl#"e! an a!!e!!ment of area! of co-operation whereNorwegian private !ector organi.ation! or enterpri!e! can enhancethe "evelopment effect! in term! of poverty re"#ction

Policy "oc#ment! The following "oc#ment! are the $a!i! an" !tarting point! for thi!!t#"yG

Strategy for Norwegian S#pport of Private SectorDevelopment in Developing Co#ntrie!, from the Mini!try ofForeign Affair! in Norway

Strategy for the Norwegian Development Cooperation withMalawi %&&;-%&&>

Malawi Poverty Re"#ction Strategy Paper, of April %&&%(PRSP

O#tline )a!e" on the o#tp#t! !pecifie" in the Term! of Reference, the reportpre!ent! an a!!e!!ment of MalawiI! re!o#rce en"owment,comparative a"vantage!, inve!tment climate, in!tit#tional an" policyframewor+ a! well a! phy!ical an" !ocial infra!tr#ct#re (Chapter! %an"

Data collection Data for thi! !t#"y wa! collecte" "#ring two wee+! fiel" wor+ inMalawi from May %@ L H#ne 3, %&&%, an" incl#"e" vi!it! an"con!#ltation! with the private !ector, government in!tit#tion!,a!!ociation!, "onor! an" N4OI! A review of literat#re, report! an"policy "oc#ment! relevant to the topic wa! carrie" o#t

Data from "ifferent !o#rce! in Malawi can $e incon!i!tent L thi!!ho#l" $e +ept in min" when rea"ing the report

The team The team wa! compo!e" $y Mr Han 5ri+!en, NORAD M! )ritt 7il"e8'l!, Fir!t Secretary at the Royal Norwegian 5m$a!!y in *ilongweMr Sverre Thron"!en, repre!entative of N7O an" Mar+eting

Manager of A)) Norway, an" Hohan Olav )'er+e, Mar+etingCoor"inator at NORP*AN, an" !ecretary an" con!#ltant to the team


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Mr Hrn 7i!ta", Senior A"vi!er at NORP*AN provi"e"$ac+!topping !#pport thro#gho#t the !t#"y


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from ;::& to %&&;

4arment! The privately owne" garment !ector i! fa!t "i!appearing SinceSeptem$er ;:::, five garment man#fact#ring companie! haveclo!e", an" other! are at !erio#! ri!+ 6t i! a po!!i$ility that the wholete1tile an" garment !ector will have clo!e" within the ne1t two year!

The !ector i! characteri!e" $y low capacity #tili!ation, o#t"ate"e#ipment, an" ina"e#ate !tan"ar"! There i! #rgent nee" forinve!tment! an" mo"erni.ation in the !ector, for concerte" effort! toimprove MalawiI! term! of tra"e, an" enforcement of the e1i!tingimport an" "#ty regime!

Mem$er! of the man#fact#ring !ector e1pre!!e" "e!pair over lac+ ofmini!terial !#pport for improvement of MalawiI! term! of tra"e,follow-#p of e1i!ting tra"e agreement!, incon!i!tent reg#lation! an"practice! with re!pect to importe1port of man#fact#ring e#ipmentamong other!

Malawi ha! an a"vantage a! an *DC to e1port te1tile! "#ty-free tothe /SA thro#gh the A4OA framewor+ #ntil %&&2, regar"le!! of theco#ntry of origin of inp#t! 7owever, the tra"e "eal with the /SA maynot $e f#lly e1ploite" a! the in"#!tryI! capacity to re!pon" to thi!opport#nity i! limite" So far only two companie! are +nown to have#alifie"

3.1. Services

Service! !hare of Malawi! 4DP fell from >3= in ;::2 to 23= in;::: The main growth in !ervice! ha! occ#rre" in financial an"profe!!ional !ervice!, which acco#nte" for @= of 4DP in ;:::Other !ignificant component! incl#"e" "i!tri$#tion (%;= of 4DPan" tran!port an" telecomm#nication! (2=

Malawi ha! a !#$!tantial "eficit on !ervice! tra"e, mo!tly attri$#ta$leto freight an" in!#rance 6n ;:::, thi! "eficit wa! /S:& million,e#ivalent to almo!t 2&= of that year! tra"e "eficit

3.1. +inerals

Mineral re!o#rce! in Malawi have in general not $een wellinve!tigate", $#t there are in"ication! that there may $e !ignificantpotential 6nve!tment! in pro!pecting were negligi$le "#ring the pa!t%& year!, an" +nowle"ge of e1i!ting mineral re!o#rce! !eem! not tohave increa!e" "#ring tho!e year! Only in ;::@ "i" inve!tment!!tart to grow

*imite" e1ploration To"ay there i! limite" e1ploration of re!erve! of coal, lime an"gem!tone!, an" +nown "epo!it! of $a#1ite, vermic#lite, #rani#m,!ilica !an"!, an" heavy mineral !an"!, $#t otherwi!e little +nowle"ge


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of other non e1plore" re!erve! The mineral !ector contri$#te" tole!! than ;= of 4DP in ;:::, of which coal acco#nte" for more than:&= The real vol#me an" val#e, partic#larly of gem!tone!e1ploration i! however a!!#me" to $e m#ch higher 6t i! f#rtherrea!ona$le to a!!#me that gem!tone e1ploration i! "ominate" $y!mall-!cale arti!anal mining The formal mining !ector employ!

appro1imately >&&& people

*icen!ing 6n %&&&, ;%> licence! were i!!#e" for pro!pecting, reconnai!!ancean" e1ploration /ncontrolle" growth in the !ector may havenegative effect! $oth to the environment an" to the economy with!#$!tantial lo!!e! to Malawi

Arti!anal mining Mining - partic#larly !mall-!cale mining - i! i"entifie" a! one of the!o#rce! of pro-poor growth in the PRSP 6"entification an""i!!emination of information on mineral availa$ility, incl#"ing#p"ating of inventorie! on mineral! are mentione" a! relevantactivitie! Department of Mine! ha! !tate" that their goal i! toincrea!e mining activity o#tp#t to


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geothermal power generation A$o#t >&&& PB-!y!tem! have $eenin!talle", $#t more than >&= of them are malf#nctioning or havecompletely !toppe" wor+ing

Coal De!pite the fact that Malawi ha! large coal re!erve! (more than million tonne! of coal have $een prove" only %&= of the co#ntryI!

re#irement i! covere" $y own pro"#ction The re!t i! importe" fromneigh$o#ring co#ntrie!

*i#i" f#el! an" ga! A$o#t :3= of the petrole#m pro"#ct! are importe"


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- *ilongwe Reha$ilitation an" Ref#r$i!hment of the Di!tri$#tionSy!tem! Pro'ect, Pha!e ;, !tarte" in ;::: A !econ" pha!e ha!!tarte" in %&&% The Norwegian 4overnment thro#gh NORAD ha!finance" $oth pha!e!

- )lantyre Reha$ilitation an" Ref#r$i!hment of the Di!tri$#tion

Sy!tem Pro'ect will !tart thi! year The Swe"i!h 4overnment thro#ghS6DA will finance the pro'ect

- The 4oM ha! !ince ;:@& $een implementing a Malawi R#ral5lectrification Programme (MAR5P Three pha!e! of theprogramme have $een implemente" 4oM aim! at increa!ing theacce!! rate to electricity to ;& = of the pop#lation $y %&;& a!!tip#late" in the 5nergy Policy Doc#ment

- Pha!e 6B will !tart in %&&% an" incl#"e! 2< !ite! an" electrificationof *i+oma Di!trict #!ing "ie!el generator! The total co!t i! !tip#late"to M8 >:> million of which M8 million are "onor f#n"! from the

Hapane!e 4overnment The remain"er of M8 %@& million will $e metfrom local re!o#rce! thro#gh a levy on petrole#m pro"#ct! !ale

- Pha!e B compri!e! a Hapane!e 4overnment !pon!ore" MalawiR#ral 5lectrification Ma!ter Plan St#"y !che"#le" to $e finali!e" $yMarch %&&2 !ite! are e1pecte" to $e incl#"e"

- Reha$ilitation programme! for the power !tation! are #n"er"i!c#!!ion

The generating capacity wa! $ro#ght to the e1i!ting level $ycommi!!ioning the 8apichira 7y"ro Scheme in H#ne %&&& 7owever,

f#rther capacity increa!e! will $e nee"e" to meet pro'ecte" "eman"of %:2 M9 in %&&>, ri!ing to 33 M9 in %&%&

6nterconnection Malawi !igne" a Memoran"#m of /n"er!tan"ing an" an Agreementwith Mo.am$i#e in ;::@ for the interconnection of power !#pplyThe implementation of the %%&+B !ingle circ#it interconnection withMo.am$i#e i! now a high priority for the 4oM The line will have atotal length of %&& +m whereof & = will $e locate" in Mo.am$i#eThe co!t for the pro'ect wa! e!timate" to $e /SD


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So#rce!G 9ater an" COM5SA phone call!G 5conomic Re!earch )#rea#, /niver!ityof Dar e! Salaam /S phone call!G )M6 Technology 4ro#p 5lectricityG 8P*C(8enya, 6nve!t in /gan"a (/gan"a, PSD mi!!ion fin"ing! (Tan.ania 5!com(electricity, Malawi, MT* (telecomm#nication!, Malawi

3.!.! 0elecommunications and mail service

Telecom !ervice! Malawi ha! a cell phone networ+ covering the large!t citie! an" mo!t

pop#lar to#ri!t "e!tination! The fi1e" line !y!tem ha! a !#$!tantial$ac+log in term! of connection!, an" the average waiting time for$#!ine!! #!er! i! two year! 6n %&&&, Malawi ha" >@,&&& fi1e"telephone line! Average recor"e" waiting time! for a telephone lineto $e in!talle" can $e #p to ten year!, e!pecially in the more i!olate"r#ral area! Recent improvement! in the !#$ !ector incl#"eincrea!e! in the p#$lic fi1e" networ+I! e#ippe" capacity to :&,&&&line!, an" "igitali.ation of the P#$lic Switching Telephone Networ+Many private !ector repre!entative! have cite" the lac+ of relia$letelecomm#nication! a! the !ingle mo!t !ignificant impe"iment to"oing $#!ine!! in Malawi

A recent ten"er for a new mo$ile an" fi1e" line operator conce!!ion(privati!ation of Malawi Telecomm#nication! *t" i! $eing eval#ate",which if privati!ation i! reali!e", mo!t pro$a$ly will lea" to e1pan!ionof !ervice! an" $ring telecom price! "own 6t will intro"#ce a thir"operator to the cell phone mar+et

Price! Telecomm#nication! price! are not e1ce!!ive compare" withneigh$o#ring co#ntrie! A , average electricity price! in Malawi were /S &&


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NORADPSD in Malawi Final Report Page ;2

"o not reflect the co!t of power in term! of pro"#ction or loa"management

6n %&&; a new management wa! intro"#ce" in 5SCOM thro#gh a ,;&&+ilometre! of whichG ,>&& +ilometre! are main an" !econ"ary, 3,&&+ilometre! are tertiary an" "i!trict, an" ;,&&& +ilometre! are #r$an

U#ality ha! clearly "eteriorate" over the la!t ten year! !#ch that over>&= of the networ+ i! now $elieve" to $e in poor con"ition

Port acce!! Malawi i! lin+e" $y roa" to the port! of Nacala, )eira, Dar e! Salaaman" D#r$an )eira an" Nacala have the "i!a"vantage! of notprovi"ing m#ch ret#rn ha#l D#r$an i! th#! !till favo#re" $y manytran!porter!

5/ f#n"e" programme! to improve !econ"ary roa"! are #n"erway9) i! financing the !ector thro#gh the Roa" Maintenance an"Reha$ilitation Pro'ect, ROMARP The 4overnment i! con!i"ering$#il"-operate-tran!fer ()OT !cheme! in or"er to involve the private!ector in roa" con!tr#ction an" maintenance

Tran!port co!t! Tran!port i! a ma'or co!t factor an" !t#"ie! of !mall tra"er! !howthat together, tran!port of goo"! an" of the tra"er repre!ent! themo!t !ignificant !hare,


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*a$o#r #nion! Malawi ha! two ma'or #nion! con!i!ting of !maller mem$er #nion!Malawi Congre!! of Tra"e /nion! (MCT/ forme" in ;::>L con!i!t!of ;> affiliate" #nion! with a total of ;&&&&& mem$er! o#t of apotential of half a million Teacher! form the large!t mem$er #nionMCT/ receive! !#pport form the Norwegian Confe"eration of Tra"e/nion!, *O The action! aim at "eveloping an" !trengthening

MCT/I! organi!ation an" a"mini!tration, partic#larly empha!i!ing#nion e"#cation, recr#itment, improving financial control! an"increa!ing reven#e! Several MCT/ mem$er #nion! have womenlea"er!

Congre!! of Malawi Tra"e /nion! (COMAT/ L con!i!t! of two#nion! civil !ervant! an" local government

#nion! civilMalawian la$o#r law! conform to the convention! of the 6nternational*a$o#r Organi!ation an" are a"mini!tere" $y the *a$o#rCommi!!ion #n"er the Mini!try of *a$o#r Malawi ha! no legali!e"!ocial !ec#rity !y!tem *e!! than ;&= of the la$o#r force i!#nioni!e", mainly in the !o#thern part of Malawi The Tra"e /nion!Act reg#late! relation! $etween tra"e #nion! an" employer!

Chil" *a$o#r 9hile acc#rate !y!tematic "ata i! lac+ing, !ome wor+ ha! $een"one in"icating that chil" la$o#r in Malawi i! wi"e!prea" Chil"la$o#r i! fo#n" in !everal !ector! incl#"ing large commercial farm!,!mallhol"ing!, "ome!tic wor+, micro in"#!trie! an" the informal!ector;2

De!pite ratifying the /nite" Nation! Convention on Chil" *a$o#r,Malawi! recor" on the i!!#e i! !till poor A recent !#rvey con"#cte"$y the Malawi Congre!! of Tra"e /nion! MCT/ ha! e!ta$li!he" thatca!e! of chil" la$o#r are !till wi"e!prea" NORAD i! pre!entlyf#n"ing /N6C5F an" their wor+ to prevent chil" la$o#r

3.!./ 5and

*an" Act An #pcoming *an" Act that recogni!e! comm#nal lan"!, ha! lea" to#ncertainty a$o#t lan" owner!hip The new act re#ire! among otherthat lan" only $e owne" $y Malawi citi.en! The new act togetherwith recent "evelopment! in 0im$a$we, have create" in!ec#rityamong foreign inve!tor! a$o#t the f#t#re Mortgage on lan" i! notwi"ely accepte" $y commercial len"er!, an" !o#rce! the team metin"icate" that lan" val#ation wa! highly overrate"

146/F6T4A)AT - Chil" *a$o#r in the To$acco 4rowing Sector in Africa, *5l"ring etal Nairo$i Octo$er %&&&Fafo-paper %&&&G%;


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NORADPSD in Malawi Final Report Page ;3

L"*- D$!$'&()$*# C/"r$s MWK/"

Capital City :>&&&&

Re!i"ential %>>&&&

Secon"ary Commercial @%>&&&

Ol" Town &&&*ocal Centre &&&

6n"#!trial 3>&&&&

Rental! per !#are metre M98M%

Commercial -2&&

6n"#!trial -2&&

Source: +$A in 6nvestors 7uide to +ala4i8.

434 M"%r&$%&*&)% s#"#&*

3.3.1 $ast perormance

MalawiI! per capita 4DP grew at a rate of aro#n" &>= "#ring the;::&! Thi! mo"e!t growth wa! $etter than S#$-Saharan Africa a! awhole, where "eclining 4DP per capita wa! recor"e" 6t wa! al!o animprovement over MalawiI! own performance "#ring the ;:@&!,when it! per capita growth rate wa! negative Nonethele!!, theachieve" growth wa! "i!appointing given the n#m$er of po!itivein"icator! at the !tart of the "eca"e The!e in"icator! were, however,o#tweighe" $y a n#m$er of negative "evelopment!, a! !hown in theta$le $elow

MalawiI! !trong !i"e! at $eginning of;::&! A"ver!e "evelopment! occ#rring "#ring;::&!

Peacef#l tran!ition to "emocracyan" a !ta$le political !y!tem

Comparatively well f#nctioningin!tit#tion!

*ow la$o#r co!t!

S#$!tantial "onor a!!i!tance

51ten!ive !tr#ct#ral reform!,incl#"ing li$erali!ation ofagric#lt#re mar+et! an" foreigntra"e

6nternational price of to$acco "own


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NORADPSD in Malawi Final Report Page ;@

A! a re!#lt, Malawi entere" the new Millenni#m with !#$!tantialmacro-economic pro$lem! )y %&&& it! economy ha" $ecome one ofthe mo!t volatile in 5a!tern an" So#thern Africa The macro-economic factor! are !till !o important for PSD in Malawi that !ome!pace m#!t $e affor"e" in thi! report to "e!cri$e the critical factor! in!ome "etail

3.3.! &urrenc% e9change rates

MalawiI! c#rrency, the +wacha (M98 wa! "eval#e" con!i"era$ly in;::2 an" then remaine" #ite !ta$le in nominal term! #ntil a$o#tH#ne ;::@ 4iven the high inflation rate "#ring the !ame perio", thi!act#ally repre!ente" a real appreciation of the c#rrency thatwor!ene" the term! of tra"e Then, in the la!t half of ;::@ the+wacha !tarte" to "epreciate an" $y Decem$er, ;::@ it ha" fallen $ynearly 2&= Thi! off!et the real appreciation that ha" occ#rre", $#twa! followe" $y a new perio" of nominal c#rrency !ta$ility (an"con!e#ently, a real appreciation, #ntil April %&&&, when a new"epreciation of 2&= wa! recor"e" #p to Han#ary %&&; Thee1change rate ha! move" into a new perio" of !ta$ility !ince then

MWK E=%/"*$ r"#$ +$*- & :$"r? $ =%$(# 2002,

&

;&

%&

&

&

3&

@&

:&

;::

;::A

;::3

;::@

;:::

%&&&

%&&;

%&&%

K1"%/"($rUS

@

Sources: +) 1;;3-1;;;


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NORADPSD in Malawi Final Report Page %&

N&)*"' *#$r$s# r"#$s

&,&=

;&,&=

%&,&=

&,&=

&,&=

3&,&=

;:

:2

;:

:>

;:

:A

;:

:3

;:

:@

;:

::

;@;-"ay Trea!#ry)ill!

Commercial $an+len"ing rate!

Commercial $an+"epo!it rate!

The!e fig#re! m#!t however $e !een in com$ination with MalawiI!high inflation rate! (!ee Chapter ,&=

;&,&=

;>,&=

%&,&=

%>,&=

;::2

;::>

;::A

;::3

;::@

;:::

Prime len"ingrate

Saving! "epo!it!

The !#cce!! in re"#cing inflation after ;::: ha! ha" a "ramaticinfl#ence on real intere!t rate! /p to la!t year, the intere!t pro$lem!were largely relate" to volatility To"ay, there i! al!o a con!i"era$lepro$lem of the intere!t rate level, !ince inflation ha! $een re"#ce"

while commercial loan! !till co!t 2>=-2@= Thi! ha! create" realintere!t at a recor" level


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NORADPSD in Malawi Final Report Page %;

The Team "i" not have !#fficient time to e1plore whether lea!ingco#l" $e a via$le alternative to len"ing, given MalawiI! high intere!trate!

3.3. >$& Debt elie Status

Malawi reache" Deci!ion Point for 76PC "e$t relief in Decem$er,%&&& The Net Pre!ent Bal#e (NPB of the planne" "e$t relief i! 22=of MalawiI! total foreign "e$t! The time !che"#le for reachingCompletion Point ha! not yet $een fi1e"

3.3. Domestic private investment in +ala4i

Malawi ha!, for !everal year!, !#ffere" from having !ome of AfricaI!lowe!t inve!tment rate! Private "ome!tic !aving! act#ally"ecrea!e" from the ;:@&! to the ;::&!, a! $#"get "eficit! a$!or$e"m#ch of the availa$le capital MalawiI! "evelopment ha! largely$een finance" $y foreign inflow!, which con!tit#te aro#n" ;&= of

4DP Thi! i! !till the ca!e, a! a n#m$er of Trea!#ry $on" i!!#e! pic+#p "ome!tic !aving! to finance government !pen"ing

MalawiI! private inve!tment! average" 3= of 4DP "#ring the ;::&!compare" with an average of over ;>= for !#$-Sahara Africa 6nrecent year!, it ha! $een even lower ($etween %&& million /S FD6!toc+ in ;::: wa! %2>= of 4DP, compare" with %;= for Africa an"

%@= for all "eveloping co#ntrie! 7owever, the per ann#m inflow! in;::@ -%&&& (the late!t year! for which fig#re! are availa$le werevery high $y African !tan"ar"! L at


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NORADPSD in Malawi Final Report Page %%

6nve!tor! g#i"e M6PA provi"e! an 6nve!tor! 4#i"e to Malawi which contain!information on re#irement! for regi!tration an" overview! of factorco!t! for lan", electricity, water, telecomm#nication!, an" tran!portDe!pite the information form M6PA $eing #p"ate", cite" co!t! varie"!#$!tantially from what wa! reporte" $y the private !ector Time "i"not permit verification of the acc#racy of the information provi"e" $y

either 6n a""ition M6PA provi"e! co#ntry information an" an overviewof $#!ine!! opport#nitie!

M6PA re#ire! that inve!tment! $e minim#m /SD >&&&& to $econ!i"ere", an" foc#! primarily on pro"#ctive !ector, le!! on!ervice!

Merging M6PA i! in the proce!! of merging with Malawi 51port PromotionCo#ncil, M5PC The technical an" $#"getary implication! of thi!merging are not yet clear

The team receive" information from private !ector that re#irement!

for an application are c#m$er!ome, an" that M6PA "oe! not have thenece!!ary power! to a!!#re the proce!! i! complete" $y the vario#!a#thoritie!

3.*.! nvestment ncentives

Ta1e! The corporate ta1 in Malawi ha! $een re"#ce" to million an" /S ;& million are given anoption to pay ;>= corporate ta1 in"efinitely or get a five-year ta1holi"ay 6nve!tment! over /S ;& million have the !ame choice $#twith a ten-year ta1 holi"ay There i! no withhol"ing ta1 on "ivi"en"!,an" man#fact#ring in"#!trie! have "#ty-free importation of rawmaterial!

Malawi i! !een a! having one of the mo!t li$eral tra"e regime! ofSo#thern Africa 7owever, the impo!ition of a %&= !#rta1 on $othimporte" raw material! an" pro"#ction machinery, with a f#rther!#rta1 on e1-factory price!, ha! ha" a ma'or impact on the overall"eman" an" co!t competitivene!! of Malawi in"#!try; There i! al!oa f#nctioning $on"e" wareho#!e regime A pre-!hipment in!pectionarrangement ha! $een p#t in place with a foreign firm

9hile in !ome ca!e! it i! po!!i$le to reclaim the !#rta1 on import!,the !y!tem i! $#rea#cratic an" time-con!#ming an" i! a ma'or i!!#eof concern for mo!t companie! vi!ite" /!er in"#!trie! often have to$orrow at very high intere!t rate! in or"er to f#n" the!e payment!an" waiting for over a year for repayment i! not #n#!#al

6nve!tment incentive! Accor"ing to M6PA, Malawi offer! incentive! for inve!tor! whichincl#"eG

16The 4overnment intro"#ce" a con!#mption ta1, calle" a !#rta1, in ;:@: Altho#gh initially applie" !electivelyto goo"! an" !ervice!, it ha! $een e1ten"e" progre!!ively, an" c#rrently applie! at a rate of %&= to mo!t goo"!The !#rta1 applie! (at the !ame rate to $oth "ome!tic an" importe" pro"#ct!, an" no longer "i!criminate!again!t import! D#ty-free importation of raw material! are grante" to in"ivi"#al companie!, $#t "oe! not implye1emption from !#rta1, which m#!t $e pai" on all tran!action! involving a partic#lar pro"#ct 7oweverman#fact#rer!, li+e e1porter!, can claim ta1 cre"it! for !#rta1 pai" on inp#t! #!e" for their pro"#ction


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NORADPSD in Malawi Final Report Page % = for all international tran!port

co!t! No "#tie! on import! of capital e#ipment for the man#fact#re

of e1port No e1ci!e ta1e! on the p#rcha!e of raw material! an"

pac+age material! ma"e in Malawi No Bal#e A""e" Ta1e!

Timely ref#n" of all "#tie! on import of raw material! an"pac+aging material!

5P0 incentive! 6ncentive! for in"#!trie! in 51port Proce!!ing 0one! (5P0 incl#"eG 0ero percent corporate ta1

No withhol"ing ta1 on "ivi"en"!

No "#ty on capital e#ipment an" raw material

No e1ci!e ta1 on locally pro"#ce" raw an" pac+agingmaterial!

No !#rta1e!

3.*.3 ?e% legislation

C#!tom! an" 51ci!e Act of ;:3%

The Act govern! the a"mini!tration, management an" control ofc#!tom an" e1ci!e, the impo!ition an" collection of c#!tom!, e1ci!ean" other "#tie! an" for matter! connecte" therewith The MalawiReven#e A#thority i! re!pon!i$le for reg#lation

51port Promotion Act of ;:3;

The o$'ective of thi! Act i! to facilitate the "evelopment of !#!taine"an" competitive e1port! of agric#lt#ral an" man#fact#re" pro"#ct!partic#larly high val#e non- tra"itional e1port! The Act le" to thee!ta$li!hment of the Malawi 51port Promotion Co#ncil (M5PC

6nve!tment Promotion Act of ;::;

Provi"e! for a legal framewor+ for facilitation of all inve!tment

proce!!e! an" accor"! paramo#nt !tat#! to the policie! an"proce"#re! containe" in the !tatement of inve!tment policie! The


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NORADPSD in Malawi Final Report Page %2

Malawi 6nve!tment Promotion Agency (M6PA i! the implementingagency

)#rea# of Stan"ar" Act of ;:3%

Thi! Act e!ta$li!he" the Malawi )#rea# of Stan"ar"! an" provi"e!for the "evelopment of national !tan"ar"! an" !cheme! for the

implementation of the!e !tan"ar"! incl#"ing pro"#ct certification

P#$lic 5nterpri!e (Privati!ation Act of ;::

Thi! provi"e! the framewor+ for the privati!ation an"commerciali!ation of p#$lic enterpri!e!, p#$lic commercial entitie!an" p#$lic commercial a!!et! an" provi"e! for the e!ta$li!hment ofthe Privati!ation Commi!!ion

6n"#!trial Act of ;::%

The primary o$'ective of thi! Act i! to !#pport an" enco#rage private!ector "evelopment $y creating a con"#ctive environment for$#!ine!!

The Companie! Act of ;:@

The o$'ective of the Companie! Act i! to reg#late the con"#ct ofcompanie! an" !harehol"er!I right! an" facilitate the regi!tration ofall companie! operating in Malawi 6t "oe! not pre!cri$e e#ityparticipation limit! on foreign inve!tment

Capital Mar+et Development Act of ;::&

The p#rpo!e of thi! Act i! to provi"e for the "evelopment of thecapital mar+et, to e1pan" acce!! $y companie! in Malawi to termfinancing for "evelopment p#rpo!e!, to provi"e the #tili!ation of!aving! an" e1ce!! li#i"ity in "ome!tic "evelopment an" to provi"ea"e#ate reg#lation of the capital mar+et an" !elf reg#latoryorgani!ation!, to fo!ter "evelopment of fair an" or"erly financialmar+et! The Act i! a"mini!tere" $y the Re!erve )an+ of Malawi

Other act! Other e!!ential act! incl#"eG

The Competition an" Fair Tra"ing Act, ;::@51port 6ncentive! Act, ;:@:

The Cooperative! Act, ;::@The Fi!herie! Con!ervation an" Management Act, ;:::The Mine! an" Mineral! Act of ;:@;The Comm#nication! Act, ;::@

3.*.* +ala4i &onederated &hambers o &ommerce and ndustr%

MalawiI! cham$er of commerce MCCC6 i! mainly con!tit#te" $yme"i#m an" !mall !cale enterpri!e! Total n#m$er of mem$er! i!e!timate" $y the Cham$er to $e aro#n" @&&&, altho#gh payingmem$er! are only appro1imately ;@&& *arger e1port oriente"companie!, altho#gh many $eing mem$er!, "o not activelyparticipate in the Cham$er MCCC6 lo$$ying capacity i! #ncertain,an" certain $#!ine!! area!, !#ch a! the larger e1port oriente"$#!ine!!e! "o not feel their intere!t! are !#fficiently ta+en care ofMem$er! e1pre!! #nreali!ticly high e1pectation! a! to what i!


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NORADPSD in Malawi Final Report Page %>

po!!i$le to achieve, !ometime! lea"ing to fr#!tration an" pa!!ivityon the part of mem$er!

One firm one vote The Cham$er !eem! to $e r#le" $y the principle of Jone firm onevoteK which in the view of larger companie! place them in an#nfavo#ra$le po!ition, a! !maller firm! have limite" #n"er!tan"ing of

the challenge! e1port oriente" firm! e1perience Thi! ha! re!#lte" inthe Private Sector $eing fragmente" an" many firm! prefer to lo$$ytheir own concern! in"ivi"#ally

The Cham$er ha! a clear o$'ective to $ee treate" $y the4overnment a! the tr#ly repre!entative private !ector $o"y

3.*. $ublic-$rivate Dialogue

)#!ine!! Co#ncil 6n or"er to improve an" complement the "ialog#e $etween theprivate !ector an" the 4overnment, initiative! have $een ta+en toe!ta$li!h a formal )#!ine!! Co#ncil Thi! ha! however not

materiali!e" A! a re!pon!e to the nee" for clo!er "ialog#e,partic#larly with the larger enterpri!e! an" important a!!ociation!, agro#p ha! met on !everal occa!ion! The gro#p ha! a"vocate" theimportance of foc#!ing on the private !ector in the PRSP amongother i!!#e!, an" ha! contri$#te" to !haping the private !ectorI!place in the PRSP Nonethele!!, the PRSPI! attention to the private!ectorI! potential role in poverty alleviation ha! remaine"#n"er"evelope" The Mini!try of Commerce an" 6n"#!try ha! al!oe1pre!!e" an intere!t in improving the "ialog#e in it! ConceptDoc#ment for a Private Sector Development Pro'ect ;3

3.*. $rivatisation @ $arastatal Sector eormDive!tit#re plan Malawi ha! em$ar+e" on a privati!ation programme The P#$lic

5nterpri!e! Privati!ation Act of ;::, the Dive!tit#re Se#ence Plancon!i!ting of a li!t of ;&& P#$lic 5nterpri!e!, an" the e!ta$li!hmentof the Privati!ation Commi!!ion, ha! lai" the $a!i! for theprivati!ation proce!! 8ey !ector! !#ch a! telecomm#nication!,power an" water have $een targete"

The privati!ation an" #tility reform programme! have $een a!ignificant part of the !tr#ct#ral a"'#!tment programme! !#pporte"$y the 9orl" )an+

)y Novem$er %&&&, 2& of the ;&& enterpri!e! !che"#le" forprivati!ation ha" $een privati!e" 6n"epen"ent reg#lation ha! $eenintro"#ce" in telecomm#nication an" electric power The large!tremaining p#$lic enterpri!e! are

17Mini!try of Commerce an" 6n"#!try, Private Sector Development Pro'ect Concept Doc#ment Han#ary %&&%


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NORADPSD in Malawi Final Report Page %

S#"#s & s#"#$&*$- $*#$r(rs$s

5nterpri!e Net profit

Agric#lt#re Development an" Mar+eting Corporation(ADMARC

s#"%'$s #& -&* >s*$ss 19992000 sr!$:

(; E no o$!tacle %G minor o$!tacle


39/71

NORADPSD in Malawi Final Report Page %3

neigh$o#ring co#ntrie! !#ch a! 0am$ia an" 0im$a$we, which haveal!o ha" con!i"era$le inflation pro$lem! The infra!tr#ct#re pro$lemi! !een a! a higher o$!tacle in Malawi than in the neigh$o#ringeconomie!, an" higher than in the average African co#ntry, an" arerelate" $oth to MalawiI! lan"loc+e" po!ition an" to the poor !tate ofit! #tility !ervice!

On the po!itive !i"e, corr#ption an" policy in!ta$ility are rate" a!le!! of an o$!tacle in Malawi 51change rate! are al!o !een a! arelatively minor pro$lem Thi! pro$a$ly reflect! that Malawi ha! fewe1porter!, who !ee the "irect impact! of e1change fl#ct#ation! Thefl#ct#ation! are !een $y "ome!tic companie! mainly in the form ofinflation (which i! rate" a! a $ig pro$lem

437 I*#$r*"#&*"' r$'"#&*s "*- *!$s#&r ($r%$(#&*

3..1 >o4 is +ala4i perceivedC

De!pite it! n#mero#! pro$lem!, Malawi !core! comparatively well,$y African !tan"ar"!, on !everal international rating! Some of the!ein"icator! are li!te" $elow

Tran!parency 6nternationalCorr#ption Perception 6n"e1G

Malawi No ; of :; co#ntrie! (No > of ;>African co#ntrie! ran+e"

7eritage Fo#n"ation 6n"e1 of5conomic Free"om

;;@ of ;; co#ntrie! (wor!t !#$!coreGmonetary policy

9orl" )an+ 6n!tit#teG of ;@ co#ntrie! on 4overnment5ffectivene!! (!imilar to *ith#ania

@% of ;% on Political !ta$ility (!imilar to)elar#!

of ;&& on reg#latory #ality (!imilar to Mali

:< of ;: on r#le of law (!imilar to Hamaica

3..! +emberships and Access to nternational markets

MalawiI! mo!t important !o#rce of import i! SADC, while the5#ropean /nion $#y! appro1imately >&= of it! e1port!

Come!a Malawi i! a mem$er of COM5SA, the Common Mar+et for 5a!ternan" So#thern Africa, which i! to $ecome a c#!tom! an" monetary#nion

SADC Malawi i! !ignatory to the SADC Tra"e Protocol, !igne" in ;::

The o$'ective! of COM5SA an" SADC incl#"e among other thing!,facilitating, increa!ing an" promoting intra-regional tra"e thro#gh thegra"#al re"#ction an" event#al elimination of tariff an" non- tariff$arrier! COM5SA an" SADC al!o aim at promoting cro!! $or"ertra"e an" inve!tment an" at enhancing the economic "evelopment,"iver!ification an" in"#!triali.ation of the region COM5SAenvi!age! the e!ta$li!hment of a Common 51ternal Tariff $y the year%&&2 The SADC Tra"e Protocol aim! at e!ta$li!hing a Free Tra"eArea within eight year! of it! entry into force


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)ilateral agreement! Malawi ha! $ilateral tra"e agreement!, mainly with So#th Africa,)ot!wana an" 0im$a$we, an" i! negotiating !imilar agreement! with0am$ia, Tan.ania, an" Mo.am$i#e The Malawian a#thoritie! !eethe!e a! largely interim agreement! #ntil the SADC Free Tra"e Areai! e!ta$li!he"

Cotono# Malawi i! a mem$er of the Cotono# Agreement /n"er the Cotono#Agreement, the 5/ grant! non-reciprocal tra"e preference! to mo!timport! originating from ACP !tate! The 5/I! 5verything )#t Arm!(5)A initiative, implemente" from March %&&;, ha! e1ten"e" "#ty-an" #ota-free acce!! to 5/ import! of all pro"#ct! from lea!t"evelope" co#ntrie!, e1cept for arm! The 5/ i! an importantmar+et for Malawi! main e1port! of to$acco, tea, coffee, an" !#gar,which enter the 5/ at .ero tariff! 6t! !#gar e1port!, however, arecovere" $y the S#gar Protocol #n"er which Malawi i! allocate" an"f#lly #!e! !pecial #ota acce!! to the 5/ of %&,&&& tonne! ann#ally,at price! higher than the worl" level! The recent e1ten!ion $y the5/ of preference! to all lea!t "evelope" co#ntrie! #n"er the5verything )#t Arm! (5)A initiative, from March %&&;, an" the5/! own m#ltilateral tariff re"#ction! have re"#ce" their importance5/ i! MalawiI! main mar+et Other !o#rce! !how that acce!! to 5/mar+et! may $e more ren"ering than SADC ;@

A4OA The African 4rowth an" Opport#nity Act (A4OA, offer! free acce!!to !ome man#fact#ring pro"#ct! originating in African co#ntrie!African co#ntrie! eligi$le for preferential treatment #n"er the A4OAwill receive 4SP treatment (e1empt from the competitive nee"!limitation! in the /S mar+et #ntil the en" of Septem$er %&&@,Malawi $enefit! from 4enerali.e" Sy!tem of Preference! (4SPtreatment an" e1port! ;&,&&& ton! of !#gar ann#ally to the /nite"State! #n"er "#ty-free 4SP #ota acce!!, an" $egan e1portinggarment! #n"er the!e arrangement! from A#g#!t %&&; Altho#ghmany other pro"#ct!, incl#"ing certain proce!!e" agric#lt#ral goo"!,are covere" $y the A4OA, Malawi! ma'or agric#lt#ral e1port! of#nproce!!e" !#gar, to$acco, an" tea are ineligi$le;:

9TO Malawi i! a 9TO mem$er A! an /N-"e!ignate" lea!t-"evelope"co#ntry, Malawi i! eligi$le for !pecial an" "ifferential treatmentprovi"e" #n"er the 9TO Agreement! Malawi "oe! not have"iplomatic repre!entation in 4eneva *imitation! of governmentofficial! on 9TO matter!, incl#"ing negotiating !+ill! in the

m#ltilateral conte1t, i! a con!traint on Malawi! participation in them#ltilateral tra"ing !y!tem, which i! f#rther hampere" $y thea$!ence of "iplomatic repre!entation in 4eneva 9TO affair! have$een covere" $y it! em$a!!y locate" in )r#!!el!, incl#"ing ACP an"5/ relation! Malawi can rarely atten" 9TO meeting! "#e tofinancial limitation!

9TO finali!e" a Tra"e Policy Review of Malawi in Fe$r#ary %&&% %&

186mani Development %&&;G JOverview of MalawiI! Tra"e Relation! )oth Regionally an" 6nternationallyK

199TO %&&% TRAD5 PO*6C? R5B659, Malawi, Report $y the 4overnment

209TO %&&% JTra"e Policy Review,Report $y the 4overnmentK


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Overlappingagreement!

To !#m #p, Malawi i! a mem$er of the Common Mar+et for 5a!ternan" So#thern Africa (COM5SA, an" the So#thern AfricanDevelopment Comm#nity (SADC 6t i! a !ignatory to a $ilateraltra"e agreement with 0im$a$we, an" it i! negotiating !#chagreement! with Mo.am$i#e, Tan.ania, an" 0am$ia Malawireceive! non-reciprocal preferential treatment from the 5#ropean

/nion #n"er the Cotono# Agreement an" the 5verything )#t Arm!!cheme from the /nite" State! #n"er the African 4rowth an"Opport#nity Act from other "evelope" co#ntrie! #n"er the4enerali.e" Sy!tem of Preference! (4SP an" #n"er a !eparateagreement with So#th Africa

Malawi! cro!! mem$er!hip of overlapping regional an" $ilateralarrangement! with "ifferent tra"e li$erali.ation agen"a! an" tra"ingr#le! ma+e! it! tra"e regime more comple1 6t may "i!tort Malawi!tra"e an" incentive pattern! an" entail #n"erta+ing incon!i!tento$ligation!

6ntegrate" Framewor+ Malawi ha! $een !electe" for the pilot pha!e of the 6ntegrate"Framewor+ (6F for Technical A!!i!tance for Tra"e Development in*ea!t Develope" Co#ntrie!, an initiative ta+en $y 9TO, 6TC, 9),/NDP, 6MF og /NCTAD The aim of the 6F i! to promote theintegration of *DCI! into the glo$al economy The Mini!try ofCommerce an" 6n"#!try will $e the focal point A! an intro"#ction tothe programme a Diagno!tic Tra"e 6ntegration St#"y (DT6S will $ecarrie" o#t lea" $y the 9)

M64A Malawi i! al!o a mem$er of the M#ltilateral 6nve!tment 4#aranteeAgency (M64A

Malawi! mem$er!hip of overlapping regional an" $ilateralarrangement! with "ifferent geographical coverage, ma+e! it! tra"eregime comple1, an" i! an a"mini!trative $#r"en 6t! tra"ing partner!receive "ifferent acce!! con"ition! to the Malawi mar+et "epen"ing#pon which agreement they are in, an" the !tage of implementationof the agreement $y the partner! Mem$er! of more than oneagreement can tra"e with Malawi #n"er either agreement The!ame applie! to Malawi! e1port! to the!e mar+et! Thi! may "i!torttra"e an" incentive pattern! in an #npre"icta$le manner an" co#l"entail incon!i!tent o$ligation! $eing #n"erta+en $y Malawi

436 Pr!"#$ s$%#&r s#r%#r$ "*- &*$rs/(

3..1 =4nership structure and irm si(e

Previo#! monopolie! MalawiI! ha! a few large (in Malawian !tan"ar"! companie! withpara!tatal root!, in the #tility !ector! an" within monopoli!ticagri$#!ine!! The mo!t important companie! in thi! gro#p are5lectricity S#pply Commi!!ion of Malawi, MalawiTelecomm#nication! Co, Air Malawi, Malawi Railway!, an" Aric#lt#reDevelopment an" Mar+eting Co The!e companie! are c#rrently invario#! !tage! of privati!ation an" commerciali!ation

*arge private firm! Malawi ha! few large private firm! o#t!i"e of the gro#p of e1-para!tatal! Tho!e that e1i!t are pre"ominantly to$acco, tea an"!#gar e!tate!


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*.3.1 ntegrated )rame4ork or 0echnical Assistance

6t i! recommen"e" that Norwegian initiative! $e clo!ely coor"inate"with the 9TO 6ntegrate" Framewor+ for Technical A!!i!tance forTra"e Development (6F, an" the Diagno!tic Tra"e 6ntegration St#"y(DT6S #n"er preparation (cla#!e < a$ove

535 K$: ss$s

)a!e" on the TeamI! interview! with !ta+ehol"er! in Malawi, the +eycon!traint! for PSD have $een i"entifie" a!

7igh tran!port co!t!

Macro-economic volatility an" high capital co!t!

*imite" "ome!tic mar+et

/nrelia$le infra!tr#ct#re

6n a""ition, MalawiI! economy !#ffer! from a n#m$er of inherentwea+ne!!e! which can only $e mitigate" thro#gh private !ector"evelopment

*ac+ of foo" !afety

Depen"ency on to$acco an" "onor f#n"! for foreign e1change

An increa!ing lan" !hortage

The +ey concern! of a PSD program in Malawi !ho#l" $e to targetthe!e pro$lem!

537 R$-%* Tr"*s(&r# C&s#s

*..1 0he acala &orridor

6n light of the !trategic importance of the Nacala corri"or to Malawi,an" the !#$!tantial inve!tment! alrea"y ma"e to #pgra"e thetran!port infra!tr#ct#re, it i! e!!ential that the relatively limite" wor+!nee"e" to f#lly e1ploit it! potential are complete" Completion of therailway line will improve the potential! in the area, an" $oo!t rail an"har$o#r tran!port 5/ i! f#n"ing a fea!i$ility !t#"y for completion ofthe !ection in Mo.am$i#e an" ha! committe" 5/R ;& mill forreha$ilitation 6t i! e1pecte" that wor+! will !tart within a year

23)ilateral $i!tan" g'ennom NORAD for"elt p region, lan" og $#"!'ettpo!t %&&;


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The planne" inve!tor! conference in Septem$er %&&% for SpatialDevelopment in the corri"or area !ho#l" $e promote" a! anopport#nity for intro"#ction to the $#!ine!! environment in $othMalawi an" Mo.am$i#e

*..! oadsThere i! con!en!#! among !ta+ehol"er! that roa" infra!tr#ct#rem#!t $e improve" in or"er to facilitate economic growth 7owever,9), NDF an" 5/ are alrea"y a""re!!ing the #pgra"ing of roa"!The 9orl" )an+ ha! approve" a /S


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*.11.1 $roblem deinition

The increa!ing lan" !hortage in Malawi can only $e met $yincrea!ing pro"#ctivity on c#ltivate" lan", an" $y "eveloping

alternative !o#rce! of employment an" income for the #r$anpop#lation Thi! will re#ire acce!! to cre"it, for irrigation an"fertili!er an" other !ea!onal financing in the agric#lt#re !ector, an"for creation of new employment opport#nitie! within man#fact#ringan" !ervice! 6n thi! chapter, we pre!ent a n#m$er of option! for!#pport that will a""re!! the!e i!!#e! in a $roa" !en!e

*.11.! +icro inance

Micro finance !cheme! are !#pporte" ia $y DF6D The environmentfor micro-cre"it in Malawi i! "iffic#lt, with wil"ly fl#ct#ating realintere!t rate! (!ee Chapter


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al!o pave the gro#n" for increa!e" PSD co-operation in !#$!e#entperio"!

*.11. Demand-driven $SD 6und8

An alternative approach to the propo!al! li!te" a$ove wo#l" $e to

provi"e a financing mechani!m $a!e" on application! from Malawiancompanie! an" organi!ation!, ear-mar+e" for PSD i!!#e! A wi"erange of propo!al! co#l" potentially #alify, from financial 'o#rnali!man" economic re!earch to mar+eting, pro"#ct certification an" anyother i!!#e that wo#l" fall #n"er a PSD #m$rella to $e morepreci!ely "efine" at a later !tage

Management of a Jf#n"K !#ch a! thi! !ho#l" prefera$ly $eo#t!o#rce" to a tr#!tworthy $an+, in!tit#te or !imilar interme"iary 6nline with NORADI! PSD policy, mar+et "i!tortion! m#!t $e avoi"e"thro#gh limitation! on !#pport to in"ivi"#al companie!

*.11. 2ducation

Malawi ha! a !hortage of !+ille" la$o#r, an" import! la$o#r at time!5"#cation co#l" therefore $e a potential area of co-operation, $#twa! not e1plore" f#rther "#ring the !t#"y $eca#!e re!pon"ent! fromthe private !ector "i" not rate the h#man re!o#rce! i!!#e among themo!t important con!traint!

5312 G$*-$r ss$s

4en"er, 76BA6DS an" 5nvironment are i"entifie" a! cro!!-c#ttingi!!#e! in the PRSP Other "onor! who !#pport PSD have al!oinvo+e" gen"er a! a cro!!-c#tting i!!#e 6n the TeamI! opinion, thi!!ho#l" al!o $e the approach in a NORAD !#pporte" PSDprogramme, if la#nche"


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7 POTENTIAL FOR COOPERATION WITHNORWEGIAN COMPANIES AND INSTITUTIONS

731 P$*#"' r&'$s

The mini!c#le !i.e of the Malawi economy (only /S ;@ $illion a!maller amo#nt than the ann#al t#rnover of Den nor!+e )an+ an"it! lan"loc+e" location, to which tran!port acce!! i! e1pen!ive, areevi"ence that a $roa" co-operation $etween Malawi an" Norwegiancompanie! !ho#l" not $e e1pecte" 7owever, opport#nitie! for$#!ine!! in !electe", !peciali!t area! "o e1i!t

Norwegian companie! an" in!tit#tion! can play three f#n"amentally"ifferent role! in MalawiI! PSD !ector

A! e1porter! an" importer! of goo"! an" !ervice!, on

commercial term!

A! inve!tor! in local $#!ine!!

A! partner! in "evelopment co-operation program! fortechnology tran!fer, etc

Some of the!e po!!i$ilitie! are "i!c#!!e" $elow

732 E=(&r#s #& "*- I)(&r#s r&) M"'"

.!.1 0he Donor +arketThe "onor mar+et i! pro$a$ly the mo!t relevant area of $#!ine!! forNorwegian companie! 6t i! fairly pre"icta$le, an" macro-economicfactor! !#ch a! e1change rate an" price fl#ct#ation! are le!!infl#ential

Official Development A!!i!tance (ODA to Malawi increa!e" from/S 2 million in ;:3> to /S 23& million in ;::@

Ai" to Malawi primarily goe! to general government con!#mptionan" only to a le!!er e1tent to !pecific inve!tment pro'ect! Acohe!ive overview of the ai" mar+et ha! not $een availa$le

7owever, an in"ication can $e fo#n" in the plan! for #!ing the 76PC"e$t-relief f#n"!, where priority i! towar"! health care (partic#larlyp#rcha!e of "r#g!, e"#cation (teaching material!, water ($oreholecon!tr#ction an" roa"!

The "onor mar+et i! intere!ting for Norwegian !#pplier! of me"icale#ipment, electrical e#ipment, roa" con!tr#ction (partic#larly if theNacala Corri"or pro'ect i! la#nche", water !#pply !y!tem!,con!#lting !ervice!, an" other pro"#ct! an" !ervice!

Norway ha! al!o !#pporte" the energy !ector thro#gh the *ilongweReha$ilitation an" Ref#r$i!hment of the Di!tri$#tion Sy!tem Pro'ect

The programme co#l" $e finali!e" thro#gh the thir" pha!e


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Some pro'ect! in the energy !ector are commercial via$le 5ven ifMalawi an" 5SCOM have a !erio#! "e$t a commercial financialarrangement might in !ome ca!e! $e con!i"ere" 6t i! however acon"ition that Malawi get! acce!! to the rea!ona$le Norwegiang#arantee arrangement for *DC co#ntrie!

.!.! =ther e9ports

There are few mentiona$le e1port opport#nitie! to Malawi o#t!i"e ofthe "onor !y!tem

.!.3 mports rom +ala4i

Malawi ha! yet to "evelop a f#ll #n"er!tan"ing of the opport#nitie!provi"e" $y the 5)A an" A4OA "#ty reform! Norwegian importer!who wi!h to !t#"y !#ch po!!i$ilitie! L an" po!!i$ly tran!fer !+ill!along the way L can $enefit from e1i!ting $#"getary provi!ion! withinNORAD 6n an early pha!e, importer! may nee" to provi"e active

a"vice on pro"#ct "evelopment, certification, pac+aging, an" !imilari!!#e! The 5)A an" A4OA !y!tem! have relive" the c#!tom!$arrier!, $#t mar+eting an" pro"#ct-#ality $arrier! !till e1i!t ANorwegian company i! alrea"y e1ploring opport#nitie! within tra"e inanimal fee"!

734 I*!$s#)$*#s * M"'"

.3.1 7eneral

Previo#! intere!t 6t i! "oc#mente" el!ewhere in thi! report that FD6 i! low in MalawiMalawiI! JanonymityK a! a "e!tination for inve!tment can $e rea"clearly from the !mall portfolio! of company-oriente" PSD financingNORAD ha! only provi"e" !#pport to three pre-fea!i$ility !t#"ie! tocompanie! intere!te" in !tarting #p $#!ine!! in Malawi None of thepropo!al! have materiali!e" A Norwegian company involve" in!awmilling (Tree Farm! AS ha! with"rawn from Malawi Telenor a!acon!i"er! a pro'ect within the telecomm#nication! !ector

Other DF6I! 6FCI! portfolio in Malawi i! only /S million, concentrate" in thefinancial !ector an" !mallme"i#m-!i.e" enterpri!e! in to#ri!m,agri$#!ine!! an" health care 6F/ (Denmar+ ha! one inve!tment,"ating from ;:@ S95DF/ND (Swe"en ha! no inve!tment in

Malawi neither ha! NORF/ND FMO (the Netherlan"! ha! noinve!tment in Malawi CDC (/nite" 8ing"om ha! ma"e threeinve!tment! L in tea, cement, an" agri$#!ine!! NORSAD Agencyha! one inve!tment in Malawi, within the tim$er $#!ine!!

)a!e" on thi! e1perience, one !ho#l" not e1pect a $roa" inve!tmentco-operation $etween Malawi an" Norway S#ch pro'ect! will remainfragmente" an" confine" to !peciali!t !ector!

.3.! 2lectric $o4er

The 4oM are opening #p for 6n"epen"ent Power Pro"#cer! (6PP!

an" "i!tri$#tor! (6PD! The private !ector in Malawi i! wea+ an" notvery pro-active, !tr#ggling with the micro economy challenge! an"lac+ of infra!tr#ct#re in potential inve!tment area! 7owever, the


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NORADPSD in Malawi Final Report Page 2

.*./ )inancial sector

Norwegian con!#ltant! an" N4O! with e1perti!e in micro-financeco#l" provi"e tran!fer of +now-how within thi! fiel", altho#gh then#m$er of #alifie" Norwegian a"vi!or! i! limite" Al!o, in!tit#tion!familiar with $#!ine!! "evelopment co#l" $e #!e" to "efine the

mo"alitie! of JPSD f#n"K a! "e!cri$e" in Chapter 2

.*. )isheries and agriculture

The re!o#rce! of !everal Norwegian in!tit#tion! with internationale1perience in fi!herie! an" agric#lt#re co#l" $e "rawn #pon forprogramme! within the!e !ector!

.*.; +ining

Norwegian competence co#l" $e relevant eg within re!o#rcemapping, an" within the "e!ign of licen!ing an" ta1ation regime!


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ANNEX 1

MAP OF MALAWI

N"%"'" C&rr-&r#& I*-"* O%$"*

!"M&")>$

Pr&(&s$- (&$r#r"*s)ss&* '*$

M&")>$M"'"

powertran!mi!!ion lineMo.am$i#e-Malawi


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ANNEX 2

REFERENCESBIBLIOGRAPHY

SADC %&&;G JMining Sector Strategic Development, Final Draft, JSADC Mining SectorCoor"ination /nit, A#g#!t 2, %&&;

DF6D %&&%G JAi"e Memoir, CA)S Ann#al ReviewK

National 5conomic Co#ncil, Strategic Planning Divi!ionG JAlternative! to To$acco for Malawi,Bol ;, Agric#lt#re an" Man#fact#ring

National 5conomic Co#ncil, Strategic Planning Divi!ionG JAlternative! to To$acco for Malawi,Bol %, Mining To#ri!m an" Cro!!-C#tting 6!!#e!

Magit Nolan 6D6, %&&; JMalawi Private Sector Strategy 6nitiativeK

MF5P %&&%G JMalawi Poverty Re"#ction Strategy Paper, Final Draft, April %&&%K, Mini!try ofFinance an" 5conomic Planning, Malawi

9orl" )an+ %&&%G JPerformance A!!e!!ment Report, Malawi fi!herie! Development Pro'ect,Cre"it no %%%> MA6K, March %&&%

6mani Development %&&;G JOverview of MalawiI! Tra"e Relation! )oth Regionally an"6nternationallyK Prepare" $y 6mani Development Malawi *t" for the Royal Norwegian5m$a!!y, Han#ary %&&;

NORAD %&&&G J7an"$oo+ in 4en"er an" 5mpowerment A!!e!!mentK

NORAD %&&&G Appropriation Doc#ment M96 %&< NASFAM, Agreement no;

NORAD %&&;G JStrategy for the Norwegian Development Cooperation with Malawi %&&; L%&&>,

Mini!try of Foreign Affair! Norway ;:::GKStrategy for Norwegian S#pport of Private SectorDevelopment in Developing Co#ntrie!K

Nacala Development Secretariat /nit %&&;G JNacala Development Corri"or, a De!criptiveDoc#ment an" Progre!! ReportK

4oM %&&%G JMalawi 5nergy Policy 9hite PaperK, Min of Nat#ral Re!o#rce! an"5nvironmental Affair!, Department of 5nergy Affari!, March %&&%

4oM %&&%G JPower Sector Reform StrategyK, Min of Nat#ral Re!o#rce! an" 5nvironmentalAffair!, Department of 5nergy Affair!, Malawi

4oM G Paper on po!!i$le area! of cooperation in in"#!trial "evelopment Mini!try ofCommerce an" 6n"#!try, Malawi

4oM %&&&G Towar"! Re!pon!i$le Development of the Fi!herie! Sector in Malawi,Department of Fi!herie!, Malawi, March %&&&

/N %&&;G JCo#ntry Pre!entation for MalawiK, thir" /nite" Nation! Conference for *ea!t"evelope" Co#ntrie!, May %&&;


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Agric#lt#ral Mar+et! in )enin an" MalawiG Operation an" Performance of Tra"er!6nternational Foo" Policy Re!earch 6n!tit#te, Decem$er %&&;

Memoran"#m of The Pre!i"ent of the 6nternational Development A!!ociation to the51ec#tive Director! on a Co#ntry A!!i!tance Strategy of the 9orl" )an+ 4ro#p for theRep#$lic of Malawi, A#g#!t 2, ;::@

5R* %&&%G O$!ervation! on )#!ine!! O$!tacle! Confronting Man#fact#rer! in Malawi an"Recommen"ation! for Action, 5conomic Re!o#rce! *imite" (Malawi, A#g#!t Septem$er%&&&

9TO %&&% Tra"e Policy Review,

Nacala Development Corri"or, A De!criptive Doc#ment an" Progre!! Report, NacalaDevelopment Corri"or Secretariat /nit, %&&;

/NDP %&&;G Malawi National 7#man Development Report %&&;, /NDP Malawi

Men. A (e" ;::>G The Fi!hery Potential an" Pro"#ctivity of the Pelagic 0one of *a+eMalawiNia!!a Chatham, /8G Nat#ral Re!o#rce! 6n!tit#te, Over!ea! DevelopmentA"mini!tration

Private Sector Development Strategy, )a!eline S#rvey, Report S#$mitte" To Mini!try OfCommerce an" 6n"#!try, Agric#lt#ral Policy Re!earch /nit, )#n"a College Of Agric#lt#reNovem$er, %&&;

9TO ;:::G JFramewor+ Convention on To$acco Control, A primerK

6/F6T4A)AT %&&& - Chil" *a$o#r in the To$acco 4rowing Sector in Africa, *5l"ring etalNairo$i, Octo$er %&&&Fafo-paper %&&&G%;

4OM %&&%G Private Sector Development Pro'ect Concept Doc#ment Mini!try of Commercean" 6n"#!try, Han#ary %&&%


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LIST OF INSTITUTIONS MET A**$= 4

I*s###&* C&*#"%# P$rs&* A--r$ss P/&*$C$''( F"= E)"')riti!h 7igh Commi!!ion *ilongwe Mr Norman *ing

7igh Commi!!ionerPO $o1 3 $hcVwi!!comw

)#n"a College Dr 5mman#el 8a#n"aSenior *ect#rer A#ac#lt#re

)#n"a College)o1 %;2, *ilongwe

e+a#n"aVmalawinet

Central Me"ical Store! Mr 4 8a"ewereChief Pharmaci!t

Cl#$ Ma+o+ola Mr N D#m$a4eneral Manager

PO)o1 >: Mangochi >:2 %22CellG @:2 2;3 cl#$ma+Vmalawinet

DF6D M! Tr#"i Cra$$Dep#ty Programme Manager

)riti!h 7igh Commi!!ionPO )o1 3%;

33% >3 t-cra$$V"fi"gov#+

5SCOM *t" Mr D van 9y+Chief 51ec#tiveMr T 9 Chi!aleDir Di!tri$#tion W C#!tomer!

5SCOM 7o#!e, 7aile Sela!!ie Roa",PO)o1 %&23)lantyre

%% &&&CellG @2< 32&

CellG @%< @%@

%< >& "vanwy+Ve!commwcom

5#ropean /nion Mr 6ngmar Stelter 5conomic Section

5#ropa 7o#!e, PO )o1 , )lantyre

%& ;&& %& >@2 m"cgmVmalawinet

Malawi 6nve!tment Promotion AgencyM6PA

Mr A 8a$ele4eneral Manager

A#ari#! 7o#!eP)ag


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MA*D5CO Fi!herie! Mr H7 Mga!aOperation! Manager

)o1 2> Mangochi >@2 @2 3%2 mal"ecoVmalawinet

MAN6CA Malawi Mr A Chit!imeManaging Director

Ma+ata 6n"#!trial Site, Mc*eo" Roa",PO )o1 2& )lantyre

3 >CellG @%% 233

3; %:3 achit!imeVmanicamalawinet

Man#fact#rer! A!!ociation of Malawi Mr Peter )arrattManaging Director

PO)o1 ; *ilongwe 3>2 3@:CellG @%: 3%2

3>2 3:< gwpmVV!"nporgmw

Department of 5nergy Mr ChitenyeDep#ty Director of 5nergy

Mini!try of 9or+! an" Tran!portNacala Development Corri"or

Mr 9ilfre" AliPro'ect Manager

3@@ 3%CellG @%

hy"roVmalawinetvictoria+eelanVeomwnet

Nyi+a Chemical *t" Mr Peter n+ataManaging Director

Chipem$ere 7ighway, Ma!elemaP )ag 2 Chichiri, )lantyre && 2< 3%@ nyi+achemV!"nporgmw

Pac+aging 6n"#!trie! Malawi *t" Mr SA 6tayeManaging Director

PO )o1 A/"**/>B?+/C?


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ANNEX T TER"S * RE*EREN+E N PR!,ATE SE+TR DE,E-P"ENTAND PRSPE+TS *R NR.E/!AN TRADE AND !N,EST"ENT !NTERESTS

!N "A-A.! (P0ASE $)

perationalisation of Purpose1

he main prpose of this std' is to provide the information deemed necessar' and sfficientfor a decision on scope and direction of frther assistance to )*% to .e inclded "orwe&iancolla.oration with +alawi

he followin& docmentsD +)$*) of 2002, *trate&' for the "orwe&ian %evelopmentooperation woth +alawi 2001!2005 and "-* strate&' docment from +inistr' of >orei&nAffairs in "orwa', shall .e ta(en as the std's point of departre

Scope of .or'

he std' and the or&aniation of wor( will follow the threefold prpose in the o$ hedetailed scope of wor( will in addition to the &eneral assessment to focs specificall' onareas where "orwa' ma' have a comparative advanta&e

he std' of possi.le areas of co!operation shold cover

he framewor( for )*% in terms of infrastrctre with focs on the ener&' sector distri.tion and

+#E!+=-!-nterconnection and transport sector "acala $ailwa's

=ithin the primar' sector, discss areas of development and possi.le frther "orwe&ian assistance

%iscssion of the role of ! and colla.oration with ! nei&h.orin& contries li(e Eam.ia and

+oam.i@e "acala %evelopment orridor, power!transmission, EA+!+=-!+#E rowthrian&le

rief review the possi.ilities for "orwe&ian involvement in the minin& and fisher' sector

rief review the scope for contri.tin& to the improvement of the fnctionin& of financial mar(ets in

+alawi

he national, re&ional and international framewor( related to the potential for increased trade,eports and international co!operation

-n .road terms, the potential for increased eport/import "orwa'!+alawi and indicate main

constraints .arriers

Assess possi.le specific lin(a&es to competence in "orwe&ian companies and instittions which

cold contri.te to develop the private sector, instittions and p.lic sector in +alawi

%iscssion of possi.ilit' of commercial involvement of "orwe&ian companies

-n colla.oration with the ?m.ass' s&&est areas which will .e &iven more thoro&hassessment, ie ener&'!sector, fisher'!sector, and propose isses which can .e ela.orated

phase 2


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"et#odoloyimplementation

%e to time constraints and composition the team will .e constitted in lant're at the startof field wor( he ?m.ass' will thro&h consltants/firms provide anal'sis of .ac(&rondinformation his to&ether with the team!mem.ers own information collection and anal'sis

form the .asis from which the direction and strctre of the $eport will .e prepared #n this.asis interviews with private sector or&anisations/instittions/enterprisesD appropriateathoritiesD .i! and mltilateral donors and financiers will .e carried ot

Team composition

+r Can ?ri(sen $e&ional Adviser )*% *othern Africa, teamleader

+r *verre hrondsen +ar(etin& +ana&er, A

+r Cohan #lav er(e +ar(etin& oordinator, "orplan

+s ritt ilde FGlHs )ro&ramme #fficer, $o'al "orwe&ian ?m.ass' in ield wor(:

Iisit in +alawi will ta(e place in the period 2805!0606 2002

"#$A% will from "orplan receive a draft report in Jsoft cop'K not eceedin& 40 pa&esecldin& attachments for comments not later than 20062002 he final report shall .es.mitted not later than 5 da's after comments from "#$A% have .een received

24/05/02/C?


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