This arose out of the state of affairs then, when the development partners froze budget support to Malawi. Under this budget, every economic activity that had been exempted from taxation previously was taxed with the aim of raising revenue. During this period, Malawi saw its industrial sector scaling down and dis-investing substantially because of the unfavorable investment environment that resulted. Furthermore, Foreign Direct Investment (FDI) was at its lowest. As a desk officer responsible for industrial investment in the Ministry of Industry and Trade, I was tasked to lead the team to negotiate with the Ministry of Finance to scrap off the newly introduced taxation policies which were detrimental to the industry sector in the country. The Ministry of Finance was convinced and reinstated the tax incentives that were associated with industry investment. Among the incentives reinstated were; the removal of duty on capital machinery and raw materials used in manufacturing. Additional tax incentives were also re-introduced in order to lure new investors and maintain the existent ones. This was an important accomplishment not just for me personally but also for what it translated to in the country as a whole. Recreation of an investment enabling environment reduced the potential unemployment rate since a number of companies were planning major retrenchments. Big companies in Malawi such as Bakhressa and Raiply that threatened to pull out of the investment sector reversed their decisions. Consequently, FDI increased as the incentives were able to attract potential investors. For example, companies like MM (Operations) Limited and Limphasa Sugar Company came and invested US$25 and US$80 million respectively. Products for export also became competitive on the international market and resulted in the inflow of the much needed foreign exchange currency in the country. Overall the reinstatement of the investment incentives contributed hugely to the country’s GDP and economic development. This was a positive achievement also for the Industry Department in the Ministry. The Department’s main role is to promote and develop industries while sustaining the existing ones through sound policy. The design of the Zero Deficit Budget frustrated the accomplishment of this role, and would have resulted in the department’s low performance appraisal rating if these negotiations had fallen through. I consider this accomplishment important because of the impact it had on the economy as a whole, besides getting unprecedented commendations from my superiors.
Malawi, like most developing countries suffers the cost of lacking access to trade information and the general incompetence on the subject matter. This has led to the loss of millions of dollars in most developing countries, Malawi inclusive. In 2009 there were speculations in the international market that prices of cotton in the following year, 2010 were expected to be very low. Based on information gathered and verified, Egypt, one of the leading producers of cotton, dissuaded its farmers from growing cotton in that year. The rumors were true and cotton prices were at their lowest in decades. Malawi on the other hand grew lots of cotton which eventually fetched very cheap prices. The difference between the two African countries was the effectiveness in the use of trade information. Malawi does not have a trade information center which can be utilized for sharing trade information with the private sector. As a result, a lot of investments opportunities are compromised because of the same. A very recent example of the cost of not having access to trade information happened in 2012. An investor in the leather sector from Malawi went to buy some raw materials for his company, unknown to him was the fact that the country he was buying from was a COMESA member state. The investor ended up paying duty when his products were supposed to be duty free. If the country had a trade...
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