According to the 2006 issue of “Doing Business: Removing Obstacles to Growth,” a publication of the International Finance Corporation, Malawi’s investment climate is above the region’s average.  The score on Transparency International Perception Index is also above that of many countries in Sub-Saharan Africa. The Malawi Investment Promotion Agency (MIPA) operates as a “One Stop Shop” for investment and aims to provide the highest quality of service to those seeking to invest in Malawi.

Malawi is a beneficiary of the African Growth and Opportunity Act (AGOA) and is a signatory to many multilateral and regional trade agreements including the Common Market for Eastern and Southern Africa (COMESA) and the Southern Africa Development Community (SADC). Its major exports to the US under AGOA include agricultural products, followed by textiles and apparel products. Major US exports to Malawi include machinery, transport equipment, electronic goods and agricultural and forestry products.

Malawi has always been a free market economy with a free trade and investment environment. The government encourages both domestic and foreign investment in any sector of the economy, with minor restrictions on ownership, size of investment, source of funds, and destination of final product.

Despite being a land locked country, Malawi has a good road network and railway services which connect Malawian importers and exporters to the ports of Beira and Nacala in Mozambique and the port of Durban in South Africa. The country also has well-serviced international airports in the major cities of Lilongwe and Blantyre.

There are various sectors which provide opportunities for foreign investors especially in agri-business. Specific mention should be made of the cotton sector where investment opportunities include: cotton growing; cotton ginning; spinning, weaving and knitting; as well as manufacturing of textiles and garments. Other opportunities exist in infrastructure development, including the Shire-Zambezi Waterway, the production of cut flowers; fruit juice processing; mining, manufacturing of phosphate fertilizer, rubber products and other industrial products and in the tourism industry particularly hotels and ecotourism.

Malawi’s legal system, which is based on the English common law, protects investment regardless of ownership. The country is also a signatory to international treaties for the protection of foreign investment.


WHY INVEST IN MALAWI?

1. Stable political environment
2. Friendly and welcoming people
3. A liberalized economy
4. Preferential access to world markets under COMESA, SADC, LOME IV,AGOA
5. Hard working, trainable, English speaking labour force
6. Competative investment incentives for manufacturers and exporters
7. Modern Telecommunications infrastructure
8. Daily connections to regional and international flights
9. Industrial estates and esport processing zones

1.0 Investing in Malawi

The Government of Malawi encourages local and foreign investment in any sector of the economy, with no restrictions on ownership. Malawi offers an attractive investment climate, featuring Stable political environment; Friendly and kind people; A liberalized economy; Preferential access to world markets under COMESA, SADC, LOME IV, AGOA; Hard working, trainable, reliable and English speaking labour force; Competitive investment incentives for those manufacturing for export; Modern telecommunications; Daily connections to regional and international flights; Industrial estates and Export Processing Zones; and positive moves towards a corruption free nation.

The Malawi Investment Promotion Agency (MIPA) established by the 1991 Investment Promotion Act, is a parastatal mandated to promote, attract, encourage, facilitate and support domestic and foreign investment in Malawi. To accomplish this mandate MIPA is required to Supply information about Malawi; Develop a favorable investment image of Malawi regionally and throughout the world; Undertake investment promotion missions; Recommend to the government changes in the statutory and administrative framework relevant to the investment climate; and Provide courtesy services to visiting investors; among other functions.

This Guide therefore presents information on the investment processes and various requirements for investing in Malawi.
 

2.0 Investment Process

The investor must invest at least US$50,000 in order to be eligible for a Business Residence Permit (BRP).

In applying for a BRP, the investor has to submit application forms in duplicate, which can be obtained from Malawi Investment Promotion Agency, two passport size photographs, project proposal, police clearance from last country of residence and processing fees of MK 3,500. Upon approval of the BRP application, the investor has to pay MK 50,000 as issuance fees.

The investor has to submit to the Malawi Investment Promotion Agency (MIPA) together with the application forms, a comprehensive project proposal and/or business plan.

The company/enterprise must be incorporated/registered in Malawi. After incorporation, a foreign company is required to register its amount of capital inflow with the Reserve Bank of Malawi (the country’s Central Bank) through a Commercial Bank in Malawi.

Companies are also required to register with the Commissioner of Taxes for the payment of taxes.

The investor has to open a business account with a Malawian Commercial Bank. A business account is only transacted when a BRP and company registration/incorporation have been attained.

Exchange rate: US$1.00 = MK 142.00 (February 2008)
 

3.0 Procedures For Various Applications

3.A Business Incorporation

1. Any Investor investing an amount equal to or above US$50,000 shall be required to make an application for an Investment Licence from Malawi Investment Promotion Agency (MIPA);
    

2. The applications shall be accompanied by a Business Proposal providing full details of the project and its requirements; (expatriate staff, land etc.)
    

3. A non-refundable processing fee of US$200, or its equivalent, shall apply in all cases of new applications for an investment license.
    

4. Upon receipt of the application, the Malawi Investment Promotion Agency (MIPA) shall process the application and a background check on the company shall be conducted. The application shall be summarized and sent to the Investment Approval Committee for appraisal and approval;
    

5. When the Committee is satisfied with the application, it shall approve and issue an investment license;
    

6. Upon approval, the investor shall be required to pay US$800 or an equivalent amount in Malawi Kwacha (MK) for the investment certificate.
    

7. All companies shall be incorporated with the registrar of companies.

Note: New investors shall be required to state their project requirements (staffing, land, incentives applications etc.) at this stage so that issuance of the Investment Licence shall be complete covering all investment requirements.

3.B Business Residence Permit (BRP) and Temporary Employment Permit (TEP)

New applications for Business Residence Permits (BRP) shall include duly completed immigration application forms for BRP, a business proposal that shall include full details of the proposed investment project, 2 passport size photos, and a police clearance report from last country of residence.

New applications for a Temporary Employment Permit (TEP) shall include duly completed immigration application forms, 2 copies of curriculum vitae of the applicant, passport size photos, copies of certificates and the organisation chat;

The applications shall be submitted to the Malawi Investment Promotion Agency – MIPA (Secretariat) and the processed applications shall be presented before the Investment Approval Committee which shall approve or reject, as the case may be;

The General Manager/Chief Executive of Malawi Investment Promotion Agency (MIPA) shall immediately obtain the Temporary Employment Permit (TEP) and the Business Residence Permit (BRP) from the Chief Immigration Officer;

Upon approval of the Business Residence Permit (BRP) or the Temporary Employment Permit (TEP), the investor shall be required to pay a processing fee of MK 3,500 for both permits and an issuance fee of MK 50,000 and MK60,000 for Business Residence Permit (BRP) and Employment Permit (EP) respectively.

Exchange rate: US$ 1.00 = MK 142.00 (February 2008)

3.C Land

An investor shall submit an application to Malawi Investment Promotion Agency (MIPA) for allocation of land for investment;

The application shall be accompanied by a Business Proposal that will give detailed information of the project.

The Malawi Investment Promotion Agency (MIPA) shall process the application for the Investment Approval Committee;

Upon allocation of land, the General Manager / Chief Executive of Malawi Investment Promotion Agency (MIPA) shall then work with Ministry of Lands for issuance of a Title Deed.

All the payments made by investors on issuance of land shall be paid to Ministry of Lands through the Malawi Investment Promotion Agency (MIPA).

4.0 Summary Guidelines For Various Applications

3.A Business Residence Permit

1. Submit your project proposal for new investment or project profiles for existing investments;

2. Police clearance certificate from last country of residence;

3. Duly completed immigration application forms;

4. Two passport size photographs for each applicant;

5. Processing fee – MK 3,500

6. Upon approval of the Business Residence Permit (BRP) you will be required to pay MK 50,000.

Investment Certificate: Application fee: US$200 or Malawi Kwacha equivalent. Upon approval of the investment certificate you will be required to pay US$800 or Malawi Kwacha equivalent

Submit documents to Investor Service section - Malawi Investment Promotion Agency in Blantyre or Lilongwe.

3.B Temporary Employment Permit

1. Submit your organisational chart and indicate position being filled;

2. Copies of certificates and curriculum vitae for time posts;

3. Duly completed immigration application forms;

4. Two passport size photographs for each applicant;

5. Processing fee – MK 3,500.00

Upon approval of the temporary employment permit (TEP) you will be required to pay MK 60,000;

Submit documents to Investor Service section - Malawi Investment Promotion Agency in Blantyre or Lilongwe.

Exchange rate: US$ 1.00 = MK 142.00 (February 2008)

5.0 Fees For Investment Licence And Immigration Permits

Investment License
Processing Fee: US$ 200
Issuance Fee: US$ 800

Business Residence Permit
Processing Fee: MK 3,500
Issuance Fee: MK 50,000

Employment Permit
Processing Fee: MK 3,500
Issuance Fee: MK 60,000

Exchange rate: US$ 1.00 = MK 142.00 (February 2008)

6.0 Company Incorporation Registration Procedures

Name of Registration:
The Companies Act allows for registration of external companies. The Act defines an external company as a body corporate formed outside Malawi, which establishes or maintains an established place of business in Malawi. A company incorporated outside Malawi may therefore establish a liaison office in Malawi.

Registration Agent:
Normally a legal firm acts as the registration agent and the registration fees are payable in Malawi Kwacha.

Duration of Registration:
Maximum 14 days.

Cost of Registration:
Registration fees depend on the share capital of the company. Agent’s fees are also calculated depending on the share capital but the minimum fee payable is K5, 000.

• There is no cost of registration maintenance

• No need for renewal of registration

• Representative in registration: normally advisable to have a local legal firm handles the process of registration.

Obligation for Registration

• A company is required to maintain accounts

• Employment of national staff encouraged but not obligatory

• Income tax and corporate tax both obligatory

• Not obligatory to announce company in media

Cancellation of Registration
If an external company ceases carrying on business in Malawi, it simply informs the Registrar of Companies by filing a Notice of Cessation of Business in Malawi. There is no cost and this can be done in a matter of days.

Necessary Documents for Registration

• Articles of Association

• Memorandum of Association

Address and Place to send documents:

• Advisable to use a legal firm as registration agent and or company secretary.

• Advisable to submit three copies

• Being an external company notary public will be obligatory.

• The documents must be notarized in the country of origin.

• Documents should be in English

7.0 Procedures For Acquiring Land in Malawi

Types of Land in Malawi
Customary Land: Under the jurisdiction of the traditional authorities, outside municipal boundaries and is held in trust by the State President.

Public Land: Land that has been occupied, used or acquired by the Government.

Private Land: Land held in either freehold or leasehold ownership both in rural and urban areas.

Land Development
Commercial or industrial development is possible on all three types of land, although the location must conform to the zoning regulations set by the Department of Housing and Physical Planning. Prior to development an applicant must apply for and receive an Offer of a Lease from the Ministry of Lands, Physical Planning and Surveys in the case of customary and public lands. Transfers of freehold land are private transactions, although notice of intended sale must be given to Government when freehold property is sold. An investor may approach a freeholder for a direct transfer or lease of freehold land.

Procedures for Obtaining a Lease
Upon identifying a suitable plot of land, an application for lease should be directed to the Regional Controller of Lands and Valuation. The application fee is MK 1000. A sketch plan must accompany the application. The procedure is different for each type of application.

Customary Land: The general policy is that customary land is reserved for Malawians for agricultural purposes. Exceptions are possible when the public interest will benefit from a proposed development.

Following confirmation from the Village headman, the Traditional Authority, and the District Commissioner, that customary land is available in a specified area.

The application is initially checked by the Department’s Record Section to verify availability of the land and is then referred to the Department of Housing and Physical Planning and the Ministry of Industry and Trade (where appropriate) or Ministry of Information and Tourism for tourism development for advise on the suitability of the development in terms of zoning. The District Commissioner must also approve the application upon the consent to transfer by the traditional authorities (Village Chief/Village Headperson). This is confirmed on the Lands Department Form 1, Customary Land Consultation with Chief.

Following this series of approval the Department seeks Ministerial approval upon which an Offer of Lease is made to the applicant. The applicant must respond to Offer of a Lease within 60 days and pay the required fees to enable a request for survey to be processed. The Offer of a Lease is virtual legal document, and at this point an applicant may proceed with design of the building and obtain planning approval.

Unserviced Public Land: The procedure is the same for customary land except that there is no requirement for official consultation with traditional authorities since the land is publicly owned and therefore not under the jurisdiction of traditional authorities.

Serviced Land: Serviced land includes access roads, access to water within an economic distance, and electricity distribution lines. The process of obtaining serviced land is similar to that of unserviced land.

Freehold Land: A transfer of freehold land is a private transaction. However, details of the purchase are required to be submitted to the Government by both seller and purchaser on the requisite form. On the transfer of freehold land, the purchaser may proceed directly to the Planning Approval stage, although he should also obtain a survey of the property through the Department of Surveys if the plot is not already surveyed.

Procedures Following the Offer of a Lease
Within 60 days, the applicant for serviced or unserviced land must accept the offer and pay the indicated charges. This includes the fee deposit required for the Department of Surveys to survey the land and prepare the Deed Plan that is a requirement for drawing up a Title Deed to the property. At this point, the applicant may also proceed to develop plans for the building in association with an architect/consulting engineering company. A planning application must then be made to the relevant City Council Planning Department. Both processes are necessary prior to the preparation, registration and issuance of the Title Deed to the applicant. At this point construction may proceed. However, if bank financing is not required, or other collateral is available, construction may proceed at the point when the property is beaconed or delineated by the Department of Surveys, and planning approval has been received.

A similar procedure applies in the case of unserviced land, except that where such land is offered for development, the applicant is provided with two choices in regard to servicing:

• Applicant may be requested to pay a deposit on the estimated cost of developing the site, upon which the Ministry of Lands and Valuation assumes responsibility for installing services. In this case the balance is payable on conclusion of the work: or

• Permission may be given to develop the site privately, in which case the applicant is responsible for the installation of services either through a contractor or by utilizing his own equipment. Private site development must receive planning approval from the municipal authorities, which is obtained simultaneously with planning approval for the building.

Applicability of Surveying and Deed Plan Preparation
Surveying and beaconing or demarcating publicly-owned land is a requirement following the Offer of a Lease by the Ministry of Lands and Valuation. Plot surveys are required by the Ministry of Lands and Valuation in order to prepare the Title Deed, which ultimately becomes part of the Lease. A Title Deed is necessary as security (on all types of land) when bank financing is required for construction. Where bank financing is not required, an applicant may proceed with construction at the point when the plot has been beaconed.

Survey Procedure
Upon the Offer of a Lease involving a plot of public land by the Ministry of Lands and Valuation, an applicant is allowed up to 60 days to respond and pay a survey deposit fee, ground rent, and development charges. At this point the applicant becomes the virtual legal owner of the plot and may proceed with detailed plan preparation.

The Commissioner of Surveys approves the survey following examination of the survey by the Department’s Examination Section and a Deed Plan is prepared. The Deed Plan, which takes the place of the sketch map, is then returned to the Ministry of lands and Valuation, where it is inserted into the Title Deed.

Although the Ministry of Lands and Valuation has no involvement in transfers of freehold land, a survey is necessary whenever there is a change of land ownership by transaction. In this case, the survey must be requested by the purchaser, and must be carried out prior to conveyancing. No surveys are carried out for customary land unless the transaction involves a change to private ownership.
 

8.0 Investment Incentives

Tax incentives in Malawi are enshrined in the main tax legislations that include the Customs and Excise Act, the Income Act and the Export Processing Zones (EPZ) Act, to encourage investment; the Government offers the following incentives:

General Incentives:

• 100 percent investment allowance on qualifying expenditure for new building and machinery;
• Allowance up to 40 percent for used buildings and machinery
• 50 percent allowance for qualifying training costs;
• Allowance for manufacturing companies to deduct all operating expenses incurred up to 25 months prior to the start of operations;
• Zero duty on raw materials used in manufacturing
• Loss carry forward of up to seven years, enabling companies to take advantage of allowances;
• Additional 15 percent allowance for investment in designated areas of the country;
• Duty-free importation of buses with a seating capacity of 45 persons (including driver) and above;
• Duty-free direct importation of building materials for factories and warehouses;
• Duty-free direct importation of goods used in the tourism industry, which includes building materials, catering and related equipment, and water sport equipment;
• Free repatriation of dividends, profits, and royalties.

Export Incentives:
Incentives for establishing operations in an Export Processing Zone (EPZ) Include:

• Zero corporate tax rate;
• No withholding tax on dividends;
• No duty on capital equipment and raw materials;
• No excise taxes on purchases of raw materials and packaging materials made in Malawi.
• No Value Added Tax (VAT)

Incentives for Manufacturing in Bond:

• Export tax allowance of 12 percent of export revenues for non-traditional exports.
• Transport tax allowance equal to 25 percent of international transport costs, excluding traditional exports.
• No duties on imports of capital equipment used in the manufacture of exports.
• No surtaxes
• No excise tax or duty on the purchase of raw materials and packaging materials.
• Timely refund of all duties (duty drawback) on imports of raw materials and packaging materials used in the production of exports.

There are also additional incentives for the horticulture, mining and tourism.

To find out more about Investment opportunities in Malawi, click on www.malawi-invest.net/inves_opp.html

Malawi Investment Promotion Agency
Private Bag 302, Capital City Lilongwe 3, Malawi
Tel: 265-1-770 800, Fax 265-1-770 781
Email: mipa@mipamw.org
Web: www.malawi-invest.net