Foreign Direct Investment in Blantyre, Malawi - Millennium Cities ...

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access granted by AGOA. A requirement for locally or regionally sourced raw materials comes into effect in 2012, forcing garment producers to source raw material regionally without a fully developed local textile-manufacturing sector. This will force Malawi to compete with the world's largest garment suppliers on equal ground. Given the lack of textile manufacturing facilities in the country, a significant opportunity exists to invest in textile manufacturing facilities. Investment in this sector would entail a capital investment in an existing company or the establishment of an entirely new textile manufacturing company. Mapeto, the country’s sole textile producer, is looking to expand its weaving capacities. This represents a unique opportunity to investment in the industry at a time when Malawi still enjoys preferential access to international markets. A second alternative is to set up a new company encompassing a vertically-integrated textile-manufacturing operation. Blantyre City is optimally located in either case, since it serves as the headquarters of two of the country's three cotton ginners and most of the garment producers. In addition to textile manufacturing, which is the sole high feasibility-impact sector, the authors identified five medium feasibility-impact sectors. These investment opportunities include the following agricultural value-added products: cassava processing, pigeon pea processing, chili processing, groundnuts processing and macadamia nut processing. Analyses of industries with limited investment potential are included in Appendix I. Having identified opportunities for investment, the authors also evaluated constraints hampering the growth of each industry. These constraints are provided in the individual assessment sections. Considering the aforementioned constraints associated with FDI in general, as well as with individual industries, the authors set forth recommendations for MCI with a view to encouraging FDI in the High Feasibility-Impact sectors and alleviating constraints that hamper growth in these sectors. These recommendations include the following: • Identify investors for high feasibility-impact sector investment opportunities; • Advocate for the alleviation of supply-side bottlenecks; • Support institutional capacity building of key agencies, such as the Malawi Investment Promotion Agency MIPA, the Malawi Bureau of Standards (MBS) and the Malawi Export Promotion Council (MEPC) MEPC; • Establish stronger linkages between MVP and MCI; • Encourage partnerships with development agencies and NGOs for value-added projects. FDI in Blantyre Page 10
I. Mandate and Investment Evaluation Framework 1. Mandate The authors were mandated by MCI to focus on the following three objectives: • To identify viable and feasible investment opportunities in Blantyre; • To assess the various FDI opportunities that create sustainable economic development in Blantyre; • To provide MCI with recommendations on programming priorities, by focusing on the types of FDI that offer deep, positive and sustainable impacts on Blantyre’s development goals. 2. Methodology The key research question to be answered in this working paper is: What viable/feasible investment opportunities exist in the city of Blantyre and which of those can offer sustainable development that can contribute toward the achievement of the MDGs in Malawi? As such, the paper focuses on: • The analysis of key industries with potential to attract FDI; • An assessment of key industries from two aspects: o The feasibility of FDI in Blantyre, including constraints and opportunities; and o The potential impact of FDI, i.e. the various ways in which different types of FDI can positively contribute to Blantyre’s development plans. The achievement of the above objectives entailed the successful completion of various sequenced, timebound activities that were executed within the framework of an established methodology. Investment Evaluation Framework The authors used an Investment Evaluation Framework to assess the attractiveness of potential investment opportunities. The figure below illustrates this tool. It must be noted that this assessment was not determined from any particular index or quantitative measure of feasibility and impact; the graph merely serves as a visual guide and conceptual framework when evaluating one investment against other. Figure 1: Investment Evaluation Framework As such, investments were classified according to two criteria: impact and feasibility. For instance, an investment was catalogued as “high” if it had high scores in both impact and feasibility, whereas FDI in Blantyre Page 11
Page 1 and 2: MCI AND VCC WORKING PAPER SERIES ON
Page 3 and 4: Table of Contents Table of Contents
Page 5 and 6: Acknowledgements The authors would
Page 7 and 8: Acronyms and Abbreviations ADMC Agr
Page 9: Executive Summary Introduction In 2
Page 13 and 14: • Spillover effects - What effect
Page 15 and 16: shedding occurring regularly due to
Page 17 and 18: III. Industry Assessments 1. Cotton
Page 19 and 20: Figure 5: Cotton Hectarage and Prod
Page 21 and 22: Opportunities The textile productio
Page 23 and 24: Impact and Feasibility Assessment I
Page 25 and 26: According to the 2006 - 2007 Annual
Page 27 and 28: for thickening, binding, texturing,
Page 29 and 30: y urban residents and a distributio
Page 31 and 32: Figure 11: Production Supply of Pig
Page 33 and 34: the world demand. 91 In other words
Page 35 and 36: Figure 14: Blantyre Chili Productio
Page 37 and 38: Lack of Adequate Supply and Quality
Page 39 and 40: Figure 15: Blantyre Groundnuts Prod
Page 41 and 42: Investment recommendation Given som
Page 43 and 44: Under AGOA, Malawi is one of the mo
Page 45 and 46: Enabling environment AGOA offers du
Page 47 and 48: Advocate for the Alleviation of Sup
Page 49 and 50: fourteen microfinance institutions
Page 51 and 52: Constraints Low and Volatile World
Page 53 and 54: Because local producers are only ab
Page 55 and 56: eaching 1.57 million tons. In terms
Page 57 and 58: volume. The new market that the com
Page 59 and 60: Africa, where there is an average o
Page 61 and 62:
The number of visitors to Malawi ha
Page 63 and 64:
General Incentives • Allowances o
Page 65 and 66:
• Southern African Development Co
Page 67 and 68:
president Bingu wa Mutharika, has m
Page 69 and 70:
Edward Labuwana Kholomana, Nali Ltd
Page 71 and 72:
Press Corporation. Chombe Tea. http
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