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

Textiles
All textile production in the country is manufactured by Mapeto, a former parastatal located in Blantyre
city. Plagued by severe financial difficulties (e.g. yarn production fell from 30 million meters in the early
1980's to 100 thousand meters by 2002), the company was forced into receivership in 2002, only to
resume operations in 2003. 34
The disruption of the domestic market as a result of severe dumping and
smuggling of finished textile goods played a key role in the company's struggles.
Currently, the spinning operations of Mapeto buy up less than 5 percent (1,000-1,500 tons per annum) of
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the country's domestically produced lint. Furthermore, only a very small percentage of its yarn and cloth
production is purchased by the country's domestic-oriented garment makers, with the rest being exported
or sold directly to the consumer market. Since the company does not produce higher quality fabrics
required by international standards, it does not supply the country's garment exporters.
Figure 7: Cotton Area, Yield, and Production Trends (1985 – 2007)
Source: Ministry of Agriculture and Food Security.
Garments
The garment industry in Malawi is relatively small, consisting of approximately 8 major companies, most
of which are located in Blantyre. The garment industry is divided into EPZ-designated exporters and
local-market suppliers. Domestic-oriented garment producers mostly import their fabric (a minimal
amount is bought from Mapeto) and supply a market that is flooded with imported secondhand clothing—
a by-product of increased liberalization. As incomes in Malawi are generally low, locals generally prefer
the cheaper secondhand clothing, making this a difficult market to enter. Some of these garment
producers export regionally, but do not account for much of the overall production.
Garment exporters generally source most of their fabric from India, Taiwan, and China, as regional fabric
is not regarded as being of sufficient quality. At the moment, exports are destined mostly for South Africa,
with an increasing amount being shipped to the US through the AGOA agreement. These firms are not
allowed to supply the domestic market given EPZ regulations.
Once again, the data in Figure 4 for Lesotho and Swaziland underscore the growth potential of the
garment industry in Malawi. The textile exports of all three countries as a share of the overall totals also
further highlight the unique opportunities presented by AGOA for garment exporting.
34 The Regional Trade Center (RATES) (July 2003). Cotton-Textile-Apparel Value Chain Report Malawi. (Nairobi: RATES).
35 Agar, Jason (September 2007). Credit Demand and Supply, Cotton Sector, Malawi (Blantyre: Kadale Consultants).
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