REPUBLIC OF MALAWI STATEMENT BY HIS EXCELLENCY, PROF. ARTHUR PETER - - PDF document

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REPUBLIC OF MALAWI STATEMENT BY HIS EXCELLENCY, PROF. ARTHUR PETER MUTHARIKA, PRESIDENT OF THE REPUBLIC OF MALAWI ON THE OCCASSION OF THE PRESENTATION ON MALAWI’S PRIORITIES AND PARTNERSHIPS: DIVERSIFICATION FOR DEVELOPMENT, AT THE CHATHAM HOUSE, LONDON, UNITED KINGDOM, 30TH NOVEMBER, 2015

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• 1. It is a great honour and privilege for me to address this

august house under the topic “Malawi’s Priorities and Partnerships: Diversification for Development.”

• 2. As most of you may be aware, Malawi is a democratic nation

in South East Africa with a stable social, political and economic environment; liberal trade policies; and strategic geographical proximity with neighbouring Mozambique, Zambia and Tanzania.

• 3. I emphasise strategic, because there is a tendency to look at

landlocked countries like Malawi as ‘doomed’ but my government’s approach is shifting to viewing our neighbours as providing potential opportunities for development partnerships that can mutually benefit our countries’ economies.

• 4. Malawi is a land-linked country. Despite having recently

discovered minerals, my country’s economy is largely agro- based with agriculture accounting for eighty-five of all exports. Distinguished Ladies and Gentlemen

• 5. I am particularly delighted to speak about “Malawi’s Priorities

and Partnerships: Diversification for Development.” Malawi’s development trajectory has been associated with growth based

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• n agriculture in the absence of significant contributions from

the manufacturing or minerals sub sectors.

• 6. As a new government, we are now moving on a path for

economic diversification away from the commodity based economy, in order to increase the export base. We strongly believe that trade and investment are key drivers for inclusive economic growth and sustainable development. Thus, without investment, then sustainable development is impossible.

• 7. My Government recognizes the critical role the private

sector plays in contributing to sustainable economic growth and

• development. Mobilizing investment to support sustainable

development remains my government’s number one priority areas, as clearly outlined in the Malawi Growth and Development Strategy (MGDS) II; the overarching medium term development strategy designed to attain Malawi’s medium to long-term development aspirations.

• 8. To that end, my government is pro-actively addressing market

failures by among other things prioritizing; energy, tourism and infrastructure development, through the public private partnerships, including government own financing.

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Distinguished Ladies and Gentlemen

• 9. My Government’s priorities are in line with Vision 2020

aimed at transforming Malawi into a democratically mature, environmentally sustainable, self reliant and technologically driven middle income country. The achievement of this Vision is implemented, through medium term strategies covering a period of five years, since 2000.

• 10. The priorities of the Malawi Government under the current

Malawi Growth and Development Strategy (MGDS) II for 2011- 2016 are derived from six broad thematic areas, namely: i. Sustainable Economic Growth; ii. Social Development; iii. Social Support and Disaster Risk Management; iv. Infrastructure Development; v. Governance; and vi. Gender and Capacity Development.

• 11. Within these six thematic areas, the MGDS II isolates nine

key priorities areas (KPAs), as follows: i. Agriculture and Food Security; ii. Transport Infrastructure; iii. Energy, Industrial Development, Mining and Tourism; iv. Education, Science and Technology; v. Public Health, Sanitation, Malaria and HIV and AIDS Management; vi. Integrated Rural Development; vii. Greenbelt Irrigation and Water Development; viii. Child

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Development, Youth Development and Empowerment; and ix. Climate Change, Natural Resources and Environmental Management.

• 12. The key objective of the MGDS II is designed to attain

Malawi’s long term’s development aspirations of wealth creation and poverty reduction, through sustainable economic growth and infrastructure development. Similarly, the MGDS II implementation was also earmarked to achieve the United Nations Millennium Development Goals (UNMDGs).

• 13. Since the launch of the MGDS II, a lot of development

programmes have been implemented, through the Public Sector Investment Programme and other programmes involving Public Private Partnerships (PPP) arrangements. The aim is to enhance economic growth and development in Malawi.

• 14. It is important to note that some progress has been realized

in various sectors. For instance, the Government has increased the bituminous road network in both urban and rural setting to facilitate mobility of goods and people across the country, and improve access to markets. Currently, our efforts are being taken to increase production of energy, which is one of the

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stumbling blocks undermining investments, therefore impeding developments in this regard for Malawi.

• 15. As I earlier alluded to, Malawi is largely agro-based - as such,

Government has taken some steps to increase investment in this sector. For example, the Government is implementing Green Belt Initiative, an irrigation initiative which will stretch

• ver one million hectares across Malawi, with the aim of

reducing dependency on rain-fed agriculture. The aim is to increase productivity of agricultural land and ensure that smallholder farmers are participating in productive agriculture to sustain their own livelihoods as well as contribute to national economic growth. Chairperson, Distinguished Ladies and Gentlemen

• 16. The realisation of the MGDG II and MDGs targets required

enormous resources, which could not be mobilized by Government alone but also through partnerships with cooperating partners, including the United Kingdom, the European Union, the United States, the World Bank, the African Development Bank (AfDB), Germany, Ireland, Norway and many others.

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• 17. In that regard, a Development Cooperation Strategy (DCS)

for Malawi was developed in collaboration with our cooperating

• partners. This strategy advocates for inclusive partnerships,

government leadership and country ownership of the national development agenda in line with the Paris Declaration on Aid Effectiveness, Accra Agenda for Action and the Busan Global Partnership for Effective Development Cooperation. Chairperson, Distinguished Ladies and Gentlemen

• 18. In summary, the partnerships played a crucial role in the

implementation of the eight (8) United Nations Millennium Development Goals (UNMDGs) for 2000 to 2015. My government managed to attain four of the eight goals on Reducing Child Mortality; Combating HIV and AIDS, Malaria and

• ther diseases; Ensuring Environmental Sustainability; and

Developing Global Partnership for Development.

• 19. My government will, therefore, devote its energies to fulfil

the remaining four MDGs on Eradicating Extreme Poverty and Hunger; Achieve Universal Primary Education; Promote Gender Equality and Empower Women; and Improve Maternal Health under the framework of the recently adopted 2030 Sustainable Development Goals (SDGs).

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• 20. We will also continue to implement programmes and

interventions aimed at sustaining progress made. Just like the MDGs, my government recognizes that the achievements of the SDGs will depend on the availability of adequate resources. It is for this reason that government will continue to harness efforts

• f all stakeholders, including the private sector, development

partners, and civil society organizations (CSOs), in order to achieve the goals that have been outlined in the SDGs. Chairperson, Distinguished Ladies and Gentlemen

• 21. Allow me, to use this opportunity to highlight one of the

main challenges that my government faced when implementing the MDGs, which may also recur in the SDGs. Our cooperating partners stopped providing budget support following a pilferage

• f public funds also known as “cashgate scandal” that occurred

in the previous administration in 2013. Donor support is now being provided outside the government budget making it difficult to monitor and evaluate the impact of these off budget programmes.

• 22. In the meantime, my government is working tirelessly to

bring transparency and accountability in the implementation of the public finance management systems and seal all loopholes in

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the government system. These efforts will assist us to bring back

• n track the International Monetary Fund (IMF’s) Extended

Credit Facility (ECF) Programme with Malawi by December,

• 2015. The restoration of the IMF’s ECF may also allow the

resumption of budgetary support by the European Union and the World Bank. It is hoped that the United Kingdom and other Governments of goodwill will also consider resuming budget support to Malawi as we have sealed off the loopholes on our public financial management system. Chairperson, Distinguished Ladies and Gentlemen

• 23. As stated earlier on, Malawi’s economy is agro-based and

remains the country’s main foreign exchange earner with tobacco, sugar, tea, coffee and cotton as major export products followed by manufacturing and tourism. The country’s dependence on this sector renders our economy vulnerable to external shocks hence the need to diversify.

• 24. Joseph Stiglitz, Nobel Prize Winner for Economics 2001

stated and I quote “The globalization of the economy has benefited countries that took advantage of it by seeking new markets of their exports and by welcoming foreign investment.”

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• 25. My government’s drive for diversification of the economy in
• ther sectors such as mining, tourism and services has also

included attracting massive Foreign Direct Investment (FDI).

• 26. In December, 2012, the Government of Malawi launched the

National Export Strategy (NES), which provides a prioritised road map for developing Malawi’s productive base to allow for both export competitiveness and economic empowerment.

• 27. Malawi, therefore, urgently needs to develop its productive

base to: a. Drive Malawi’s export capacity on a scale that exports can maintain the pace of imports; and b. Economically empower youths, women, small-holder farmers, job seekers, micro and small businesses and the poor through ensuring that they are included in the productive base. Chairperson, Distinguished Ladies and Gentlemen

• 28. The Strategy has four clusters including export clusters. The

three prioritised export-oriented clusters for diversification include oil seeds products, sugar cane products and

• manufacturing. The Strategy includes support plans to

stakeholder efforts in other major existing clusters, namely: tobacco, mining, tourism, tea and services.

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• 29. In addition to the above, my government launched the One

Stop Service Centre (OSSC) in October, 2014, to improve our business climate and our ranking on the World Bank Index on Cost of Doing Business. It is pleasing to report that our ranking has improved in the recent World Bank Index on Cost of Doing Business for 2016 with 23 steps up but our aim is to be in the top 100 ranking.

• 30. Malawi is also a party to a number of multilateral, regional

and bilateral trade agreements offering wider access and preferential treatment for Malawi export products. The regional and multilateral trade agreements include the Common Market for eastern and Southern Africa (COMESA), the Southern Africa Development Community (SADC), the European Union under the Everything but Arms (EBA), the United States of America under the African Growth and opportunities Act (AGOA) as well as preferential markets, with Brazil, China, Japan, India, just to mention but a few. Distinguished Ladies and Gentlemen

• 31. It is also my government’s policy to ensure adequate supply
• f the energy in the country, which is currently not sufficient to

meet domestic and commercial demands in the country. A number of projects to increase the supply are in the offing. The Government targets hydropower, coal and even wind generated

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energy to supplement each other and meet the energy requirement in the country and boost economic performance.

• 32. It is, therefore, important for businesses in Malawi and

abroad to realise that this is one area where they can invest.

• 33. The Government also encourages investors to go into the

mining extraction subsector. We have undertaken a Geo- physical Airborne Survey to guide Malawi and investors into the potential areas where minerals are located and they can invest. We have deposits of coal, iron, niobium, uranium, graphite, phosphate, silica sand, pink granite, bauxite, limestone, nickel, rare earth, diamonds, copper and gold among others.

• 34. There is also a chance in Malawi for investors to participate

vigorously in tourism sector. The Government of Malawi has put in place some facilities to boost tourism. For instance, the road network to tourist centres has been upgraded and new hotels have been established in Malawi. However, there are still some tourist centres, which are potential for investment by private sector.

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Distinguished Ladies and Gentlemen

• 35. The Government also recognises the important of supply of

skilled labour force if investors into the country are to be

• attracted. Malawi has an opportunity in its young population –

54% of the country’s population is under the age of twenty –five (25), highly productive if the right investment is made into this group.

• 36. To this effect, Malawi has embarked on establishment of

Community Technical Colleges across the country to ensure the production of skilled vocational labour, which is essential for industrial development in particular and development of the nation in general. The higher education sector has also been targeted - a number of government-funded universities have been established to increase the number of students pursuing tertiary education. Distinguished Ladies and Gentlemen

• 37. The suspension of donor support continues to negatively

affect the implementation of the MGDS II and has adversely affected the national budget. Donor support towards Malawi’s national budget contributed to 40% of the total budget – and abrupt cut of such a percentage in having huge repercussions on my government’s capability to deliver basic social services

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including basic health care and education. The government is now largely relying on the domestic resources in implementing the budget and the resource envelope is far from adequate.

• 38. This in itself will also affect the implementation of the MGDS

II and subsequent strategies. This, of course does, directly and indirectly have negative implications on the level of investment in the country as long as development partners continue to withhold financial support. I would like to mention that my country is working hard with support from various development partners to improve the public finance management system, and therefore development partners should be confident that loopholes that were there and led to lose of public funds have been sealed and further work continues to ensure tight and leakage proof public finance systems. Chairperson, Distinguished Ladies and Gentlemen

• 39. In our drive for economic diversification, my government

also launched the Malawi Investment Projects Compendium 2014, which provides information on investment opportunities in Malawi. The projects are broad based and include manufacturing, tourism, mining, water development, agriculture,

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energy, infrastructure development, Information Communication and Technology (ICT) and financial services.

• 40. We also recently launched the Trade Map and Trade

Information Portal, which is a web-based platform that provides an authoritative “one-stop shop” of readily accessible trade information for producers and traders. This measure will assist the country in facilitating trade and investment flows and provide an enabling environment for doing business. Chairman, Distinguished Ladies and Gentlemen

• 41. In conclusion, Malawi is geared to enhance development of

her people, through increased investment in various sectors. Investment will largely depend on Private Public Partnership (PPP) arrangements, as well as government own investment programme, through Public Sector Investment Plan (PSIP)

• framework. Both local and international investors will be

encouraged in this endeavour.

• 42. Malawi is ready for Foreign Direct Investment (FDI) that will

spur socio-economic development under the framework of the

• SDGs. The country is an uncharted territory and provides many

sectors for investment as indicated previously.

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• 43. Once again, I thank the Chatham House for providing me

with this opportunity to address you on this important subject matter. I thank you for your kind attention.