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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
MALAWIS 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 Malawis 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
governments 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 countrys economy is largely agrobased with agriculture accounting for eighty-five of all exports.
Distinguished Ladies and Gentlemen
5. I am particularly delighted to speak about Malawis Priorities
and Partnerships: Diversification for Development. Malawis
development trajectory has been associated with growth based

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on 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 governments 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 Malawis 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 Governments 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 20112016 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
Malawis long terms 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
over 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
other 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
of 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
of 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


on track the International Monetary Fund (IMFs) Extended
Credit Facility (ECF) Programme with Malawi by December,
2015. The restoration of the IMFs 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, Malawis economy is agro-based and
remains the countrys main foreign exchange earner with
tobacco, sugar, tea, coffee and cotton as major export products
followed by manufacturing and tourism. The countrys
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 governments drive for diversification of the economy in


other 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 Malawis productive base to allow for
both export competitiveness and economic empowerment.
27. Malawi, therefore, urgently needs to develop its productive
base to: a. Drive Malawis 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 governments policy to ensure adequate supply
of 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 Geophysical 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 countrys 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 Malawis
national budget contributed to 40% of the total budget and
abrupt cut of such a percentage in having huge repercussions on
my governments 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.

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