Investment in Malawi: Emerging Opportunities

LAGOS (Capital Markets in Africa) –What investment opportunities are there in a land that extends to 118 484 sq. km in size with a population size of 17.2 million? The answer is that there are many investment opportunities! And the economic environment has so far been supportive of investments in Malawi. In 2017 for example, Real GDP growth came at 5.1% and is projected to slow down to 4.0% in 2018 due to challenges in agricultural production. Inflation averaged 11.6% in 2017 and the year-on year rate has decelerated to 8.9% as at May 2018. What also should give investors more confidence is the Reserve Bank of Malawi’s inflation target set in 2016 at 5% for the medium term – the first time Malawi has expressly set an inflation target!

On the currency front, the Malawi Kwacha was stable against the United States Dollar and appreciated against the British Pound Sterling by 1.81% from the beginning of year to 05 July 2018. These macroeconomic indicators augur well with investment.

From a sectoral perspective, Malawi’s economy is agricultural driven, as agriculture accounts for a large contribution to GDP. In 2017 for example, agriculture accounted for over 28% of GDP followed by the Wholesale and retail sector, which accounted for 16% of GDP, while the manufacturing sector contributed just over 9%. These and many other sectors require investment and are opportunities for investors.

Given the sectors spread of the economy, the first opportunity that naturally comes to mind is therefore the agricultural sector. Why? Well although the economy is largely dependent on agriculture, the farming is at a subsistence level where subsistence farmers year-in year-out rely on the Government to provide them with subsidized farm inputs and using hoes grow staple food for the family once a year and nothing more.

An extract from the INTO AFRICA August Edition: Driving Africa Opportunities. To read full article, please download by clicking: INTO AFRICA PUBLICATION: AUGUST 2018 EDITION.

Contributor’s Profile
Mark Mikwamba is the Managing Director of Old Mutual Investment Group in Malawi, is responsible for assets under management c. USD420m invested into equity, interest bearing assets and property. Mark is a CFA Charter holder and a Chartered Accountant.