Africa -China Review Africa -China Cooperation and Transformation
Published:July30,2022
Ambassador Allan Joseph Chintedza
Introduction
Malawi and China established diplomatic relations on 28th December 2007, and in February, 2008; Malawi opened its diplomatic mission in Beijing, while the People’s Republic of China opened its mission in Malawi on 26th January 2008. This year marks 15 years since the establishment of the diplomatic relations with bilateral relationship and economic cooperation between the two countries growing from strength to strength. There has been notable high level political, cultural and people to people exchanges between the two nations.
In August, 2021, His Excellency Dr. Lazarus McCarthy Chakwera, President of the Republic of Malawi and His Excellency Xi Jinping held lengthy discussions on the phone which focussed on the need to strengthen the socioeconomic development between the two countries. This top political level exchange opens the way for other exchanges to take place such as trade and investment. Since the establishment of diplomatic ties between the two countries, China and Malawi have cooperated in various fields such as health, education, agriculture, infrastructure development. It is pleasing to note that a number of Chinese Investors have taken advantage of the cordial bilateral ties between China and Malawi to invest in the Malawi economy.
⬆ Bingu Stadium is located in Lilongwe, Malawi
Development Coopeartion Between Malawi And The People’s Republic Of China
The relations between Malawi and the People’s Republic of China are beneficial to the people of the two countries. Both China and Malawi advocate for a win-win model of cooperation. In the 15 years that Malawi has had diplomatic relations with China; the country has witnessed the development of key infrastructures such as the Bingu wa Muntharika Convention Centre (BICC), the Malawi National Assembly Building, the Bingu National Stadium, the Malawi University of Science and Technology (MUST) and the construction of the Karonga-Chitipa Road.
Through the Forum on China-Africa Cooperation(FOCAC), the Government of the People’s Republic of China has encouraged companies and corporations from China to invest in Africa. As a result of this, Malawi is now host to many Chinese companies which are doing business in the country. These companies are making a contribution to the socio-economic development of the country. Some of the companies are: –
a. China State Construction Engineering Company (CSCEC): The Company is currently working with the Malawi Government to improve and upgrade the water supply systems in Karonga District in the northern part of Malawi.
b. Sino-Hydro Corporation: The Company is working with the Lilongwe Water Board to improve water supply in parts of Lilongwe, the capital City. The company is also involved in the Shire Valley Transformation Programme in the lower Shire.
c. The China Malawi Cotton and Textile Company Limited: This is another company established in Balaka and Salima Districts.
d. Lilongwe Grand Mall/ Shandong Limited: The Company is working on a big project to construct an office park in the Capital City, Lilongwe.
e. Anhui Seogecoa Group (Golden Peacock Hotels and Casino): The Group has established a chain of modern hotels in the two major cities of Lilongwe and Blantyre, thereby contributing to the tourism industry in Malawi.
f. Huawei Group: Huawei is working with the Government of the Republic of Malawi on the National Fibre Backbone project to increase ICT connectivity and penetration in the rural areas of
Malawi.
⬆ Mulanje Mountain – Proudly “ the island in the sky”, it is the highest peak in Southern Africa with the height of 3000m
The Forum On China-Africa Cooperation (FOCAC)
Malawi looks forward to cooperate more with the Government of the People’s Republic of China through the implementation of the Forum on China-Africa Cooperation (FOCAC). During the 8th Ministerial Conference of the FOCAC held in Dakar, Senegal, from 29th to 30th November, 2021, under the theme: “Deepening the Sino-African Partnership and Promoting Sustainable Development to Build a China-Africa Community with a Shared Future in the New Era”, President Xi Jinping announced at the opening ceremony that China and Africa had jointly prepared the China-Africa Cooperation Vision 2035, which is aimed at determining the direction and objectives of the mid to long term cooperation and promote a closer community with shared future for China and Africa.He further announced nine new programmes for the next three years, in the context of the 2035 Vision on China-Africa Cooperation, namely: (i) medical and health programmes (one billion doses {600m vaccines donation and 400m vaccines through joint production}); (ii) poverty reduction and agricultural development programme; (iii) trade promotion programme (USD10billion trade finance); (iv) investment promotion programme (USD10billion Chinese investment, debt relief for African LDCs with Chinese interest-free loans due 2021, and USD10billion for Africa under China’s IMF Special Drawing Rights); (v) digital innovation programme; (vi) green development programme; (vii) capacity building programme (10 schools construction and training workshops for 10,000 African professionals); (viii) cultural and people-to-people exchange programme; and (ix) peace and security programme (10 peace and security projects in Africa).The pleasant feature of the vision is that it takes into account the Africa Union Agenda 2063 as well as individual national development strategies of African countries. In this regard China will work to support the development of African countries by supporting their home grown policies.
It is expected that at the expiry of the vision in 2035, trade between China and Africa will have reached US$300 billion. China will support African countries to increase their export capacities, strengthen cooperation in the inspection and quarantine of agricultural produce and food, as well as accelerate the quarantine process. This is good news for Malawi which is an agricultural country and most of its crops are produced organically. Malawi has just signed a Memorandum of Understanding (MoU) with the Government of the People’s Republic of China through the General Administration of Customs (GACC) on meeting of Phytosanitory requirements so that Malawi can export Soy beans to the Chinese market. Malawi is looking forward to the speedy implementation and execution of this MoU so that the country can begin its export of soybeans and ground nuts to China. Malawi expects that China will open up its market for more products from Malawi and other African countries.
⬆ Malawi University of Science and Technology (MUST), located in Thyolo District, Malawi
The Silk Road Economic Belt And The 21St Century Maritime Silk Road Initiative (Belt And Road Initiative) And The Future Direction Of The Cooperation Between Malawi And China
Malawi signed the Memorandum of Understanding with the Government of the People’s Republic of China on the Cooperation in the Framework of the Silk Road Economic Belt and the 21st Century Maritime Silk Road known in short as the Belt and Road Initiative (BRI) on 5th August, 2021. Malawi views the Belt and Road Initiative as the epitome of Chinese Diplomacy and the centre piece of President Xi Jinping’s Foreign Policy.
By this policy, China is helping to promote economic development and inter-regional connectivity through investment in ports, railways, roads, bridges, airports, dams, electricity power stations.
Malawi‘s joining of the BRI is complementary to the Malawi Vision 2063, which is the current policy for national development in Malawi. This is the national blueprint which will guide Malawi’s development plans. With this vision the Government of the Republic of Malawi aims at creating an inclusively wealthy and self–reliant industrialised upper-middle-income country by the year 2063.
When launching the vision, the President of Malawi, His Excellency Lazarus McCarthy Chakwera urged Malawi’s development partners and non state actors to join him in designing and implementing only those initiatives that catalyse and sustain the country’s inclusive wealth creation and self-reliance.
The Vision is anchored on three main pillars of Agriculture productivity and Commercialisation; Industrialisation and Urbanisation.Through the Agriculture Productivity and Commercialisation pillar, the agricultural industry will produce and supply raw materials for industrial processing and ensure the availability of healthy and nutritious food.
The growth of agro-based industries associated with job creation will economically anchor the creation of urban centers. The urban centers that include tourist-based cities will act as off-takers of agricultural produce. This connectivity in agriculture shall ensure an increase in the number of youths engaged in competitive agricultural value chains.
To commercialize the agricultural sector, the Government will embark on a progressive and extensive agricultural programme to boost incomes and spur economic growth. This will go beyond focusing on crops that guarantee food security, so that emphasis is placed on strategic crops, livestock and fisheries that will yield high-income in the local, regional and international markets.
The commercialization of the agricultural sector shall particularly target the youth with the intent of encouraging rural economic growth towards greater urbanization. This means moving away from subsistence farming on small plots of lands to mega farms that produce for export. This will involve mechanisation of the agriculture sector, moving away from using the hoe.
The other pillar of the Vision is industrialisation. Through this pillar Malawi aspires to have a vibrant knowledge-based economy with a strong manufacturing industry driven by productive and commercially vibrant agriculture and mining sectors. Industrialization will transform Malawi’s economy from being predominantly consuming and importing to predominantly producing and exporting.
The manufacturing sector will have strong backward and forward linkages with the agriculture, mining and services sector. Mining, will help create secondary industries that will enhance import substitution and export growth. Mining has tremendous potential to develop and support the inclusive wealth creation agenda. Value addition will increase the returns from mineral resources while creating more jobs for Malawians, including the skilled and unemployed youth.
The third pillar is Urbanisation, through this pillar the Malawi government aims to establish world-class urban centers and tourism hubs across the country, with requisite modern socio-economic amenities. Well planned urban centers will help promote efficient use of resources that create more sustainable land use and protect the biodiversity of natural ecosystems. This will create opportunities that focus on absorbing the increasing unemployed population from rural-urban migration. Implementation of this pillar will help to turn Malawi into a regional and international tourist destination, harnessing the SADC and Sub-Saharan continental tourist market as well as the rest of the world. Urbanization will, therefore, contribute to the realization of the aspiration of inclusive wealth creation and self-reliance.
Investment Climate In Malawi
Malawi is a landlocked country located in south-eastern Africa. It is bordered by Mozambique, Tanzania and Zambia. Why invest in Malawi? Malawi is a politically stable country with friendly and warm hearted people. It is one of the most peaceful countries in Africa providing a good environment for business growth. Malawi is strategically located and is an ideal investment location, with its beautiful fresh water lake and its scenic mountains and rivers, making it attractive for both leisure and business.
It has a competitive labour market made up of skilled and semi-skilled man-power; Duty-free access to two large regional markets: Common Market for Eastern and Southern Africa(COMESA) and the Southern Africa Development Community(SADC); Duty-free and quota-free access to the European Union(EU)market under Everything But Arms (EBA) facility; and privileged to trade benefits from the USA under the African Growth and Opportunity Act(AGOA) and other signed trade multilateral agreements with the World Trade Organization (WTO) and the Cotonou agreement between the EU and the African, Caribbean, and Pacific Group of States; and bilateral duty-free trade agreements with Mozambique, South Africa, Zimbabwe, China, and Portugal. The Malawi government also signed a customs agreement with Botswana and provides investors with attractive tax incentives as indicated under the official
Through the MITC, Malawi has established a One Stop Service Centre (OSSC) to ease company registration, and provide guidelines on how to qualify for investment incentives, facilitation and processing of land etc. Overall, Malawi has huge untapped economic investment opportunities in Agriculture, Energy, Mining, Manufacturing, Infrastructure Development/ICT, Tourism and Finance. The Malawi government is urging Chinese investors to take advantage of these huge investment opportunities.
Investment Policies Of The Government Of The Republic Of Malawi
Recognising that industrialisation and structural transformation of the economy are essential to maintain the rapid long-term economic growth needed to raise the per capita income, create sufficient rural and urban jobs, widen the tax base to finance Malawi’s welfare requirements and address an unsustainable trade deficit, the Malawi Government has developed the National Industrial Policy, which provides direction on how its productive economy can be developed and industrialised.
In addition, through implementation of this policy, the Malawi Government hopes increase the diversification of industrial products; improve value addition to primary products; reduce the trade deficit by promoting exports and import substitution.
The Malawi Government is inviting Chinese investors to partner it in the establishment of industrial parks that will increase production for the export market and commercialise the agricultural sector as stipulated in the MW 2063 Vision. Investment in agricultural mechanisation equipment would be ideal for investors from China.
Trade has fundamentally shaped the economy of Malawi. The country’s exports are largely based on primary and semi processed products, solely geared for sale on the global market. Malawi also relies heavily on imported goods, in particular fuel, fertilisers, and most of the manufactured goods. One of the biggest challenges Malawi is facing is the unsustainable trade deficit due to the above narrow export base and weak domestic and international trade linkages and systems.
The National Trade Policy is a response to make Malawi a globally competitive export-oriented economy, generating higher and sustainable livelihoods through trade that recognises the role of Micro, Small and Medium Enterprises. This is an area where the People’s Republic of China through the China International Development Agency for Cooperation can assist with soft-ware micro-financing mechanisms for small and medium scale enterprises that would have a direct bearing on the standard of living of the majority of Malawians.
The Tourism Industry
Malawi is a very beautiful country with a gentle rolling landscape with picturesque mountains and plains rich with flora and fauna. The serene and calm Lake Malawi also known as the Lake of stars is home to over 600 species of fish and offers a very rare exquisite tourist attraction. In order to harness the tourism potential, the Malawi Government launched the National Tourism Investment Master Plan in April, of this year (2022).
The plan is for a period of 20 years from 2022 to 2042 and aims at providing direction to, among other things, infrastructure development, community participation, and preservation of nature and the environment. The government will create an enabling environment for the private sector to enable it to contribute to the growth of the sector and create jobs for the youth.
Malawi Government is encouraging more and more Chinese investors to emulate the example of those who have already taken advantage of this huge potential in the tourism sector by investing in infrastructure such as the Golden Peacock hotels in two major cities of Lilongwe and Blantyre.
Conclusion
Malawi has created a conducive environment for investment in many portfolios such as agriculture, industries, tourism, power generation and many more. This is supported by the friendly investment policies that the Government of the Republic of Malawi has put in place.
The bilateral cooperation that exists between the two countries of China and Malawi, should be further strengthened to translate into areas of mutual cooperation and increased trade, investment and infrastructure development. The signing of the Belt and road initiative memorandum between the Malawi government and the People’s Republic of China opens the door for Chinese investors to take advantage of the many investment opportunities existing in Malawi, especially through the current 9 programmes stipulated under the 8th ministerial conference of FOCAC.
Already, advanced discussions are underway between the Embassy of the Republic of Malawi and the Provincial government of Hunan to take advantage of these investment opportunities by establishing a potential cooperation platform to compliment the already existing China-Africa Economic and Trade Expos (CAETE).
H.E Ambassador A. Joseph Chintedza is Walawi’s ambassador to China.
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