CONFERENCE ON THE NATIONAL DIALOGUE ON THE ECONOMY
NKOPOLA LODGE, 29th JUNE TO 1st JULY, 2012
SUMMARY ISSUES AND WAY FORWARD
Her Excellency the President opened the Conference on National Dialogue on the Economy which took place at Nkopola Lodge from 29th June to 1st of July, 2012.
In her key note address, Her Excellency the President called on the delegates to consider the following questions:
1. How can we re-envision Malawi to be the best small country in the world to do business in?
2. How can we re-establish our economic reputation?
3. How can we re-engage with the emerging markets?
4. How can we re-energise our country? and
5. How can we reform Malawi?
The conference was attended by International experts, members of parliament, national panellists, business people, civil society members, development and cooperating partners, and public servants. The delegates deliberated on the issues raised by Her Excellency and those that were on the programme.
A. MGDS II
Conference observed that:
1. There are too many focus areas in the MGDS, and noted that there is need to focus on those that are pro-growth, represent quick wins, and are highly effective; and
2. There is need to focus on sectors that can generate employment.
B. Improving business environment
The conference observed that:
1. There is urgent need for Malawi to expedite the process of simplifying and streamlining business permit processing, work permits, and visas to facilitate economic growth, and thereby allowing private sector to develop;
2. Challenge to access land is a major hindrance to foreign direct investment in Malawi; and
3. There is urgent need to establish a predictable, transparent and seamless incentives regime.
C. Political will for credible reforms
The Conference cited that poor economic governance is major contributor to Malawi’s low position on the economic development scale. The conference therefore noted that:
1. There is need to implement and execute reforms that are credible; assure the private sector that government is serious and committed about creating a conducive environment to re-establish its economic reputation; and
2. There is lack of strategies and coordination to translate policy into action between and among Government departments.
D. The role of cooperating and development partners
The conference observed that:
1. There is need for Government to initiate, develop and own a development ideology which should be owned by and communicated to its population and thereafter secure donor buy-in;
2. Malawi needs to develop projects that will gradually reduce donor dependence overtime;
3. Malawi needs to guide donors on which sectors they should invest; and
4. Malawi should engage donors to diversify their investment from primary education to tertiary education, especially skills training.
E. Regional integration and international trade
The conference acknowledged that there are a number of efforts that are being implemented to attract international trade in Malawi. The conference, however, noted that:
1. There is need to create a conducive environment including:
o Reducing non-tariff barriers;
o Reduced period taken to access services such as registering a company; and
o Improve regulatory environment and infrastructure to facilitate regional and international trade.
2. Malawi should consider exploring trade facilitation with selected strategic partners notwithstanding its engagement in SADC and COMESA trade protocols;
3. There is need to prioritise and focus on a few strategic transport corridors.
F. The role of SMEs
The conference noted that there is a need for Malawi to recognised the role of Small Medium Enterprises in job creation. To this end, the conference urged Government to promote entrepreneurial skills and develop a well-articulated delivery strategy for economic growth and job creation.
G. Monetary Policy
The conference acknowledged the current positive development in engendering the independence of the monetary policy committee of the Reserve Bank of Malawi. However, the conference was mindful of the challenged encountered in coordination the balance between the exercise of monetary policy by the Reserve Bank of Malawi and on the other hand the Ministry of Finance.
The conference observed that Malawi will continue to depend on agriculture as its mainstay of its economy in the short to medium term. The conference, therefore, noted that:
1. Diversification and up-scaling of production of non-traditional crops such as coffee, rice, sunflower, wheat and legumes are a necessity;
2. There is urgent need to repeal Strategic Crops Act as it brings distortions in the industry; and
3. There is need to focus and encourage large-scale commercial farming by easing procedures in obtaining land.
I. Tobacco industry
1. The conference noted that marketing mechanism for tobacco industry (auction system) does not guarantee stability of prices and volumes in the industry.
2. The conference further recognised that in the short term, while the auction system could continue, Malawi should seriously consider adopting contract farming system (Integrated Production System) which will promote contract farming;
3. The conference suggested the need to create a stakeholders forum, Tobacco Council, to foster dialogue for the proposed reform in the industry. This will overcome vested interest that could hinder seamless reform process of the industry;
4. The conference recognises the challenge that the industry poses to the environment and recommended a parallel programme that are aimed at improving aforestation.
J. Tourism industry
While recognising that tourism is increasingly contributing to the GDP, the conference noted that the industry faces many challenges. The conference therefore recognised the need to:
1. restock game reserves and national parks;
2. attract more direct, cost effective international flights into Malawi thereby engendering competition;
3. decisively resolve issues surrounding Air Malawi;
4. improve infrastructure including roads, utilities (water and power) and airports;
5. simplify the system of visa issuance; and
6. improve investment climate, including establishment of tourism industry board.
K. Energy sector
• The conference expressed concern over the acute shortage of supply of electricity and negative impact it has on the industry;
• The conference took note that there have been efforts to establish new hydro stations such as the Kapichira II project, the MCC account project and the interconnection with Mozambique;
• The conference observed the need to manage the demand side of the industry by encouraging economic usage of electricity, including usage of energy saver bulbs;
• Noting the impact that the interconnector project with Mozambique has in the short term, the conference encouraged that the same efforts should be initiated with Zambia and encouraged Government to explore establishment of coal generated electricity;
• The conference acknowledged the growing technology in renewable emerged, and hence, urged Government to initiate policies that encourage investment in the same;
• The conference acknowledged efforts by Government for liberalising tariffs in the sector, hence, conference was optimistic that the support from Millennium Challenge Compact would hasten the restructuring of the legal, management and reduction in transmission losses.
L. Mining sector
• Acknowledged that Malawi is richly endowed with mineral resources, including uranium, bauxite, and heavy sands.
• Recognised that investment in mining requires long term commitment and demands a lot of infrastructure requirements such as electricity, water and roads.
• Observed the need for capacity for negotiations, ability to abide to contractual obligations, and a predictable legal regime for conflict resolution.
M. Malawians in diaspora
The conference noted significant potential for Malawians in diaspora to provide foreign exchange, skills and capital transfer. The conference was informed that Government has set up a diaspora desk and is in the process of developing terms of reference for the establishment a department responsible for diaspora affairs.
1. The conference acknowledged that the Malawi Growth and Development Strategy remain an overarching reference document for the development agenda. However, the conference observed that the MGDS priorities are not focused, and therefore not able to realise quick development results. The conference, therefore recommends that Government narrows down its priorities to say, three to five.
2. The conference, noted the need for political will to carry through the proposed reforms. The conference, therefore, was pleased with the bold reforms carried by the current administration. The conference, therefore urges the leadership to sustain the momentum at all levels of decision making.
3. The conference recommends that each sector identify few key strategic projects that will drive economic growth in the medium term.
4. The conference recommends that the creation of a diaspora office responsible for diaspora affairs be expedited. This should be responsible to tap into expertise and facilitate remittances from the diaspora.
5. The conference recommends that Government should put in place measures to develop human capital to enhance realisation of this road map.
6. The conference recommends that Government should enhance coordination harmonization of institutional framework.
7. The conference recommended that Government should develop a framework for resource mobilisation.