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2021 Malawi Foreign Private Capital (FPC) Survey

The 2021 Malawi Foreign Private Capital (FPC) survey was carried out from 25th April to 20th May 2022, collecting data on stocks for 2019, 2020 and 2021 and flows for 2020 and 2021.Data compilation exercise started from June 2022 to July 2022 using MEFMI’s PCMS platform. Report writing commenced in July 2022 and was finalised in September 2022.

The survey report presents major findings from private sector enterprises in Malawi with foreign assets and/or liabilities. The information collected covered the magnitude, nature, composition and direction of foreign private capital flows and stocks. The findings provide a reliable source of data for the compilation of the Balance of Payments (BOP) and International Investment Position (IIP) statements which form a basis for decision making and formulation of macroeconomic management and investment policies.

Executive Summary

This report presents results of the ninth Foreign Private Capital survey which collected data on stocks and corresponding flows for the years 2019, 2020 and 2021. The survey was administered to 170 enterprises across the country, out of which 120 companies responded, representing an overall response rate of 70.6 percent.

The survey results show that Malawi’s stock of foreign private capital liabilities increased to USD3,717.9 million at end 2021 from USD3,649.1 million at end 2020. The stocks were largely dominated by FDI (55.7 percent, USD2,071.1 million) and Other Investment (43.4 percent, USD1,614.9 million). The major source countries of FDI net inflows into Malawi in 2021 were Mauritius, South Africa and Mozambique.

In terms of Foreign Portfolio Investment (FPI), it is noted that FPI liabilities were at USD2.8 million as at end 2021, constituting equity and investment fund shares only. The 2021 stocks represented 31.8 percent and 64.7 percent respective increases from USD2.1 million in 2020 and USD1.7 million in 2019. In 2021, total dividends declared stood at USD95.2 million compared to USD62.5 million declared in 2020. The amount of dividends paid in 2021 was USD71.3 million compared to USD49.5 million in 2020. Regarding retained earnings, a total of USD106.1 million was reinvested in 2021 compared to USD61.4 million reinvested in 2020. The survey further established that in 2021, Financial derivatives recorded a net inflow of USD13.2 million hence their stock increased to USD29.0 million from USD15.5 million in 2020.

The stock of Private Sector External Debt (PSED) decreased by 1.0 percent to USD2,496.3 million at end 2021 from USD2,522.2 million recorded in 2020. Long-term debt amounted to USD2,197.8 million in 2021 compared to USD2,173.1 million in 2020 and USD2,091.2 million in 2019. Short-term debt amounted to USD298.56 million, USD349.1 million and USD313.0 million in 2021, 2020 and 2019, respectively. The stock of PSED debt in 2021 was dominated by Loans amounting to USD1,529.0 million followed by FDI at USD848.8 million and trade credits and advances at USD85.3 million. The Transportation and storage industry accounted for the largest proportion of PSED at USD1,984.7 million in 2021, representing 79.5 percent of total PSED. It was followed by the Agriculture, forestry and fishing industry and the Manufacturing industry which registered respective stocks of USD154.1 million (6.2 percent) and USD104.1 million (4.2 percent) in 2021.

On the assets side, it is noted that the stock of Malawi’s foreign private capital assets declined by USD5.8 million in 2021 compared to a decline of USD37.4 million in 2020. During the period under review, the leading component of stock of foreign private capital assets was Other Investment which accounted for an average of 76 percent of the total stock of foreign assets. Malawi’s foreign private capital assets were mainly held by the agriculture industry at USD44.4 million.

Overall, the survey established that FDI continues to be the main source of capital for longterm investment in Malawi as such, long-term policies should endeavour to create a conducive environment for attracting foreign direct investment. It was also noted that Foreign Portfolio Investment (FPI) was insignificant during the period under review. However, FPI is considered to be less risky compared to equity financing through FDI hence may be more attractive to foreign investors. Further, the processes of investing through FPI are less sophisticated compared to those of investing through FDI. Therefore, there is need to devise incentives that attract more foreign investors to participate in the capital market.

The report therefore recommends the following;

  1. Foreign investors should be guided to direct their FDI resources towards the prioritised economic sectors for development and generation of foreign exchange as outlined in the Malawi 2063 development agenda.
  2. Authorities must promote foreign portfolio investment (FPI) by further developing the capital stock market through increasing the number of both local and foreign stock market players to provide foreign investors with a much wider range of investment facilities.
  3. Government should promote the Northern and Central regions to Foreign Investors as equally attractive destinations for investment for even distribution of foreign investments in the country.


2021 Malawi Foreign Private Capital (FPC) Survey Report


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