Malawi

Location : Southern Africa, east of Zambia

Capital : Lilongwe

Languages : Chichewa 57.2% (official), Chinyanja 12.8%, Chiyao 10.1%, Chitumbuka 9.5%, Chisena 2.7%, Chilomwe 2.4%, Chitonga 1.7%, other 3.6% (1998 census)

Area : 118,480 sq km

Land Use : arable land: 23.38%; permanent crops: 1.49%; other: 75.13% (2001)

Natural Resources : limestone, arable land, hydropower, unexploited deposits of uranium, coal, and bauxite

Population : 12,158,924 (July 2005 est.).

Labour force : 4.5 million (2001 est.)

Labour force participation rate : 37.01% of population (2001 est.)

Population below poverty line : 55% (2004 est.)

International Organisation participation : ACP, AFDB, AU, C, FAO, G-77, IBRD, ICAO, ICC, ICFTU, ICRM, IDA, IFAD, IFC, IFRCS, ILO, IMF, IMO, Interpol, IOC, ISO (correspondent), ITU, MIGA, MONUC, NAM, ONUB, OPCW, SADC, UN, UNCTAD, UNESCO, UNIDO, UNMIK, UNMIL, UPU, WCL, WCO, WFTU, WHO, WIPO, WMO, WToO, WTO

GDP per capita : U$600 (2004 est.)

GDP Growth Rate : 3.6% p.a. 1990-2001

GDP sectoral composition : agriculture: 54.8%; industry: 19.2%; services: 26% (2004 est.)

Investment (gross fixed): 10.7%% of GDP (2004 est.)

Industries: tobacco, tea, sugar, sawmill products, cement, consumer goods

Industrial production growth rate : 1.4% (2004 est.) 

Agriculture - products : tobacco, sugarcane, cotton, tea, corn, potatoes, cassava (tapioca), sorghum, pulses; groundnuts, Macadamia nuts; cattle, goats

Exports : U$503.4 million f.o.b. (2004 est.)

Exports - commodities : tobacco 60%, tea, sugar, cotton, coffee, peanuts, wood products, apparel

Exports - partners : South Africa 13.8%, US 12.3%, Germany 11.8%, Egypt 8.2%, UK 6.8% (2004)

Imports : U$521.1 million f.o.b. (2004 est.)

Imports - commodities : food, petroleum products, semi-manufactures, consumer goods, transportation equipment

Imports - partners : South Africa 43.5%, India 6.8%, Tanzania 4.1% (2004)

QUALITATIVE TRADE PROFILE

The tariff is Malawi 's main trade policy instrument. Its tariff bindings cover 31% of its tariff lines. Its simple average MFN tariff is 13.2%. Virtually all tariffs are ad valorem. The tariff structure is escalatory, with six bands; rates of zero or 5% apply to "necessities" and of 10% to intermediate goods. The maximum duty rate applied to consumer goods is currently 25%. Lower, more uniform duties would improve the tariff structure and economic efficiency.

Widespread use of exemptions and rebates, including under several local-content schemes, is non-transparent, and provides tailor-made protection to certain industries by increasing tariff escalation and effective protection. Their discretionary use is extensive and their rationale, other than as a distorting protective measure is unclear. A duty drawback system operates, with refunds no longer based on ratios, but on materials used in exports.

In the context of the Uruguay Round, Malawi bound tariffs on all agricultural products at a ceiling rate of 125% (except for a few products with ceiling rates of 50%, 55%, and 65%), and on less than 1% of tariff lines for non-agricultural products, at ceiling rates ranging from 30% to 65%. Other duties and charges on these products are bound at a ceiling rate of 20%.

Malawi has removed most formal non‑tariff barriers, including import quotas. Such restrictions apply for environmental, health, safety, and security reasons, some under international conventions. Standards, including mandatory technical regulations, are set by the Malawi Standards Board on the basis of regional and international norms such as ISO and Codex Alimentarius; they do not discriminate against imports. Sanitary and phytosanitary requirements apply, but do not appear generally to impede imports, except for prohibitions on genetically modified food, and meats subject to growth hormones.

INSTITUTIONAL FRAMEWORK 

The Ministry of Commerce and Industry has overall responsibility for trade and industry policy formulation. It negotiates and implements Malawi's multilateral, regional, and bilateral trade arrangements, although formal responsibility for international negotiations rests with the Ministry of Foreign Affairs and International Cooperation. Inter-Ministerial Committees have been established to examine trade agreements and WTO matters. The National Working Group on Trade Policy advises the Government on the full range of trade issues, policies, and agreements. In addition, it provides a framework for monitoring and evaluating the implementation of Malawi's trade arrangements and for ensuring conformity with agreed rules. It is also to facilitate consultation and cooperation among private and public sector parties to promote trade. The Group is to regularly commission and review technical reports prepared by the National Task Force on Trade Policy. Membership comprises high level representatives from the public and private sectors as well as academia and the donor community. The Group is privately funded, including from donors. The Government is attempting to improve the coordination of trade policy, which, until now, has been dispersed over several ministries, with no overriding authority.

Other ministries having an important input in trade-related policies include Finance and Economic Planning, Agriculture and Irrigation and the Malawi Revenue Authority. Moreover, policy decisions of the ministries/departments responsible for communications transport and public works, forestry, mines, and tourism directly affect trade.

Malawi has no independent statutory body to review or advise the Government on economic and trade policies, including the provision of government assistance to industry. Most economic policy advice to the Government comes from the Reserve Bank, the Ministries of Finance and Economic Planning, and Commerce and Industry, and the publicly funded National Economic Council. Reporting to the President, and operationally linked with the Ministry of Finance and Economic Planning, the Council advises the Government and the public on economic and development policies.

The private sector (e.g. the Malawi Confederation of Commerce and Industry, and the Garments and Textile Manufacturers Association of Malawi) is involved in trade-policy formulation through consultations held by the Government as well as participation in the National Working Group on Trade Policy. Although consumers' interests are represented by the Consumer Association of Malawi, it has no representation on the National Working Group. The National Association of Small and Medium Enterprises represents the interests of small-scale entrepreneurs, and the Small Enterprise Development Organization of Malawi provides micro-finance, training, and other assistance to small enterprises, such as through the Malawi Entrepreneurs Development Institute. Improving consultation and coordination between the public and private sectors is seen by the Government to be important. Academics from the University of Malawi, including the Malawi Polytechnic, are also members of the Group, and are periodically commissioned by the Government to advise it on aspects of trade and other economic policies. Two institutions affiliated with the University - the Centre for Social Research and the Agricultural Policy Research Unit - conduct economic research.

TRADE AGREEMENTS

Bilateral

Malawi is a signatory to a bilateral trade agreement with Zimbabwe, and it is negotiating such agreements with Mozambique, Tanzania, and Zambia. Malawi receives non-reciprocal preferential treatment from the European Union under "Everything But Arms" scheme; from the United States under the African Growth and Opportunity Act; from other developed countries under the Generalized System of Preferences (GSP); and under a separate agreement with South Africa.

Regional

Malawi is a member of the Common Market for Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the Organization of African Unity (OAU). Malawi is currently negotiating an Economic Partnership Agreement with the EU through the ESA configuration.

Multilateral

Malawi is an original Member of the WTO and grants at least MFN treatment to its trading partners. It has GATS commitments in 33 sectors. 

NEED PRIORITIES  

Priority areas for technical assistance are: (i) alignment of national laws, rules, and regulations to WTO requirements; (ii) notification requirements; (iii) training of Government officials on WTO matters, including capacity building for negotiations

Source: Commonwealth Yearbook 2005, World Fact Book, WTO Secretariat.