7.2: Private Sector Development

Enabling Environment for Private Sector Development

Other Information:

Government recognizes that the private sector is an engine for growth and wealth creation. In Malawi, the private sector is not well developed. Private sector investment has remained very low averaging around 3.0 percent of GDP. This low level of investment has negatively affected the economy's ability to diversify the economic base and exports. This situation has arisen due to poor macroeconomic environment, high transportation costs, and supply-side constraints. The participation of private investors in the economy has also remained limited due to low investor confidence, poor management, and limited domestic market. Goal: The long-term goal is to create an enabling environment for private sector to increase domestic and foreign investment. To achieve this goal, Government will support, encourage and engage the private sector and all relevant stakeholders in result oriented dialogue to ensure tangible improvement in the business environment. Emphasis will be on economic policy, legal framework, infrastructure and good governance. Deliberate efforts will also be made to empower the indigenous Malawians so that they benefit from their engagement in the economic activities. Medium Term Expected Outcome: It is expected that in the medium term there will be an increase in the number of local firms producing goods that are competitive in regional and international markets. MEGS highlights a number of constraints currently facing the private sector in Malawi. These include deterioration of infrastructure, irregular power supply, unreliable water supply and sanitation services, low access to credit, high tax rates and high transport costs. There is also a significant shortage of skilled workers to supply the private sector with a productive workforce. The education system is not producing enough graduates to meet current and future economic needs. Besides, training offered is inappropriate for business needs. This is further compounded by productivity losses due to high incidences of malaria, HIV and AIDS.

Indicator(s):

Indicator:1

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