The Government of Malawi developed and launched the National Export Strategy (NES) in December 2012 with the primary objective of boosting and promoting exports of the country’s prioritised productive sectors. These sectors are the Oilseeds and Oilseeds products, the Sugarcane and Sugarcane products and the Manufacturing sector, which include sub-sectors like Beverages, Agro-Processing, Plastics and Packaging and Assembly. The NES is a clearly prioritized roadmap for building Malawi’s productive-base and to generate sufficient exports to match the upward pressure on Malawi’s imports. It is a key strategy in attaining the goals of Malawi’s Growth and Development Strategy II (MGDS II) and central to accomplishing Malawi’s desired move into exporting of high value-added goods and services and to reducing the country’s reliance on the export of raw or semi-raw commodities. It is worth noting that the manufacturing sector in Malawi accounted for only 10% of GDP in 2011, relying mainly on the processing of agricultural commodities (tea, tobacco and sugar) and is predominantly inward-oriented as only 14% of manufactured products are exported.
The low contribution of manufacturing into Malawi’s GDP is due to the limited investments attracted in the sector over the past few decades. As the country aims at promoting private sector development and industrialize in order to become self-sufficient and reduce its reliance on donor support, it is imperative for Malawi to become a competitive destination for both domestic and foreign investment through, inter alia, the provision of a business friendly and enabling environment and strategic incentives for investments in the potential productive sectors. Many countries in the region have also sought to improve on their investment climate through the extensive use of investment and export incentives. The effectiveness of incentives in attracting investment is, however, unclear as little consensus has emerged from the ongoing debate. Some experts believe that incentives are ineffective in attracting foreign direct investment, while others argue that investment incentives contributed significantly to the rapid economic growth of countries such as Singapore, Mauritius, China and South Korea.