WORLD TRADE  
ORGANIZATION  WT/TPR/G/231/Rev.1 
7 July 2010  
 
(10-3695) 
Trade Policy Review Body Original:  English 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
MALAWI 
 
Revision 
 
 
 
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Malawi is attached. 
 
 Malawi WT/TPR/G/231/Rev.1 
 Page 3 
 
 
CONTENTS 
 
 Page 
I. INTRODUCTION 5 
II. ECONOMIC ENVIRONMENT (2002-2008) 5 
 (1) M ALAWI 'S DEVELOPMENT STRATEGY  5 
 (2) M ACROECONOMIC DEVELOPMENTS  6 
 (3) S ECTORAL PERFORMANCE  8 
 (i) Agriculture 8 
 (ii) Manufacturing 10 
 (iii) Fisheries 10 
 (iv) Forestry 11 
 (v) Mining 12  (vi) Services 12 
III. TRADE DEVELOPM ENTS AND POLICY 15 
 (1) T
RADE POLICY OBJECTIVES  15 
 (2) T RADE POLICY FORMULATION AND COORDINATION FRAMEWORK  16 
 (3) C OMPETITION AND FAIR TRADING  16 
 (4) D OMESTIC LAWS AND REGULATIONS GOVERNING TRADE  16 
 (5) B ILATERAL TRADE AGREEMENTS  17 
 (6) R EGIONAL TRADE ARRANGEMENTS  17 
 (i) COMESA 17  (ii) SADC 17 
 (iii) SADC-EAC-COMESA Tripartite Framework 18 
IV. INVESTMENT MEASURES 18 V. MALAWI AND THE MULTIL ATERAL TRADING SYSTEM 19 
 (1) I
MPLEMENTATION OF WTO  AGREEMENTS  19 
 (2) I MPLICATIONS OF OTHER TRADING ARRANGEMENTS ON MALAWI  20 
 (i) Economic Partnership Agreements 20 
 (ii) The African Growth Opportunity Act 20 
 (iii) Generalized System of Preferences 21 
 (iv) South-South Cooperation 21 
 (v) Aid for Trade 21 
VI. CONCLUSION  22 
 
   Malawi WT/TPR/G/231/Rev.1 
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I. INTRODUCTION 
1. Malawi is situated in Southern Africa, surr ounded by Mozambique in the south and southeast, 
Tanzania in the northeast and Zambia in the we st.  Malawi comprises of an area of almost 
118,500 square kilometres out of which about 24,420 s quare kilometres is cove red by Lake Malawi.  
According to a 2008 population census, the country h as an estimated population of about 13 million, 
with about 84.7 per cent of the population residing  in rural areas and 15.3 per cent living in urban 
areas.  Malawi's economy is dependent on agricult ure and exports of primary commodities.  The 
country has a GDP per capita of US$347.9 (2009).  The proportion of the population living on less 
than a dollar a day has declined from 54% in 1998 to 40% in November 2009. 
2. The overriding goal of the Malawi Government h as been to provide a coherent and consistent 
economic framework that underpins the developmenta l objectives outlined in the Malawi Growth and 
Development Strategy (MGDS).  Malawi's economic  policies continue to be aimed at reducing 
poverty through sustainable economic growth and infrastructure development as espoused in the MGDS.  Growth has been impressive, averaging 7.5 per cent for 2006-09, and inflation has come 
down to single digits.  Higher revenues and aid inflow s, in addition to lower interest payments on the 
public debt, have translated into higher poverty-re ducing and social expenditures allowing the country 
to make progress towards many of the Millennium Development Goals (MDGs). 
3. The country's medium-term program, as outlined  in the MGDS builds on the strong economic 
results achieved since 2005, including under th e successfully completed Poverty Reduction and 
Growth Facility (PRGF) arrangement and the Ex ogenous Shocks Facility (ESF) program.  The 
country's economic strategy has emphasized the need for fiscal consolidation, involving both carefully 
managed increases in public spending and improve ments in revenue performance—hence creating 
space for pro-poor and pro-growth spending.  This strategy has been designed to correct the severe 
macroeconomic imbalances that ex isted prior to 2005, when weak program implementation led to 
large fiscal slippages, an unsustainable domestic debt spiral, and low investment.  
4. To sustain the current levels of economic growth, Malawi requires strong macroeconomic 
management accompanied by both private and public investment in infrastructure and productive real 
sectors that improve productivity to address supply side constraints identified in the areas of energy supply, and (cross-border) transport and trade facilitation.  To undertake this Malawi requires external 
support through grants and highly concessional fi nancial assistance as well as prudentially crafted 
fiscal and monetary policies. 
5. Since the last trade policy review in 2002, Ma lawi has continued to participate in the 
multilateral trading system through participation in :  the Southern African Development Community 
(SADC), the Common Market for Eastern and Sout hern Africa (COMESA), the African Caribbean 
and Pacific- European Union (ACP-EU) Economic  Partnership Agreement (EPA) negotiations and 
World Trade Organization (WTO) D oha Development Agenda (DDA). 
II. ECONOMIC ENVIRONMENT (2002-2008) 
(1) M
ALAWI 'S DEVELOPMENT STRATEGY  
6. The Government set out its medium term objectiv es in the MGDS that was adopted in 2006.  
One of the underlying and fundamental objectives of the Strategy is to transform the country from a predominantly importing and cons uming nation to a predominantl y producing and exporting one.  
7. The MGDS has five thematic areas on which development of the country is anchored and 
these include;  sustainable economic growth, social protection, social development, infrastructure WT/TPR/G/231/Rev.1 Trade Policy Review 
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development, and improved governance.  The overridi ng goal of the Malawi Government has been to 
provide a coherent and consistent  economic framework that underpins the developmental objectives 
outlined in the MGDS.  This drive for economic st ability is aimed at enhancing sustainability of 
economic and poverty reducing growth. 
8. The MGDS will come to and end in 2011, and as such the Government is in the process of 
formulating a successor strategy to the MGDS.  The Government has identified nine key priority areas 
of:  agriculture and food security;  green-belt in itiative and water developm ent;  education, science 
and technology;  transport infrastructure and Nsanje World Inland Free Port;  climate change, natural 
resources and environmental management;  integrat ed rural development;  public health, sanitation 
and HIV/AIDS management;  youth developmen t and empowerment;  and energy, mining and 
industrial development. 
(2) MACROECONOMIC DEVELOPMENTS  
9. Malawi has achieved positive growth during th e period under review.  In 2003 there was an 
increase in real GDP of 4.3 per cent above the 2002 growth rate of 2.1 per cent;  this growth was 
primarily led by the manufacturing, information and finance and insurance sectors.  In 2004 GDP 
growth accelerated slightly to 4.9 per cent owin g to a contraction in the mining and quarrying, 
information and technology sectors.  However, growth  slowed down more substantially to 2.3 per cent 
in 2005, owing to poor harvests in the 2004/05 gr owing season which led to the dismal performance 
of the agriculture sector which contracted by more than 5 per cent.  
10. Subsequently, in 2006, the country registered  a robust growth of 6.7 per cent following the 
inception of the input subsidy program which led to bumper yields and increased agriculture growth 
to 12.7 per cent from negative growth rate in the preceding year, 2005.  Thereafter, Malawi's 
economic performance continued to be remarkable throughout the period 2006 to 2008.  The country 
achieved Gross Domestic Product (GDP) annual growth  rate averaging 7.5 per cent.  In 2008, the 
economy recorded a robust growth in real GDP of 9. 7 per cent, compared to 8.6 per cent achieved in 
2007.  This growth rate is above the target of  6 per cent for Sub Saharan Countries to meet the 
MDGS, and has reduced the rate of poverty in Malawi from 65 to 40 per cent of the population.  
11. Annual average inflation in 2002 stood at 14.9 pe r cent and fell to 9.6 per cent in 2003.  It 
subsequently rose to 11.4 and 15.5 per cent in 2004 and 2005 respectively.  This was predominantly 
due to the poor performance registered in the agricultural sector during this period, in view of the fact 
that maize constitutes 55 per cent of the consumer pr ice basket.  Thus the escalation of the inflation 
rate between 2004 and 2005 is pre dominantly attributable to the general increase in the prices of food 
products.  Nevertheless, due to stable macroeconomi c conditions the annual average inflation rate has 
decelerated considerably from rate s that peaked as high as 29.5 per cent in 2000 to 13.9 per cent by 
2006 and has been maintained at single digits thereafter.  In 2007 and 2008, the rate of inflation eased to 7.9 and 8.7 per cent respectively attributable to increased food availability on the local market, 
coupled with a stable exchange rate and lower fuel prices on the world market later in 2008. 
12. The movements in the Kwacha per U.S. dollar exch ange rate continued to be characterized by 
persistent volatility in the early 2000s.  In 2 001, a favourable healthy foreign exchange position 
helped to dampen speculative attack s on the Kwacha and at the end of the year the Kwacha settled at a 
modest MK76.29 per U.S. dollar compared to MK80.1067 at the end of 2000, a gain of 16.0 per cent. However, in 2002, low donor inflows, mostly a re sult of an IMF-Malawi PRGF arrangement that 
went irretrievably off-track, impacted negatively on the country's reserve position.  This coupled with 
developments on the international scene led to the average nominal kwacha per U.S. dollar exchange 
rate sliding by approximately 27.1 per cent to MK 97.4 per U.S. dollar in 2003 from 76.7 per U.S. Malawi WT/TPR/G/231/Rev.1 
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dollar in 2002.  The average nominal kwacha per U.S.  dollar exchange rate slid further by 11.8 per 
cent to MK108.9 per U.S. dollar in 2004. 
13. The Government was put on a staff monitored program in July 2004 and after satisfactory 
performance, the full IMF program (PRGF) was a pproved in 2005.  Malawi was deemed by the 
World Bank and IMF to have satisfactorily impl emented the Malawi Poverty Reduction Strategy 
(MPRS) during the fiscal year 2004-2005.  
14. On 31st August 2006 the country attained the HIPC completion point through the economic 
policy efforts of the new government, and the subse quent cancellation of the country's external debt 
resulted in an improved foreign exchange position.   Nonetheless, the average nominal Kwacha per 
U.S. dollar exchange rate depreciated by 14.9 pe r cent in 2006, sliding further albeit at a more 
moderate rate of 2.9 per cent in 2007 to an averag e of MK 140.0 per U.S. dollar on the back of robust 
economic growth of over 7 per cent. 
15. Reaching the completion point brought two majo r benefits for Malawi.  Firstly, Malawi 
automatically qualified for debt cancellation under the Multilateral Debt Relief Initiative (MDRI) of 
the IMF and World Bank and from the Paris Club of Creditors.  Malawi's external debt stock was 
reduced by 84%, from US$2.97 billion as of end 2005 to only US$488 million as of end 2006. 
Malawi's stock of external debt fell from 104% of GDP at the end of 2005 to 14.2% at the end of 2006.  Secondly the IMF and World Bank approved that Malawi would require topping up and as 
such Malawi received additional debt relief from a ll creditors than what had been initially approved. 
16. The total public debt as a percentage of GDP decreased from 123.9 per cent in 2004 to only 
19.9 per cent in 2008.  During the period under revi ew, Malawi also managed to reduce its domestic 
debt from 25 per cent of GDP in 2004 to 11.5 per cen t in 2008 while foreign debt as a percentage of 
GDP reduced from 112.6 per cent in 2004 to only 16.5 per cent in 2008.  This was as a result of the country's qualification under the Highly Indebt ed Poor Countries (HIPC) and the MDRI.  
17. The cancellation of debt meant that resources that would have gone towards repayment of 
foreign debt were no longer paid to external cr editors but instead channelled to poverty reduction 
initiatives.  This fiscal achievement freed up resource s and created fiscal space for the Government to 
introduce inter alia, an agricultural input subsidy programme within its budget which has resulted in 
Malawi achieving food security, an achievement that has been widely acclaimed.  
18. During the period under review, Malawi continued to pursue prudent fiscal policies with the 
principal objective of reducing net domestic de bt and creating a sustained increase in critical 
expenditures.  This led to consolidated fiscal di scipline evidenced by lower levels of borrowing, 
reduction of non-priority expenditures, directing mo re resources to priority areas and prudent budget 
execution. 
19. Growth in tax and non-tax revenue has been r obust, with total revenue and grants increasing 
from 16.4 per cent of GDP in 2003/04 to over 20 per ce nt of GDP in 2008/09.  The increase in tax 
receipts has come about due to improved compliance and efficiency by the Malawi Revenue 
Authority (MRA) as well as measures taken by MR A to widen the tax base.  In addition, the 
economic gains in growth achieved by government resulted in an increase in aggregate demand for 
goods and services, thus boosting tax receipts. 
20. Effective implementation of the Public Financ ial Management (PFM) reforms as outlined in 
the PFM Action plan formulated in 2006, have culminated in strengthened control over the wage bill 
and other expenditures along with the implementa tion of the Integrated Financial Management 
Information System (IFMIS) .  In addition, a debt  management strategy has been developed.  The WT/TPR/G/231/Rev.1 Trade Policy Review 
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Development Assistance Strategy (2006-2011) set s out the policies and strategies for increasing 
efficiency and effectiveness in the mobiliza tion and utilization of development assistance. 
21. A post debt relief Debt Sustainability Analysis ca rried out in 2007 indicated that the country's 
external debt will remain sustainable over the medi um term.  As at December 2008 public external 
debt totalled US$679.89 million, about 8.1 per cent of GDP. 
(3) SECTORAL PERFORMANCE  
(i) Agriculture 
22. The agricultural sector continues to be the ma jor source of economic growth and remains the 
main sector in which the poor play a significant role.  The agricultural sector contributes 36 to 39 per 
cent of GDP annually, of which the smallholde r sector contributes 27 per cent.  In addition, 
agriculture accounts for 80 per cent of total employment and supplies more than 65 per cent of the manufacturing sector's raw material requirements.  It also accounts for over 90 per cent of export 
earnings.  It is, therefore, expected that agriculture will continue to play a significant role in Malawi's 
economy.  Given its role as a key input for domestic  manufacturing, this is likely to remain the case 
even as Malawi diversifies its structure of production into manufacturing. 
23. From 2000-2005, the agricultural sector grew at an average of 2.16% per annum.  This trend 
of relatively slow growth changed in 2005/06 seas on when growth of the sector accelerated to over 
8% per annum.  The increased growth was attributed  to good yields - particularly in maize which is 
the national staple food due to the Farm I nput Subsidy Program which targeted 1.2 million 
smallholder farmers out of 3.42 million farm fa milies.  The programme only targets resource poor 
smallholder farmers who are not able to access modern farm inputs on their own.  The sector has been 
forecast to continue to grow favourably, due to the Subsidy programme and good rains.  Meanwhile 
government has re-affirmed its commitment to the agriculture sector.  It is seen as one of the 
cornerstones of its development policy and, theref ore, an estimated 14% of the national budget is 
currently allocated to the agricultu re sector.  This improved performance of the agriculture sector has 
driven the national economy to greater heights, w ith annual GDP growth currently estimated at 8% 
per annum. 
24. The Government of Malawi, with support from development partners including the World 
Bank and the International Monetary Fund (IMF), h as adopted and implemented many reforms within 
the agricultural sector.  These reforms include:  (a) liberalizing the markets for inputs (fertilizer and 
seeds) and output commodities;   (b) changing the pr icing and marketing policies letting market forces 
of supply and demand play freely;  (c) repeali ng of the Special Crops Act, and thereby lifting 
restrictions for smallholder farm ers to participate in growing high value export commodities such as 
tobacco;   (d) removal of subsidies on inputs and an y concessions on credits;  (e) restructuring of input 
output and credit delivery system;  and (f) commercia lization of all state-owned parastatals in the 
agricultural sector.  All these reforms were holis tically adopted and implemented to improve 
efficiency and competitiveness in the sector. 
25. Despite the reforms, serious challenges remain  in addressing all the constraints faced in 
agricultural production, marketing, and distribution and in the diversification into non-traditional 
agricultural exports.  These challenges are linked to inadequate producer incen tives, access to credit, 
and rural infrastructure, including feeder roads to  allow private sector involvement in marketing 
inputs and outputs.  In view of these, the Malawi  Government has continuously been reviewing its 
policies, strategies and action plans to overcome these challenges.  Such reviews have, among other Malawi WT/TPR/G/231/Rev.1 
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things, led to the implementation of both short term and long- term development projects and 
programs aimed at enhancing growth in the sector. 
26. The Agriculture Sector Wide Approach (A SWAp) programme was de veloped to address 
these concerns.  The ASWAp is an overarching sectoral  programme of prioritized investments geared 
at strengthening agricultural production and productivity.  It also aims to promote agricultural 
diversification by increased production of food crops ot her than maize including:  beans;  groundnuts;  
soya beans;  pigeon peas;  horticultural crops;  as we ll as small scale livestock and fisheries related to 
the comparative advantages of each agro ecologica l zone.  The approach is comprehensive as it 
embodies strategies for addressing market and institu tional failures created by some of the reform 
programmes.  
27. In addition to the ASWAp the Malawi Gove rnment is implementing various policies 
including:  the Agricultural Policy;  Food Security  policy;  Nutrition Policy;  Fertiliser Policy and 
Strategy;  Contract Farming Strategy;  Cotton Ac t, Policy and Strategy;  and the Comprehensive 
Agricultural Marketing Development Systems Strategy.  
28.  Malawi also has initiatives aimed at developing the livestock sub-sector.  The country has a 
promising dairy industry, with some exports to re gional markets but overall, 60% of dairy products 
are imported.1  Malawi has about 4,000 registered dair y farmers producing approximately 6,500 tons 
of milk annually.  Malawi's milk c onsumption is very low at about 5 litres per capita.  Malawi is a net-
exporter of poultry products, including eggs.  Th e policy on Livestock Development in Malawi 
developed in 2006 emphasizes e nhancing livestock production and productivity and disease control 
and is currently being implemented.  The main  objective is to increase availability of quality livestock 
and livestock products by promoting local pr oduction through enhancem ent of quality service 
delivery. 
29. To further ensure sustainable food security in the country, the Malawi Government is 
implementing  the Greenbelt Initiative (aimed at  increasing production and productivity through 
irrigation intensification);  Agriculture Devel opment – Support Programme (ADP-SP) (which is 
aimed at improving effectiveness of investments aime d at food security and sustainable agricultural 
growth);  Dairy Development Project;  Irrigation,  Rural Livelihoods and Agricultural Development 
Project (IRLADP);  the Farm Income Diversifica tion Project (FIDP) and the Farm Input Subsidy 
Programme (FISP). 
30. The Farm Input Subsidy Programme together w ith favourable rainfall has been credited for 
the success in improving food security in Malawi.  After a national maize deficit in 2002/03 to 
2004/05, before commencement of the programme, Malawi attained surplus production in the 
following four seasons.  The average maize yields  improved from less than 1 tonne per hectare to 
2 tonnes per hectare.  After removing the effect of  above average rainfall, the impact on the national 
maize harvest that is attributable  to increased use of fertilizer and improved seeds has been estimated 
in the range of 300,000-400,000 tons in 2006, and 600,000-700,000 tons in 2007.  The value of the 
additional production, estimated at US$100-160 milli on in 2007, significantly exceeds the cost of the 
fertilizer subsidy of US$ 60 million.2  In addition to food surplus at  household and national level and 
increased use of fertilizer and improved seeds, the Farm Input Subsidy Programme has also led to 
improved rural economy and has promoted private sectors turn-over. 
                                                      
1 World Bank (2009), Malawi Country Economic Memorandum, Washington. 
2 DFID online information, "A record harvest in Ma lawi".  Viewed at:  http://www.dfid.gov.uk/Media-
Room/Case-Studies/2007/A-record -maize-harvest-in-Malawi/. WT/TPR/G/231/Rev.1 Trade Policy Review 
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(ii) Manufacturing 
31. Manufacturing continues to be a key sector in the economy.  During the period under review 
the sector's average contribution to GDP was 7.9 % (GDP at constant 2005 prices).  A number of industrial sectors have been earmarked to be de veloped.  Textile and Garment Manufacturing has 
been targeted in order to take advantage of th e market opportunities under the African Growth and 
Opportunity Act (AGOA), the SADC Trade Protocol  and preferential bilate ral agreements between 
Malawi and South Africa.  Another industry that is benefiting from this is the sugar industry.  
Through the EBA initiative Malawi enjoys duty and quota free access to the EU markets.  
Furthermore under the export processing zones pr ogramme, over fourteen (14) manufacturing 
companies are exporting non-traditional products such as Macadamia (AGOA), cotton (AGOA), 
timber, and eucalyptus oils.  Government is also promoting local production of engineering materials, 
leather products, chemicals and fertilizers, cement and farm implements, amo ng others, in order to 
substitute for huge imports.  
32. The major constraints in the manufacturing sector include:  the state of infrastructure;  influx 
of cheap imports;  high transportation costs;  inade quate water and energy supply in rural areas;  and 
industrial capacity in order to comply with intern ational measures of standards.  At present the 
Malawi Bureau of Standards has applied for ac creditation under the Southern African Development 
Community Accreditation Service (SADCAS). 
33. To promote growth in the manufacturing sector, government has undertaken a number of 
initiatives including the launch of the “Buy Malawian” campaign for local investors and promoting 
the Public-Private Partnership Development B ill, 2008 (PPP's) as a way of improving the poor 
conditions of infrastructure in areas such as water,  energy, telecommunications and road systems. 
34. The Government has also developed the Malawi  Cotton Sector Implementation Strategy to 
complement the Cotton-to-Clothing Strategy that  has been developed by COMESA in conjunction 
with the African Cotton and Textiles Industry Federation (ACTIF).  This is a 5 year strategy that aims 
to:  improve the production and supply of seed cott on and cotton lint;  encourage the development of 
spinning, weaving and knitting textiles for supplyi ng traditional and new markets;  assist and 
encourage profitability and grow th in the garments sector;  create a business and investment 
environment that encourages closer value chain integration;  and encourage collaboration with 
international and regional or ganizations in the sector.  
35. In addition, government recognizes that the smal l and medium enterprise (SME) sector is an 
important contributor to manufacturing.  In this rega rd measures have been initiated to facilitate value 
addition by SMEs to Malawi's products, in addition to  making the SMEs competitive.  This is also in 
view of the fact that the Malawi economy is basica lly characterized by grass root SMEs that make up 
nearly 90 per cent of the total number of enterp rises, hence the need to increase their productivity. 
(iii) Fisheries 
36. The fisheries sub-sector contributes about 4% to GDP.  The fisheries policy aims to:  
maximize the sustainable yield from the natural a nd man-made water bodies of Malawi;  improve the 
efficiency of exploitation, processing and marketing of quality fish products;  promote investment in 
the fishing industry;  develop rural fish farming units;  and exploit all opportunities to expand existing 
and develop new aquatic resources.  
37. During the period under review, the annual fish  production estimates show an increase from 
48,000 metric tonnes in the early 2000s to about 68,000 tonnes in 2009 with 90% landed by nearly 
70,000 small-scale fishers and the rest by commerc ial operators.  Production from fish farming has Malawi WT/TPR/G/231/Rev.1 
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expanded from 800 metric tonnes in 2002 to 2,000 me tric tonnes in 2009.  The supply of fish per 
person has steadily fallen due to population growth .  In 1976 per capita annual supply was 12.9 kg;  
this had fallen to 9.4 kg in 1990 and then decreased fu rther to 5.4 kg in 2008.  Fish exports generally 
have decreased in volume over time mainly due to increased domestic demand.  Processed fish 
products from Malawi (often in dried form) that ta rget markets in neighbouring countries are often 
exported in very small quantities and left unrecorded.   
38. The focus of the Government is to increase fi sh production from the deeper waters of Lake 
Malawi, presently under-exploited, and to promot e investment in fish farming.  Recent policy 
strategies that have facilitated growth of fish farming include;  the Presidential Initiative on 
Aquaculture (2006-2011), the National Aquaculture St rategic Plan (NASP) and the review of the 
National Fisheries and Aquaculture Policy which is  currently underway.  A key strategy for the 
development of the capture fisheries includes form ulation of the Chambo Restoration Strategic Plan. 
39. The main constraints to the growth of the fish eries sub-sector include;  overfishing, lack of 
infrastructure for quality control, high demand for fi sh, climate change, the HIV/AIDS pandemic (as it 
affects labour supply), and weak policies (mainly on cage fish culture and governance).  To ensure 
that the fishery products of Malawi are able to  compete favourably in the export trade, quality 
standards remain critical issues to be considered  and hence the need to develop comprehensive 
Sanitary and Phytosanitary (SPS) measures that  are in compliance with the CODEX and Hazard 
Analysis Critical Control Point (HACCP).  Malawi  will require support in terms of technical and 
financial assistance in order to upgrade its capacity  to comply with measures and standards demanded 
by importing countries. 
(iv) Forestry 
40. Forest resources in Malawi cover an estimated 27 per cent of the 9.4 million hectares of land.  
About 11 per cent of this area is in National Park s and Wildlife Reserves, 10 per cent is in Forest 
Reserves and 7 per cent is on customary land.  Plan tation forests constitute about 1 per cent of the 
total land area under forest cover. 
41. Forestry remains the main source of energy.  Biomass satisfies about 83.4 per cent of 
household energy demand with electricity providing the remaining 16.6 per cent.  This, therefore, 
leaves the country reliant on wood fuels.  Thus, there is need to diversify sources of energy so as to 
reduce pressure on the need for firewood in future. 
42. It is estimated that the forestry sector employs more that 9,000 people in the formal sector and 
about 20,000 in the informal sector, mainly in carpe ntry and pit sawing.  The populations are involved 
in the production of timber, charcoal, firewood, cu rios, honey, mushrooms, poles, wild fruits, medical 
plants and edible plants.  Although some of the en terprises have not been evaluated, charcoal is 
considered to be a multi-million dollar industry in the country and the fourth largest after tobacco, sugar and tea.  
43. The country however, continues to suffer from fo rest degradation largely because of poverty, 
population growth, agricultural expansion, infr astructure development and overdependence on wood 
fuel for energy.  Over 93 per cent of the population depends on biomass energy for heating and lighting.  It is estimated that forest resources ar e declining at a very alarming rate of 2.6 per cent 
per annum mainly due to deforestation.  The De partment of Forestry has embarked on various 
aforestation, forestry conservation and manageme nt programmes with all relevant stakeholders 
towards enhancing sustainable forestry sector development in the country. WT/TPR/G/231/Rev.1 Trade Policy Review 
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(v) Mining 
44. The average contribution of the mining sector to GDP for the period under review is 3 per 
cent and contribution is expected to reach 10% wh en production at the Kayerekera Uranium Mine 
reaches its peak.  Government reforms, including the liberalization of the sector, have led to increased 
private investment and growth in th e sector during the period under review. 
45. During the period under review, exports of mi nerals were dominated by gemstones, 
granulated clays, dimension stones (ornamental stones), ceramics giftware and, to some extent, coal, which experienced an increase in volumes exported to  Mbeya in Tanzania particularly in 2009.  
Prospects for mineral exports are bright considering that the Kayerekera Uranium Mine Project will 
attain full production capacity once construc tion of plant machinery is completed.  
46. The destinations for Malawi's mineral exports include;  the Far East, South Africa, Europe, 
USA, Tanzania, Mozambique and Zambia.  During  the period under review, a number of mineral 
deposits were being actively pursued through intens ive exploration and development work by various 
international and local companies (particularly h eavy mineral sands, uranium, coal, glass sands and 
limestone). 
47. The country, however, has potential in gold, bauxite, diamond, copper, petroleum and 
platinum group metals.  The mi ning and mineral industry conti nued to generate substantial 
employment opportunities in the country.  In 2008, the sector employed about 4850 people, 
representing a 49 per cent increase over that record in 2007.  This increase in the employment in the 
mining sector in 2008 is also partially attributable  to the construction of the Kayerekera Uranium 
Mine in Karonga district. 
48. The sector's main developmental challenge is to bring the more advanced mineral projects 
into production stage as well as transform viable small scale activities into real business enterprises 
and eradicate pure speculative mining tenement appli cations which hinder expl oration and other land 
use activities. 
(vi) Services 
49. Trade in services contributes to about 44.2 per cen t of GDP.  Malawi has potential for growth 
in the services sector.  Malawi has been particip ating in the services discussions at regional and 
multilateral level.  A national strategy for servi ces is driven by domestic policy priorities and 
grounded in the services export activity already taking place in order to support and strengthen 
Malawian service exporters. 
(a) Financial services 
50. There have been significant developments in  the banking (depository corporations) sector 
during the period under review.  Five commercial ba nks and were granted licences by the Reserve 
Bank of Malawi over the period bringing the tota l number of commercial banks (other depository 
corporations) to 11 as at end 2008.  One bank was cl osed in 2005.  Four of the banks are listed on the 
Malawi Stock Exchange.  Overall, the financia l performance of the commercial banks has been 
satisfactory with all banks adequately capitalized  and liquid.  The commercial banks, however, are 
still dominated by the two largest banks whose asset s and deposits represent about 62.0 per cent and 
56.0 per cent, respectively, of the total sector.  Over the years, direct government control and 
ownership in the financial system has significantl y been reduced through privatization and public 
offer.  At present, government still ha s 100 per cent ownership in one bank. Malawi WT/TPR/G/231/Rev.1 
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51. The non-bank financial sector comprises Insu rance companies, Pension funds, Capital 
markets, Microfinance institutions and discount hou ses.  One discount house was granted a licence by 
the Reserve Bank of Malawi during the review period.   The insurance industry is fairly developed and 
comprises four life insurance companies, eight general insurance companies, one re-insurance 
company, ten insurance brokers and twenty six insura nce agents.  Pensions and microfinance are still 
not prudentially regulated by the Reserve Bank of Malawi as the Pensions Act and Microfinance bill 
are awaiting enactment by parliament. 
52. There are fifteen companies listed on the Malawi Stock Exchange.  Most of the listings have 
been as a result of privatization of state run compan ies.  In addition, there are four stock brokerage 
firms, two transfer secretaries, one investment trust and eight portfolio managers operating on the 
capital market in Malawi. 
53. In a bid to strengthen the financial sector in ge neral, a review of various legal frameworks has 
been undertaken and a number of Bills have been  drafted awaiting finalization and enactment by 
parliament.  These are the Financial Services Aut hority Bill;  the Securities Bill;  the Microfinance 
Bill;  and the Financial Cooperative Societies Bill .  The Banking Bill, the Insurance Bill and the 
Credit Reference Bureau Bill have r ecently been enacted by parliament. 
(b) Tourism 
54. As highlighted in the Malawi Growth and Deve lopment Strategy (MGDS), tourism in Malawi 
has the potential for growth to provide income, foreign exchange earnings and employment.  To 
contribute to economic development, the Government  is aiming at establishing Malawi as a principal 
and leading eco-tourism destination in Africa and also to increase domestic tourism. 
55. During the period under review the sector grew at  an average rate of (9%) and its average 
contribution to GDP during the period under review  was 4%.  Tourist arrivals increased from 382,647 
in 2002 to 742,000 in 2008.  The key feature that led to the growth in the sector is the continued 
response of the Private sector to the investment incentives introduced in the sector.  This is seen 
through a significant increase of new entrants on th e market especially in the accommodation and car 
hire sub-sectors. 
56. The sector is however faced with a number of challenges including:  inadequate 
infrastructure;  inadequate investment in the sect or;  inadequate financial resources for destination 
marketing;  inadequate human resource;  lack of di rect flights from the major tourist source markets;  
and lack of good quality delivery in some of the hospitality units. 
57. The Government is trying to address the challe nges through strategies that have been outlined 
in the 2008-2013 Tourism Strategic Plan including implementation of the National Tourism Policy 
which provides an overall guide on how the sector  should be developed including:  improving 
transportation links to tourism destinations;  in creasing attractiveness of national parks for tourism 
and eco-tourism;  and improving tourism marketing re gionally and internationally.  It recognizes that 
tourism is a cross-cutting sector touching on areas of transport, health and safety, environment, and 
telecommunication among others.  The policy, th erefore, recognizes this multilayer network of 
stakeholders and outlines the areas in which th ey can support the sustainable development and 
promotion of tourism. WT/TPR/G/231/Rev.1 Trade Policy Review 
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(c) The Information Communication Technology (ICT) 
58. The ICT sector was liber alized following the enactment of the Communications Act in 1998.  
This led to an increase in the number of operators as well as the separation of postal services from telecommunications.   The target is to raise th e teledensity which currently between 12.5 to 20. 
59. The Malawi Communications Regulatory Author ity (MACRA) was created to ensure that 
there is a level playing field in the sector, ensure  the introduction of new services and licensing of new 
players.  Currently there are two Global System of Mobile (GSM) operators (Zain and TNM), a third operator (G-Mobile) is yet to start offering servi ces and a fourth mobile licence has just been 
advertised.  There are two fixed network provide rs (MTL and ACL).  MTL, which was previously 
state owned, is now in private hands with govern ment retaining a 20% stake, whilst ACL is fully 
privately owned.  Twelve active Internet Service Providers (ISPs) operate in Malawi. 
60. The ICT sector is fully liberalized in the sen se that ISPs are allowed to own Very Small 
Aperture Terminals (VSATs) for their upstream connectivity and companies providing security 
services are allowed to install private radios and pa ging equipment.  The Govern ment is in the process 
of introducing convergence licence for ICT services to  ensure that providers should be free to provide 
a wide range of ICT services. 
61. A number of policies and initiatives are being de veloped to ensure availability of quality and 
affordable ICT services.  These include:  the univer sal access policy;  rural telecentre project;  
regional communication integrated project (fibre optic cable);  and infrastructure service projects. 
(d) Transport 
62. Malawi, being a landlocked count ry, depends largely on overla nd movement of exports and 
imports.  Its transport network and its connections to neighbouring count ries are, therefore, of utmost 
economic importance.  In the past, the sector has b een characterized by high transport costs due to 
institutional weaknesses, restrictive policies and re gulations, and a poorly maintained and inadequate 
road network especially in rural areas, where on aggregate the highest percentage of economic 
production takes place.  Transport costs account for 55-60%  of the total cost of imports and exports in 
Malawi. 
63. In view of this, the Government approved a National Transport Policy which calls for the 
implementation of appropriate policies and regulatory measures aimed at improving operational 
efficiency and service quality on transport.  Th is should improve competitiveness, productivity and 
profitability.  For instance, management and financin g of the road sector has been reformed with the 
creation of a National Roads Authority in 1997 taki ng over the responsibility (from the Government) 
for road construction, road rehabilitation a nd routine maintenance activities.  A Road Fund 
Administration was also created to ensure the availability of funding.  The main source of revenue is 
the fuel levy collected from petrol and diesel sales. 
64. The liberalization of market entry to allow private sector companies to be involved in the 
provision and operation of transport services was done in 1994, which led to the de-monopolization of 
the state owned companies.  In respect of this , Malawi Railways (1994) Ltd was concessioned to 
Central and East African Railways Ltd in 1999.  Ai r Malawi was commercialized and plans exists to 
privatize the Airline.  Malawi Lake Services was concessioned and later brought back to government 
fold.  It currently remains under the Government while initiatives for another concessionaire are being 
worked out.  Government also intends to form a Po rt Authority to oversee the operations of Malawi's 
ports.  During the same year, freedom to set tariffs, en try and exit into transport market was granted.  Malawi WT/TPR/G/231/Rev.1 
 Page 15 
 
 
Import of second hand transport equipment was al so deregulated, leading to an increase in 
competition and services. 
65. The Government has also embarked on the c onstruction of the new multi-modal transport 
project, the Shire Zambezi Waterway Project and the World Inland Port at Nsanje to provide direct 
access to the sea, thereby reducing transport cost.  So  far a tri-lateral Memorandum of Understanding 
(MOU) has been signed between the Government s of Malawi, Mozambique and Zambia.  Pre-
feasibility studies, mapping of the port site and survey of the new Nsanje Airport have been completed and construction of the port has commenced. 
66. In addition to the waterway project, a comp rehensive program of rehabilitation and new 
construction is being done on all modes of tran sport to enhance competitiveness and efficiency 
through multi-modal transportation.  Most roads have been improved, while some new roads have 
been constructed and others are underway.  Govern ment also intends to rehabilitate the railway 
network and international airports, as well as impr ove marine transportation on Malawi waters. 
67. Regarding the institutional framework, the Ministry  of Transport and Public Infrastructure has 
been restructured and its role now is primarily to  establish and facilitate policies as well as to regulate 
the transport sector and to carry out strategic planni ng.  The role of providing transport infrastructure 
is moving to private sector.   
(e) Energy 
68. Malawi is endowed with several forms of en ergy resources, which include;  biomass, coal, 
many perennial rivers for hydropower generation,  high solar radiation, wind energy for water 
pumping and other minor applications, hot springs for geothermal power generation, and uranium 
deposits. 
69. The energy balance of Malawi is dominated, in terms of production and consumption, by 
biomass sources.  These traditional sources account for 97 per cent of production.  Fifty-nine per cent 
of this biomass is used in its primary form as fi rewood (52 per cent) and residues (7 per cent), and the 
remaining 41 per cent is converted into charcoal in traditional earth moulds. 
70. In order to meet the increased demand for el ectricity, during the period under review the 
Government financed the implementation of Kapi chira Hydro Power Project Phase II.  Efforts to 
increase the generation capacity from other rivers other th an Shire River are also at an advanced stage.  
This involves request to African Development Bank (AfDB) for financial resources to conduct a 
detailed feasibility study for hydropower generati on from Lower Fufu on the South Rukuru River in 
Rumphi District.  Furthermore, plans are at an a dvanced stage to interconnect the power system in 
Malawi to that of the Southern African Power Pool  (SAPP) Grid to allow Malawi to participate in 
power trade in the region.  The Millennium Cha llenge Account (MCA) has provided funds amounting 
to US$300 million for the rehabilitation of Tedzani. 
III. TRADE DEVELOPMENTS AND POLICY 
(1) T
RADE POLICY OBJECTIVES  
71. Malawi's trade policy is directed towards ma intenance of an open economy, with relatively 
low tariffs averaging 13.5% and the general absence of non-tariff barriers.  The objective of the policy 
is to contribute to the achievement of economic growth, improvement of the standards of living, 
employment creation and a strong balance of paymen ts position.  The Ministry of Industry and Trade 
is responsible for the implementation of the country's trade policy. WT/TPR/G/231/Rev.1 Trade Policy Review 
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72. The policy aims at creating an environment conducive to enhanced performance and the 
stimulation of private sector participation.  Such  an environment will help the private sector to be 
efficient and competitive, both domestically and intern ationally, with a view to ensuring the sector's 
maximum contribution to the achieve ment of national development. 
73. The policy is premised on the need to integrate the country and to participate effectively in 
the multilateral trading system.  Implementation of tr ade and other related policies outlined in the next 
section is done through the Ministry's programmes and projects as reflected in the budget.  The 
Ministry's budget is linked to both its strategic pl an and the MGDS, which encapsulates policies in the 
sector. 
74. The Ministry is also considering the introduction of a Sector Working Group (SWG) to assist 
in coordinating efforts among various players in th e implementation of trade policies.  This is 
intended to enhance efficient division of labour  among development part ners in relation to 
government policies and systems.  This operational framework should lead to a kind of Sector Wide 
Approach (SWAP) for the Industry and Trade Sect or where our development partners can allocate 
funds to a common pool for financing sectoral action plans. 
(2) TRADE POLICY FORMULATION AND COORDINATION FRAMEWORK  
75. The Ministry of Industry and Trade is r esponsible for trade policy formulation and 
implementation.  This is done in  consultation with the private sect or, academia, civil society, media 
and various executive institutions and organs of government that administer other trade policy 
measures.  The role of the private sector has been institutionalized through consultative forums, 
including the quarterly meetings of the Nati onal Working Group on Trade Policy (NWGTP).  A 
Private-Public Dialogue (PPD) forum was set up in 200 7.  This emanated from a realization that one 
of the obstacles to doing business in Malawi is the weak relationship between the Public and Private sector particularly on the policy development front. 
(3) C
OMPETITION AND FAIR TRADING  
76. Government has a challenge to promote and in stitutionalise a 'competition culture' in Malawi.  
To this end, Parliament passed a Competition a nd Fair Trading Act in 1998.  The Act became 
operational on 1st April, 2000.  The purpose of the Act is to encourage competition in the economy by 
prohibiting anti-competitive trade practices and to provide for the establishment of the Competition 
and Fair Trading Commission. 
77. The Competition and Fair Trading Commission was established in 2005.  The Commission 
has since facilitated activities relating to comp etition including conducting investigations on 
anticompetitive conduct, mergers and acquisitions and sale of assets, training of Commissioners, 
development of procedures for the Commission and purchase of office requirements. 
(4) DOMESTIC LAWS AND REGULATIONS GOVERNING TRADE  
78. The Government has been undertaking a number of  initiatives to ensure a coherent legal and 
regulatory framework.  The promulgation of the Trade Remedies Bill is one of the efforts by the 
Government.  According to section 85 and 86 and the Fourth Schedule of the Customs and Excise 
Act, Malawi may apply anti-dumping measures, howev er the provisions as they stand are insufficient 
in substance and detail to comply with WTO require ments.  In this regard, Malawi sought further 
assistance from the Commonwealth Secretariat in 20 08 to develop a user friendly Trade Remedies 
Bill based on the previous drafts.  The Bill provides fo r the application of remedial measures such as Malawi WT/TPR/G/231/Rev.1 
 Page 17 
 
 
safeguard measures, anti-dumping and countervailing du ties under one law.  The Bill is yet to be 
approved. 
79. Other efforts include the review of the Comme rcial and Trade related laws which are being 
conducted under the Business Environment Stre ngthening Technical Assistance Programme 
(BESTAP) of the World Bank.  Laws which are under review include the Companies Act, the 
Taxation Act, the Communications Act, the Busin ess Licensing Act, the Arbitration Act, the Business 
Names Registration Act, the Control of Goods Ac t, the Investment and Export Promotion Act , the 
Customs and Excise Act, the Export Processing Z ones Act, the Export Incentives Act, and the 
Competition and Fair Trading Act. 
80. The Government is also undertaking an exercise to review it's trade related laws especially 
laws pertaining to trade in services to make them compatible with the WTO laws.  This exercise is 
being undertaken with the assistance fro m TRADECOM in the following sectors:  
telecommunications services;  financial services (ba nking and insurance);  transport (road and air, 
cargo and freight);  construction and rela ted engineering services;  and tourism. 
(5) BILATERAL TRADE AGREEMENTS  
81. Malawi maintains bilateral trade agreements with Mozambique, South Africa and Zimbabwe, 
and a customs agreement with Botswana.   Malawi also has an agreement on  trade, investment and 
Technical Cooperation with the People's Republic of China.   
(6) REGIONAL TRADE ARRANGEMENTS  
82. Malawi continues to pursue regional integr ation within COMESA, SADC and the SADC-
EAC-COMESA Tripartite framework.  Malawi re mains committed to these regional integration 
agreements, and continues to benefit from incr eased access to these regional markets.  During the 
period under review Malawi increased market access to SADC and COMESA members on a reciprocal basis subject to respective rules of origin. 
83. There are several opportunities for Malawi in  joining these regional groups.  Apart from 
market access opportunities, cooperation in the ar ea of transport, energy and infrastructure 
development provides a window for the mitigation of some of the major constraints faced by a small 
land-locked economy. 
(i) COMESA 
84. Malawi's exports to COMESA Region amount ed to US$284 million in 2008 compared to 
US$184 million in 2007, representing an increase of  52%.  Total imports from COMESA Region 
amounted to US$596.6 million in 2008 compared to  US$140 million in 2007, representing an increase 
of 326 %.  Malawi's major exports to COMESA c ountries include tobacco, tea, sugar, maize and rice. 
85. Malawi actively participated in the negotiati ons of the COMESA Common External Tariff 
and subsequent launch of the COMESA Customs Uni on.  At present Malawi is actively participating 
in the COMESA trade in services negotiations.  Ma lawi is also hosting the Federation of National 
Associations of Women in Business FEMCOM and the Regional Competition Commission. 
(ii) SADC 
86. Malawi is committed to implementing her ta riff reduction commitments under the SADC 
Protocol on Trade.  Currently, Malawi has liberali zed 70% of her intra SADC trade which means that WT/TPR/G/231/Rev.1 Trade Policy Review 
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Malawi is trading with other SADC member States using reduced or zero tariffs for almost half of the 
products under the liberalization programme.  The lib eralization of the tariffs has been protracted 
because of the reforms that the country has been undertaking to build her economic base.  To move 
forward, government undertook a study on the imp act of the SADC FTA on government revenue, 
consumer welfare and domestic industries.  The stud y results indicate that the main cost to complying 
with the SADC FTA commitments is the loss in G overnment revenue to the tune of MWK3 billion. 
87. In view of the foregoing, Government will start implementing further tariff reductions in July 
2010 and this has been communicated to other SADC member States. 
(iii) SADC-EAC-COMESA Tripartite Framework 
88. With overlaps in the membership of COMESA , East African Community (EAC) and SADC, 
it was seen prudent for the three RECs to co-opera te and harmonize their programmes.  A framework 
agreement was agreed upon and a Task Force was est ablished to spearhead the harmonization process.  
The harmonization programme by COMESA, EAC a nd SADC which commenced in 2005 culminated 
into the first joint Summit in 2008 at whic h the SADC-EAC-COMESA Tripartite Framework was 
launched. 
89. A study on the tripartite FTA is complete and Member states including Malawi are 
undertaking consultations. 
90. Malawi supports the tripartite initiative as harmoni zation will reduce the need to comply and 
implement multiple regional obligations, which is cu rrently confusing the private sector players and 
other government implementing agencies.  Unde r the SADC-EAC-COMESA Tripartite Framework 
key issue for Malawi is the North South Corridor initiative which is a regional pilot Aid for Trade 
strategy to which Malawi attach es great importance.  Among other things the initiative intends to 
reduce border time from three days to one day and impr ove on transport and energy infrastructure.  At 
present the project has linked Zambia and Zimbabwe  through the Chirundu one stop border post.  The 
second phase of the project will f acilitate the creation of a one-sto p border post between Zambia and 
Malawi through the Mchinji-Mwame border post. 
IV. INVESTMENT MEASURES 
91. The Government of Malawi recognizes and acknowle dges that the private sector is the engine 
of economic growth.  Government's role is, theref ore, to facilitate rather than regulate private 
investment.  An Investment Pr omotion Act was enacted in 1991, in order to promote, attract, 
encourage and facilitate both domestic and foreign investment in the c ountry.  To facilitate investment 
promotion, government plans to establish a One-Stop-Shop for invest ors through the creation of the 
Malawi Investment and Trade Centre.  Governme nt regularly reviews its investment incentive 
packages in order to attract more investors and make Malawi an ideal place for foreign direct 
investment.  Other initiatives include;  intensification of efforts to promote Spatial Development initiatives that include the Shire-Zambezi Waterway to establish the Nsanje World Inland Port and the 
Green belt revolution. 
92. Government recognises that greater national effort s are required to increase domestic resource 
mobilization and in particular the levels of savings .  This is partly because the existing institutional 
framework to facilitate these developments is weak .  A stock exchange on which equity funds can be 
raised is not well developed and is yet to recover from the severe  effects of the global financial 
meltdown.  Reforms in the financial sector will continue and will be directed at increasing 
competition by encouraging new entrants.  Government  has so far established bilateral, regional and 
multilateral trade and investment agreements in orde r to expand the existing domestic markets.  In its Malawi WT/TPR/G/231/Rev.1 
 Page 19 
 
 
quest to provide excellent public goods and services  the Government has intensified in improving the 
transport and communication infrastructure.  Furthermore a National Investment Policy was 
developed to replace the Statement of Invest ment Policies (1987) and awaits Government 
endorsement. 
V. MALAWI AND THE MULTILATERAL TRADING SYSTEM 
(1) IMPLEMENTATION OF WTO  AGREEMENTS  
93. Malawi is fully committed to participating in the multilateral trading system.  Malawi signed 
the Marrakech Agreement in 1994 and became a f ounding member of the WTO Organization in May, 
1995.  Malawi' view about the WTO is that the rul es and disciplines that emerge from the negotiations 
should support efforts for strengthening supply cap acities, improving market access for products of 
interest to her and providing flexibility in the use of appropriate policy instruments to enhance the 
process of structural transformation of the economy. 
94. Malawi sees the WTO as an increasingly important framework for achieving national trade 
policy objectives.  The increasing complexity in the multilateral trading system works against Malawi, 
given her limited technical, financ ial, institutional capacities.  Malawi has not yet established any 
representation in  Geneva and this exacerbates the difficulties of  Malawi's participation in negotiations 
under WTO. 
95. Malawi's major implementation challenge is th e capacity constraint (financial, human and 
institutional) to:  comply with WTO Notificati on requirements;  align national laws, rules and 
regulations to WTO requirements and enforce th e laws and regulations, e.g.  Trade Related 
Intellectual Property, Sanitary and Phytosanitary  (SPS) Agreement, Agreement on Trade Remedies, 
Agreement on Technical Barriers to Trade;  and comply with Agreement on Customs Valuation and 
Dispute Settlement Procedures. 
96. In order to effectively implement Malawi's  obligations and rights under the WTO, 
Government, through the BESTAP World Bank project  and Trade COM is reviewing existing trade- 
related laws and drafting new ones to be  in conformity with WTO Agreements. 
97. There is a need to strengthen the Nationa l Working Group on Trade Policy as well as the 
inter-ministerial committee on WTO matters to enhance their capacity to develop negotiating 
strategies and positions.  This will entail wider inter-organizational relationships and increased 
consultations.  Equipping government officials with  necessary negotiating skills is an important area 
where emphasis is also put on. 
98. During the period under review, Malawi c ontinuously benefited from support provided 
through the Integrated Framework and its successor, the Enhanced Integrated Framework (EIF) as well as the Joint Integrated Technical Assistance Programme (JITAP) and ot her cooperating partners 
and workshops and trainings steered by the WTO Secretariat. 
99. Capacity building (including the creation of  awareness of multilateral instruments to 
stakeholders) is at the core of the needs of Malawi in her efforts to fully and effectively integrate into 
the world economy and the multilateral trading syst em.  Malawi welcomes the EIF for LDCs and 
anticipates that this project will go along way in building the needed capacities to trade. WT/TPR/G/231/Rev.1 Trade Policy Review 
Page 20 
 
 
(2) IMPLICATIONS OF OTHER TRADING ARRANGEMENTS ON MALAWI  
(i) Economic Partnership Agreements 
100. Malawi is participating in the ACP-EU Econom ic Partnership Agreement (EPA) negotiations 
under the Eastern and Southern Africa (ESA) geogr aphical configuration.  The negotiations were 
initially set to be finalized in December 2007, but  due to heavy workload and some outstanding 
contentious issues, the EC and ESA agreed to c onclude an Interim EPA to govern trade while 
negotiations are in progress.  Malawi is the only co untry in Southern Africa that has not yet initialled 
the Interim Agreement alongside Djibouti, Ethiopia, Eritrea and Sudan in the ESA region. 
101. The country, as an LDC, still con tinues to enjoy preferential ma rket access to the European 
Union (EU) under Everything But Arms (EBA) initiative,  which is part of the EU Generalized System 
of Preferences (GSP).  Through this initiative, LD Cs enjoys duty and quota-free access to the EU 
market for all its exports save armaments. 
102. Minor variation applies to sugar and rice where quotas are used.  However,  the EU is set to 
fully liberalize the sugar regime on 30 September 2 015 which entails that th e preferential treatment 
given to sugar from Malawi will be eroded.  The other issue of major concern to Malawi is the 
likelihood of withdraw of this arrangement at any time given that the EBA is unilateral in nature, and 
hence it does not provide any guaranteed access of pr oducts to EU market in the long term.  In 
addition, the EBA also has complex and restrictiv e Rules of Origin unlike EPAs which reduces the 
potential benefits that the EU market offers.   
(ii) The African Growth Opportunity Act 
103. Malawi became an AGOA beneficiary in  2001 and has exported apparel worth 
US$142 million as at October 2009.  Malawi is also exporting macadamia nuts to the U.S. market and in 2009 export quantities were 857 metric tones. 
104. Currently, only two companies are exporting garm ents to the United States market and these 
are both foreign owned.  Originally, nine compan ies were registered to export under AGOA but some 
have closed down and others have  relocated to other markets. 
105. Initiatives have been undertaken by the Malawi  Government to create conducive investment 
climate including introduction of tax incentives, duty drawbacks and creation of Export Processing Zones for those investors wishing to venture into manufacturing for export. 
106. The Malawi Government is embarking on more initiatives to improve the production 
capacities of key products for export to the U.S.  including initiatives on cotton.  The Ministry is 
working to finalise the National Export and AGOA (whi ch is aimed at promoting diversified exports 
of value added AGOA eligible products such as chillies, handicrafts and others) Strategies. 
107. Malawi fails to take full advantage of th e market access opportunities offered under the 
AGOA scheme due to supply side constraints as well as insufficient foreign i nvestment despite the 
incentives that the country provides.  Malawi need s technical and financial assistance to take full 
advantage of this market access opportunity. Malawi WT/TPR/G/231/Rev.1 
 Page 21 
 
 
(iii) Generalized System of Preferences 
108. Malawi is a beneficiary of various generalized system of preferences including;  the EC 
Everything but Arms (EBA) initiative, the China,  Canada, Japan and India initiatives for Least 
Developed Countries (LDCs). 
(iv) South-South Cooperation 
109. Since the establishment of Diplomatic Relations  between Malawi and the People's Republic 
of China on 28th December, 2007, China has contributed to Malawi's Development agenda in four key 
areas of infrastructure development, economy, tr ade and investment, and education and human 
resource development. 
110. The Indian and Malawi Governments agreed to  expedite negotiations to finalize proposed 
Memoranda of Understanding on Mine ral Resources.  Malawi Governme nt would like to cooperate 
with the Indian Government in energy developm ent which include hydro power generation and wind 
and nuclear power development. 
111. The Governments of Malawi and South Africa si gned an agreement for the establishment of a 
Joint Permanent Commission of Cooperation (JPCC) in  May, 2007.  The functions of the Commission 
are to plan and implement bilateral programmes of  cooperation, and to conduct studies and surveys in 
fields of common interest.  The areas of intere st include:  education agriculture and livestock 
development;  trade, industry, mining and tourism;  natural resources;  energy;  money and finance;  
transport and communications infrastructure;  hea lth, and human resource development;  institutional 
development;  and environment. 
(v) Aid for Trade 
112. Malawi underscores the need for improving trade related infrastructure to enhance growth and 
competitiveness of exports of goods and services as well as reduce production and transaction costs.  
It should, therefore, be emphasized that Aid fo r Trade promotes growth, reduces poverty, addresses 
infrastructure bottlenecks, establis hes a mechanism that reflects national development priorities and 
strategies as well as enhance regional integration. 
113. Malawi's Aid for Trade needs are substantial and focus on t ackling supply side constraints 
including infrastructure bottlenecks.  As a landlocke d country Malawi is connected to the main ports 
of Dar es Salaam, Nacala, and Durban by road.  The rail network is not fu lly developed and this 
further increases the transport costs. 
114. Under Aid for Trade Malawi anticipates to impr ove trade related infrastructure including;  
transport, energy, water and telecommunications, bui lding of laboratories for standards development 
and certification, SPS compliance and customs border facilities (Trade facilitatio n) and construct ware 
housing and cold storage facilities at th e two main international airports. 
115. Aid for Trade should, therefore, support Mala wi to achieve self-sustained economic growth 
because of its potential to strengthen the capacity not only to negotiate beneficial trade agreements, 
but also to benefit from them through enhanced supply capacity. WT/TPR/G/231/Rev.1 Trade Policy Review 
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VI. CONCLUSION 
116. Malawi remains committed to maintaining an increasingly open economy, the Multilateral 
trading system and a timely conclusion of th e Doha Development Round of trade negotiations.  
Malawi underscores the fact that in the context of  the current global economic recession, an ambitious 
outcome of the Doha Development Round is crucially  important to create economic prosperity and 
growth globally.  In this regard it is imperativ e that the Doha Developm ent Round establishes a fair 
and pro-development rules-based multilateral trad ing system, which enhances the country's trade 
potential and creates sufficient policy spa ce to facilitate continued development. 
117. As a Least Developed Country, Malawi faces supply side infrastructure and productivity 
constraints and is highly susceptible to fluctuations  in commodity prices.  As such, Malawi is hopeful 
that member states and cooperating partners will as sist her in addressing supply side constraints to 
enable the country take full advantage of the market access opportunities created at the multilateral 
level. 
118. The Malawi Government remains committed to transforming its economy from being 
predominantly consuming and importing into bein g predominantly producing and exporting to 
eradicate poverty.  A national development agenda, the MGDS, has also been developed to drive the 
vision.  Among others, the strategy aims to mainstreaming trade into sectoral strategies.  While economic development prospects will depend on her abilit y to adjust, there will be need for increased 
support and assistance from the international communi ty so as to develop an economy that is better 
able to absorb commodity pr ice shocks in the future. 
__________