By Elizabeth Littlefield
President and CEO, Overseas Private Investment Corporation
President Obama asked me a year ago to travel to Malawi to explore opportunities to support private sector investment in this country that is brimming with resources and promise but has not yet captured the level of investor interest that some neighboring countries … from Rwanda to Tanzania … are now enjoying.
Having recently wrapped up two and a half days meeting with business leaders and government officials in the Malawian capital, Lilongwe, and the commercial center, Blantyre, I am left wanting to support more development in this country that has so many challenges from severe power shortages to widespread food insecurity and poor access to finance. But I am also convinced that the country still needs to work on becoming a friendlier investment climate. Unlike U.S. aid agencies that can … and do … provide direct grants to developing countries like Malawi, OPIC cannot support projects without committed investors from the private sector. And what I learned during my recent trip to this small country in central Africa is that … despite the overwhelming need for additional investment … investors are seeing more promising opportunities elsewhere on the continent.
While the government of Malawi has adopted some reforms to improve the business climate and committed to doing more, the business people I spoke to in Malawi said it was not enough. They remained wary of shifting regulations, unclear policies about land rights and consistent access to finance.
My visit coincided with the country’s escalating “cashgate” crisis over the theft from a government-run electronic payment system. The wrongdoing appears to have been widespread and the crisis is consuming the news and proving to be a distraction for the whole country. It underscores the work that still needs to be done so that the country can be seen as a safe place to do business.
I sincerely believe that this crisis can be an opportunity for Malawi to promote the sort of transparency that will make it a better place for its
people and for businesses. Malawi is severely hampered by limited investment and some parts of the country are so underdeveloped that only one to three percent of the rural population has access to electricity. Due to poor transportation infrastructure, fuel must be shipped in daily at a great cost, and power outages and fuel shortages are common. I experienced this first hand when our departing flight could not access sufficient fuel for a two hour trip to Nairobi and had to stop after one hour to refuel.
Now, I know well that my travel delays fall squarely into the category of first world problems. But I repeat it here only to illustrate how limited investment touches every aspect of life.
OPIC shares President Obama’s strong commitment to Africa. We invest about one billion dollars on the continent each year and have invested more in Africa over the past four years than during the previous eight. And as a key player in the President’s Power Africa initiative, we are poised to do even more going forward.
But we also know that investing is a competitive business and Africa today is a highly competitive place where investors are often in a position to pick and choose where to put their money. I hope to be able to return to Malawi sometime in the near future with news of an active OPIC portfolio of investments. To get there, the government will not only have to adopt the reforms necessary to establish competitive advantages for investors, but also work to facilitate doing business to be an active partner with the investors it hopes to attract.