TRADE: Malawi-South Africa Agreement ’’Will Attract Investors’’
BLANTYRE, May 15 (IPS) — The Malawian government is optimistic that its new economic and technical cooperation agreement with South Africa will finally draw investors from its mighty neighbour.
Malawi and South Africa have signed the agreement to pave the way for the establishment of a Joint Permanent Commission of Cooperation (JPCC) aimed at enhancing socio-economic development in the two southern African states.
Despite being long-time trade partners, the countries had not formalized their relationship until last week on May 7 2007. South Africa’s foreign minister, Nkosazana Dlamini-Zuma, and her Malawian counterpart, Joyce Banda, signed the agreement in Durban, South Africa.
The cultivation of the agreement had been ongoing since 2004 when a delegation from Malawi’s ministry of trade and private sector development undertook a study tour to visit South Africa’s department of trade and industry.
Malawi’s deputy minister of foreign affairs, Henry Mumba, said that the signing of the agreement is an initial step towards availing Malawian resources to South African investors. Malawi is also seeking assistance from South Africa to develop its agricultural and manufacturing sectors.
‘‘Malawi is a great potential market for South African investors. But investors have been shunning Malawi because they have not felt confident with us without a formal agreement between the two countries,’’ said Mumba.
Malawi is planning a meeting between South African investors and the Malawian private sector, civil society and government on how best to forge ahead with the agreement.
The agreement encompasses trade, investment and the movement of people where ‘‘it would be easier for citizens from both countries to work in each other’s country’’, according to Mumba.
He said with the JPCC, South Africa is expected to help Malawi improve its road infrastructure, the airline industry, agro-processing and the uranium mining industry which Malawi is venturing into.
South African commercial farmers will be asked to help develop Malawi’s agro-industry. The country will also now be able to ask South African supermarket chains currently operating in Malawi to improve their labour practices.
‘‘The joint agreement is also a tool which will help to enhance confidence and trust between our two governments and enable us to coordinate our policies at the multilateral level,’’ Mumba said.
South Africa’s high commissioner to Malawi, Ntshadi Tsheole, said she was happy that the two governments have entered into a partnership as South Africa is Malawi’s major trading partner. The agreement will boost the already existing diplomatic corporation.
‘‘It is hoped that the signing of the JPCC will unlock much more cooperation between our two countries,’’ she said, adding: ‘‘In fact, last year, in one of the local daily newspapers, South Africa was declared second highest foreign direct investor in Malawi after the Republic of China.’’
Malawi was South Africa’s 10th largest export destination in Africa in 2005.
While Malawi’s government is enthusiastic about the agreement, the Malawi Economic Justice Network (MEJN), a network of non-governmental organizations concerned with socio-economic issues, warns that the poorer southern African country has to approach such an arrangement with South Africa with caution.
It has to ensure that there are deliberate policies to ensure that Malawi gains from the agreement.
MEJN deputy national coordinator Mavuto Bamusi is worried because South Africa is already dominant in the services sector through, for example, retail chain stores.
‘‘Malawi could easily lose from this agreement because South Africa is the stronger partner. This is also an issue in the Southern African Development Community as productivity in the region is dependent on the dynamics in South Africa,’’ said Bamusi.
He also warned that South African investors might only be interested in the ‘‘pool of cheap labour’’ in Malawi. ‘‘What we need is for South Africa to invest in productive investments for Malawi and not to encourage consumerism.
‘‘We are looking at countries with two different levels of resource endowment. The arrangement between the two countries may only manage to formalize exploitation of the poorer country,’’ Bamusi cautioned.
Bamusi, however, argued that South African investors were still better than the Chinese. The latter have been blamed for the influx of cheap commodities.
The Malawi government should work on promoting the general interests of the people and not allow South African-owned companies to sell commodities from their country that could equally be sourced in Malawi.
As examples, Bamusi cited agricultural commodities that are produced in abundance in Malawi. Potatoes and cabbages are some of the commodities that South Africa should not be allowed to bring into Malawi.
He also wanted to see steps to prevent both exploitative wages below the minimum level and poor conditions of service by South African investors.