2016 Malawi Investment Climate: A Review of Challenges Faced by the Private Sector

Abstract

The World Bank conducts investment climate assessments (ICAs) across the globe to analyze private sector performance and to determine principal constraints affecting the private sector in respective countries. The 2016 Malawi ICA focuses on supporting dialogue on investment climate by analyzing the challenges reported by private enterprises in the country. It is the second in a series, following the first one that was published in 2006. The 2016 Malawi ICA is based on the analysis of results from the World Bank enterprise survey conducted in 2014. Regression analysis on productivity levels of firms was conducted to present some insights into the competitiveness of manufacturing firms. The productivity analysis reveals that firms in Malawi have higher levels of labor productivity and capital intensity, but lower levels of capital productivity than their counterparts in neighboring countries. Unit labor costs are lower than in most comparator countries. The results are predominantly with respect to large firms, with medium firms in Malawi facing lower levels of labor productivity and capital intensity, but higher levels of labor costs than small and large firms. Apart from the foregoing measures of partial productivity, total factor productivity is lower than in most comparator countries.