PRIVATE SECTOR DEVELOPMENT STRATEGY AND REFORM PROGRAMME

Despite efforts to improve the enabling environment for private sector development, Malawi remains a difficult place for enterprises to do business. The constraints to industry on the supply side are numerous and undermine competitiveness, while the revenue system imposes a significant burden on a narrow formal private sector. The very high cost of credit and limited lending facilities for the private sector (particularly SMEs) undermines the incentives for entrepreneurship.

In order to address the many limitations to private sector development, during the year 2005 the Ministry of Industry, Trade and Private Sector Development, in cooperation with the Malawi Confederation of Chambers of Commerce and Industry and with the support of the World Bank, began the preparation of a Private Sector Development Strategy and Reform Programme. A team visited Zambia and Tanzania to learn from the two countries respective PSD reform agendas and to see how experiences in the region can be applied to Malawi. A concept paper on PSD reform was prepared and a high-level taskforce for preparing the strategy and reform agenda was established.

The provisional strategy will have seven components:

1. Improve the investment climate for private sector enterprise through policy and legal reforms that will reduce the cost of doing business;
   
   
2. Support to public agencies that serve the private sector in order to improve the level of service delivered;
   
   
3. Support to public/private dialogue to build consensus on PSD issues;
   
   
4. Unlock the growth potential of micro, small and medium sized enterprises and empower the indigenous entrepreneur;
   
   
5. Improvements in infrastructure for the private sector;
   
   
6. Enhance export competitiveness; and,
   
   
7. Changes in mindset and attitudes towards the private sector.

The PSD strategy and reform programme aims to use the Doing Business indicators as a benchmark for improving the enabling environment for enterprise development in Malawi and to this end, technical working groups are in the process of being set-up to carry out work assessing the necessary reforms. Technical working groups have been established for each of the five Doing Business indicators (there are ten in total) where Malawi is considered to need the most reforms. The five indicators are: getting credit; trading across borders; paying taxes, dealing with licenses; and closing a business. Click here to download the Doing Business report for Malawi and click here to download a brief on Malawi's Doing Business reforms.

The work of preparing the strategy and reform programme will draw upon the Investment Climate Assessment of Malawi, a detailed survey of some 300 manufacturing companies carried out during 2005 by the World Bank and the Ministry of Industry, Trade and Private Sector Development.