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All evidence suggests that Malawi Government has set the right tempo for achieving reforms needed to achieve growth and reduce poverty - World Bank


THE WORLD Bank has rated Malawi among the few countries in Africa eager to implement reforms

designed to boost investment, the Business Times has learnt.

However, a legal expert has said that the absence of anti-money laundering laws threatens to derail the

seemingly good prospects and pace of reform.

In their latest joint report, 'Doing Business in 2006; Creating jobs' the World Bank and the International

Finance Corporation (IFC), have put Malawi among three African governments planning ambitious reforms

that aim to make their economic environment conducive for doing business.

Other two countries cited for praise are Burkina Faso and Lesotho, while Serbia and Montenegro leads the

pack.

The report, released recently in Washington, ranks Rwanda, Mauritius, South Africa and Nigeria among the

top reformers in a continent the World Bank has recommended for heavy reforms.

"If reformers of business regulation are seeking an example, they should look nearby—to Rwanda," reads

the report in part.

It says the Eastern African country, a troubled spot for ethnic strife and genocide 10 years ago, was

among the top 12 reformers in 2004. Upon embarking on the reforms, Rwanda recorded one of Africa's

highest economic growth rates (3.6 percent), says the report.

The World Bank report used up to 10 indicators to investigate regulation that either enhance business

activity or stifle it. These indicators are applied to measure economic outcomes and identify reforms that

have worked elsewhere and why.

In Malawi, research collaborators looked at regulation governing recruitment and firing of workers, credit

acquiring procedure and licensing of businesses, among other variables.

World Bank Country Economist Khwima Nthara said in an interview, although the 'Doing Business' report

looked at selected criteria, all evidence suggests that Malawi has set the right tempo for achieving reforms

needed to achieve growth and reduce poverty.

He said the country now has political will and commitment at the top to embark on the required reforms and

that government had started to address critical needs of the private sector.

"We've seen a lot of commitment and some action. The 2005/06 budget, for instance, is business-friendly

in terms of taxation measures. The country is at the right stage and the future can only be bright," Nthara

said.

He said on its part, the World Bank has embarked on an Investment Climate Survey that would analyse

comprehensive data to come up with a more objective assessment of the factors impeding investment in

Malawi.

But a corporate lawyer who collaborated on the World Bank report said while laws regulating business in

the country were generally favourable, delays to pass the anti-money laundering bill raise serious doubts

about the seriousness of government to attract foreign investors.

The draft bill has since 2002 been entangled in red tape. During the recent session of Parliament, the draft

law was again overshadowed by debate on the impeachment of President Bingu wa Mutharika and the

food shortage crisis.

"Without the anti-money laundering law in place, Malawi is exposed and vulnerable. This situation puts the

country at a great disadvantage," said Jai Banda of Sacranie and Gow, and who has been researching on

the subject.

He said Malawi was at high risk of attracting money laundering activity because it was one of the few

countries in the region lacking specific laws to tackle the vice.

Apart from money laundering, Banda said there is also urgent need to straighten bureaucracies that cause

delays in the issuance of licenses and permits.

He said the delays, which take between 21 to 35 days, are frustrating investors and scaring them away.

The World Bank report indicates that Malawi is among six African countries where investors are still

subjected to annual renewal of licenses, a process that comes after a rigorous inspection of business

premises by the Ministry of Trade and Private Sector Development.

"Businesses often resort to bribes to obtain approval. License renewal should not be an annual rite, and

only violators should pay fines," says the report.

It advises governments to simply their licensing systems to save costs.