<< Programmes - Poverty Reduction

The Business of Change:

Growing Sustainable Business Programme

Location:
Lilongwe, Malawi
Period:
2007 - 2008
Corporate Thematic Area:
Poverty Reduction, but falls within the Environment & Energy AWP of UNDP
2007 Budget:
US$ 493,000
2008 Budget:
US$ 400,000
Implementing Partners:
Malawi Investment Promotion Agency (MIPA)
Contact:
Jan Willem van den Broek
GSB Broker,
P.O. Box 30135
Lilongwe 3, Malawi
Office: +265 (0) 1 770 808
jan.vandenbroek@undp.org

"It is the absence of broad-based business activity, not its presence that condemns much of humanity to suffering. "
- Secretary-General Kofi Annan, Financial Times, September 14 2005

Malawi is one of poorest countries in the world, with 20.8 percent (1990-2005) of the population living on less than a dollar a day, and 62.9 percent (1990-2005) living on less than two dollars a day. Malawi's economy is based largely on agriculture, which accounts for 90 percent of foreign exchange earnings, 40 percent of its GDP, and employs 80 percent of the workforce (2005). Sectors that would add considerable value to this produce such as processing, manufacturing and services are relatively small and only a small portion is produced for export.

A more substantial private sector in Malawi would not only be good for economic growth but will offer more diverse opportunities for the poor to improve their income and livelihoods. For that reason UNDP’s Growing Sustainable Business (GSB) Programme is supporting the Malawi Investment Promotion Agency (MIPA) in its efforts to reform and improve the enabling environment for business activity, in particular by cultivating investment opportunities and by attracting potential investors, and providing the Government with hands-on examples from pro-poor and sustainable business investments to inspire future change. GSB supports two mutually complementary activities—capacity development of MIPA and brokering specific investment opportunities.

Building capacity at the Malawi Investment Promotion Agency (MIPA) GSB Malawi directly supports MIPA in its endeavors to attract foreign investment and develop business. The programme is run from the MIPA offices. As well as contributing to the infrastructure of MIPA, GSB Malawi has provided two UNVs, who are building capacity at MIPA to improve its investment resources and outreach activities. In 2008 this support aims to lead to attracting US$30 million in additional investment pledges for Malawi (excluding mining).

Facilitating pro-poor investment to the country.
The GSB Broker is responsible for identifying pro-poor investment opportunities, developing innovative business models, brokering partnerships between key stakeholders, and marketing projects to both local and international investors. During 2007 GSB has focused on developing five projects in a range of areas that have a strong local business partner, are commercially viable and with potential to have a big impact on the development of Malawi. These hands-on examples will be presented to MIPA as models to encourage future success. They include the establishment of a cassava starch factory, promotion of community cage fish farming, introduction of ethanol-fueled cooking stoves, supply of financial and telecom services in rural areas and promotion of Malawi/Mzuzu premium quality coffee.

Supporting women’s businesses
One aspect of capacity building in MIPA focuses on training in identifying industry linkages. In conjunction with a GSB advisor placed in MIPA, MIPA staff produced a project proposal to build and run a center providing equipment and training for women’s associations of small-scale entrepreneurs engaged in food processing in Mchinji. Mchinji women’s groups are involved in a range of activities, including oil extraction (from Soya, sunflower seeds, and groundnuts), soap making, and mushroom culture. As most work is done manually or outsourced, they could benefit from appropriate technology for their production but do not have access to the capital to make these investments. The proposal seeks grants and equipment to provide the centre with things such as an oil-extracting machine. An oil-extracting machine costing US$600-900 would increase the scope of income generation for women already involved in producing sunflower, Soya, or ground nut oil.

Once the centre is set up and if it proves successful, MIPA would aim to promote scaling up to reach a larger number of women’s associations.

Malawi Coffee Goes Global
Specialty coffee has great potential to generate extra income for smallholder farmers and is produced across Malawi. Malawi’s Mzuzu Coffee, for example is a cooperative of 3200 smallholder farmers with a regionally recognized brand. Malawian coffee however generally has a limited global presence and is known to v ery few importers.

GSB Malawi aims to identify and attract new importers and retailers as well as to research the idea of creating a single Malawi Coffee brand, which would combine beans from the major producers in Malawi.

In August 2007 GSB Malawi sent samples to 75 importers worldwide, with a request for feedback on quality, price and commercial potential for a Malawi Coffee brand. 10 importers returned their feedback, rating Mzuzu Coffee as premium quality coffee. Based on the samples immediately 36 tons of coffee from Mzuzu and some of the estates were sold. 4 importers expressed interest in the idea of a Malawi Coffee brand and willingness to partner with GSB Malawi to enable this process.

GSB Malawi is programmed to run through 2008, subject to extension. GSB Malawi aims to continue to the support MIPA under its current strategy for several additional years, after which capacity that has been developed will have been absorbed.