Developing Country International Business Environment Paper
SWOT Analysis of The Republic of Malawi

Introduction
Malawi is one of the few countries in Africa in which doing business is relatively safe. Located in the southeastern region of the continent, Malawi is landlocked bordering with Zambia, Tanzania, Mozambique, and with the Lake Malawi which is the major body of water of the country. It is one of the most densely populated African countries with a regional, young, and patriarchal society. Total population is estimated to be 16,323,044 for a total land of 94,080sq, more than half the population lives below the poverty line. The population suffers from high illiteracy rate and death rate. Christianity is the major religion but Islam is also widely practiced among the people. Chewa is the official language but government and commerce is conducted in English which is spoken on most of the cities but scarcely on the rural areas. Two major cities of importance are Blantyre which is the commercial center and the largest city of the country and the capital, Lilongwe, in which all the government is located with the exception of the Supreme Court, located in Blantyre.
Political
Malawi is a multiparty democracy with 28 administrative districts which are divided into traditional authorities and then into administrative wards throughout the country. Since Malawi was once a colony of England, the legal system is a mix of English common law and customary law. The official president, Bingu wa Mutharika, died on April 2012 and vice president Joyce Banda assume presidency on April 7, 2012, next elections will be held on May 2014. The government is pro western and although there has been some setbacks it has establish good foreign policies with develop countries and is a member of several international organizations including the IMF, UN, WHO, and WTO. It has been criticized for its high levels of corruption and its life threatening prison conditions, among other violations of human rights. It has several major society issues that the government must work on including health issues like the high level of HIV/AIDS and waterborne diseases; famine, the infrastructure, and the education system. Apart from those it also has to deal with the pressure of the foreign donors, its wide black market, and the pressure from international environmental protection groups.
Economy
Economy wise, agriculture and monetary aid is what sustain of the country. Malawi is predominately agricultural with 90 percent of the population working in agriculture. The agriculture industry represents one-third of the GDP, and almost all of the export revenues. Half of the exports alone are tobacco accounting for 53 percent of the total exports. Other exports are tea, sugar, cotton, coffee, peanuts, and wood products. Major export partners are India, Germany, South Africa, Russia, Zimbabwe, Canada, and the US. Despite its abundant fertile land, Malawi has suffered from droughts and famine. This makes the country particularly vulnerable to weather related issues and to declining terms of trade. The country enjoys a bilateral trade agreement which allows the entry of Malawian duty free products to South Africa and Zimbabwe. Natural resources include limestone, unexploded uranium, coal, bauxite, phosphate, graphite, granite, black granite, vermilite, aquamarine, tourmaline, rubies, sapphires, and rare earths minerals. The country has zero production of petroleum and natural gas. Major imports are petroleum, semi-manufactures, consumer goods, and transportation equipment. Since the country lacks of industrial sectors, all the major industrial goods are imported.
Financial wealth of the country is concentrated in a small elite class and land distribution is unequal. Total GDP per capital estimated for 2011 was $ 900 with a labor force of 5.747 million people. The official currency is the Malawian Kwachas which was trading for 163.55 per US dollar as of May 1st 2012(Oanda) but the former president devaluated the currency in order to meet the IMF request and reestablish its support. As of June 9, 2012 it is trading for 267.49 per US dollar (Oanda). This devaluation caused inflation to increase from its 7.5 percent in 2011causing an internal increase of price on the basic items. Other reforms include the introduction of a floating exchange rate regime and voiding controls on currency trading. The IMF and the World Bank have been supporting the country’s economy for years. This year alone is set to give 157 million in aid. More than 2 billion in debt has been cancelled because of the Heavily Indebted Poor Countries Initiative program but as of December 2011 the estimated external debt was $ 1.35 billion. The country was heavily affected by the recent world recession. Malawi lost its ability to pay for imports and investments fell 23 percent and continued to decline. As of 2011 estimate gross fixed investments were 21.3 percent of the GDP and the commercial bank lending rate was 23.5 percent.
Infrastructure
Procedures to start a business in Malawi have lessened as the government moves towards westernization. It takes approximately 39 days to start a business as of 2012 during which the entrepreneur has to file an application for the certificate of incorporation to the Registrar General in the Ministry of Justice; file the name with the Malawi revenue authority; obtain a seal; and pass several inspections for an approximately cost of 44000 MWK or 164.49 US dollars. However, Malawi is extremely behind in infrastructure; for example, to get electricity to a facility takes approximately 244 days as of 2012, 41 days to export goods, and 51 to import. According to the World Bank “Malawi stands at 139 in the ranking of 183 economies on the ease of doing business” (Doing Business, 16). Malawi’s telecommunications system has been rated as the worse in Africa but this is expected to improve with the new reforms. The country counts with 32 airports, 5 ports, and railways. Access to the sea is usually through Mozambique’s port. Internet is accessible but only a very small percentage of the population has access to it. Improving the quality of education for the middle class students still remains a major problem. Education is reserve for those who can pay the school tuition and fees but the elite class can afford to send their children to study abroad.
SWOT Analysis
Strengths
Malawi has an advantage in the mining industries. It is rich in uranium which is one of the world most important energy minerals. New projects are to start by 2014 to help improve the countries energy crisis by exploring and using the uranium as energy sources. China, Australia, and India are working closely with the government to improve and manage the countries mines. Globe metal and Mining, an Australian company, is already working on a new mine in the country.
Government is pro-western and has maintained good relationships with foreign partners. Governmental policies, laws, and even officials tend to favor the pro-westernization. This creates an advantage for the US entrepreneurs and makes the country more attractive towards investments. It also allows them to enjoy good terms of trade with developed countries and receive monetary aid from several international institutions.
Malawi borders one of the biggest lakes of Africa. Lake Malawi is one of the main attractions of tourism offered by the country. It is home to hundreds of endemic species and beauty landscape. Malawi offers “Kayaking, sailing, snorkelling, scuba diving and water skiing are just some of the lake activities available to visitors. Journeys by lake range from the famous motor vessel the Ilala to sailing in an ocean-going yacht. Cruises into the upper reaches of the great Shire River are also possible” (http://www.malawitourism.com/pages/content/index.asp?PageID=70) Other strengths include a political stable government and inexpensive labor. Weaknesses
There is a drug problem in Malawi. The best drug in Africa is cultivated in Malawi, called the Malawian Gold. These plants are cultivated in the Northern and Central region and are said to be the finest marijuana of the world. It is common and sociably accepted; women tend to the fields while the men do the transactions. The government has established Drug Fight Malawi Regional offices but little results have been seen from them.
There is no fuel source in Malawi, all must be imported. Electricity is a luxury in the country and it consumes most of the government revenues. Any business industry suffers from the lack of energy and cannot be exploited if there is no sufficient electricity within the country.
Health related issues are major weaknesses in the country. HIV/AIDS is extremely abundant. Yellow fever, malaria, and rabies are common. Water is said to be contaminated and is not recommended for drinking. The hospitals suffer from lack of medicine, sanitation, and of technology. There is also lack of education regarding personal health especially on the rural areas which are filled with medicine man that cure the spirits and are highly regarded among the tribes but with little to no medical education, contributing to the high mortality rate of the country.
Corruption is has been Malawi’s weakness since it became independent. The government created organization and bureaus to fight internal corruption in the past but with no result. Nevertheless, Banda’s new policies are turning to be more restrictive and less lenient towards the deviation of the international aid and of public funds. In an article released last month she gave only a month to report prior acts without prosecution. She stated that “If this information does not reach my office by the 18th of June, 2012 and it is later discovered, there will be no sympathy for those involved”. (Wezzi, 1) http://www.maravipost.com/malawi-national-news/malawi-political-news/979-pres-joyce-banda-to-govt-officials-you%E2%80%99ve-a-month-to-expose-corruption.html Opportunities
Malawi is a small country but it has a very fertile land. According to some studies done in the 2011 Malawi have extensive unexploited areas where rare earth elements can be exploited. Rare Earth Elements are a set of chemical elements that occur in the same ore. The type of metal created by the compound is in high demand in today’s society, it are used to in IPods, GPS, Plasmas, missiles, etc. China is the major producer of this metal and has been placing export restrictions on it and announcing more cutbacks on its exports, Malawi could benefit from this and supply the rest of the world with the minerals. Also an increase on the agricultural products and investments in industrial farming could help grow the economy.
Threats
The country is landlocked. All the international trade has to either come by air or pass by another country. Luckily, the Malawian government understands the importance of the maintaining a good relationship with its neighbors and has remained neutral in its conflicts. Malawi has helped the refugees of war when civil war has erupted, like in the case of Mozambique, and had donated food to other countries principally maize. If these ties were to break Malawi will be left fighting for access to the sea with no sea port to trade.
The economy is highly dependent of international monetary aid. In prior years the IMF has cut back the funding because the government failure to follow its indications and the world recession; this has caused internal famine and desperation. The government is tied to what the IMF recommends and this might cause internal conflict as new governmental policies can directly affect the people’s lifestyle.
Conclusions and Recommendations
The government should concentrate in the country’s mining industry. There is high demand for the rare earth minerals, Malawi is in desperate need of an energy source powered by the uranium it has, and not to forget the deposits of rubies and sapphires that could also be exported. Developing policies that will facilitate the exploitation of its raw minerals, the import of the equipment needed to mine, and the facilitation of exporting the minerals could make the country more attractive to investors and allow sufficient revenue to become independent of the IMF in the future. Nevertheless, as any African country Malawi has to undergo many internal changes in order to lift its dependency and provide a better lifestyle to its citizens. Hopefully this new government can move the country to achieve its fully potential.