The multibillion kwacha Magwero Industrial Project in Lilongwe has drawn discomfort in the ranks and file of the Malawi Investment Trade Centre on account of Secretary to Treasury’s “illegal” directive relating to 417 hectares of land earmarked for the investment
By Chimwemwe Mangazi:
To break or to not break laws?
This is the question that has pitted government authorities against each other.
The confrontation is over the implementation of the Magwero Industrial Park (MIP) investment.
On June 1, 2024 President Lazarus Chakwera flanked by Gagan Gupta, president and founder of Arise IIP, and Benedict Oramah, president of Afrexim bank, launched the project in Lilongwe.
The launch followed a contract signed in June 2023, between the Government of Malawi, represented by the Export Development Fund (EDF), and Arise Integrated Industrial Platforms (Arise IIP).
Details show that the government institutions are at odds over a potential violation of multiple statutory regulations in the allocation of land for the project.
Ordinarily, the expectation is that the investor would pump money into the project.
The fear is that Malawi could lose money so that it can have the project.
On August 19, 2024, Secretary to Treasury Betchani Tchereni issued a memo, addressed to Secretary for Lands and Malawi Investment Trade Centre (MITC) CEO, announcing a waiver of premium charges and annual rent for the MIP on the 417 hectares of land in Area 55 in Lilongwe.
The total value of this waiver, the memo says, amounts to K130.3 billion for premium charges and K15.6 billion for annual rent.
“Kindly note that given the strategic nature of this project, government has granted a waiver of the premium charges and annual rent,” reads the memo, effectively giving the green light to the land allocation.
However, we have it on good authority that the decision did not sit well with some officials at MITC.
At law, MITC is the custodian of the land in question.
Officials there sought a legal opinion from Mbendera & Nkhono Associates.
A copy of the legal opinion, which we have seen and dated December 31, 2024, indicates that Tchereni committed several legal transgressions in authorising the land waiver, as requested by the Export Development Fund (EDF).
According to the legal opinion, the fundamental error lies in the lack of statutory authority for Tchereni to waive land-related charges.
It notes that the Investment and Export Promotion Act explicitly limits incentives to fiscal mechanisms such as tax allowances and duty drawbacks.
These can only be granted by the Minister of Finance.
By unilaterally waiving premium charges and annual rent totalling over K130 billion, the Secretary to Treasury exceeded his legal mandate.
It further highlights that the Public Finance Management Act strictly prohibits transferring public assets without proper justification.
It refers to Section 15(2) as preventing loaning or transferring public assets for purposes outside an institution’s core functions.
The opinion further states that by effectively giving away a public asset worth billions of kwacha, the Secretary risked reducing MITC’s asset base without providing a legally sound justification.
The legal opinion suggests that such transfers require explicit motivation and legal sanction, neither of which appears to have been provided.
A separate copy of legal opinion from Attorney General Thabo Chakaka Nyirenda also advises against an outright free allocation of land.
However, the Attorney General suggests an alternative approach:
“The amounts payable could be recognised as government equity contribution in the investment company, through a government nominated agency for that purpose.”
We have gathered that despite the advice, the MITC Board passed a resolution to issue the lease to MIP as announced by Secretary to Treasury.
We have also seen a copy of the drafted offer letter of a sublease to MIP ready to be signed by the MITC Board Chairperson effecting the release of the land on February 1 2025.
In an interview Friday, Tchereni characterised the transaction as a critical economic strategy aligned with Malawi’s developmental state philosophy, rather than an arbitrary financial decision.
He said the MIP investment, totalling approximately K700 billion, represents nearly 13 percent of the national budget.
He argued that the project is structured as a special purpose vehicle where the government holds a direct shareholding alongside Arise, ensuring it is not a simple giveaway to a private investor.
“A developmental state looks at multiple dimensions. We need to create export incentives to promote value addition and industrialisation. This guided the decision-making process,” Tchereni said.
He added that the economic rationale extends beyond immediate financial considerations.
“We evaluated potential job creation, foreign exchange generation, tax collection, and complex economic linkages.
“Of particular significance are the forward-backward-sideways benefits, including potential market opportunities for local farmers and substantial foreign exchange savings through localised production.
“This is a question of economics and not politics or ego. The land allocation is a calculated economic intervention designed to accelerate national development objectives,” Tchereni said.
MITC Board Chairman Godwin Ng’oma referred us to MITC management.
MITC Chief Executive Officer Paul Kwengwere said MIP project is a special purpose vehicle that will have Arise, an Indian company that specialises in developing Special Economic Zones, and the Malawi Government shareholding.
He said the shareholders agreement is yet to be finalised, hence MITC cannot competently say how much the government and Arise will be putting in the special purpose vehicle (SPV).
“The land 417 hectares that is being given to the SPV is not necessarily for free,” he said.
According to him, MITC it is being considered as government’s contribution to shareholding as advised by the Attorney General.
“It should be noted that MITC is a Special Economic Zones Authority, hence it is not involved much in the establishment. EDF is the department that is taking government shareholding,” Kwengwere said.
0 Comments