Sustainable Development Impacts of Investment Incentives: A Case Study of Malawi's Tourism Sector

This case study examines the impact of investment incentives on the tourism sector in Malawi, finding that such incentives are not the primary driver of foreign direct investment (FDI) and may conflict with sustainable development goals.

• Investment incentives are not the determining factor for foreign direct investment (FDI) in Malawi's tourism sector. Instead, investment decisions are primarily driven by natural resources, raw material costs, cheap labour, and economic indicators such as inflation, interest rates, and foreign exchange. Furthermore, 80% of interviewed tourism-sector investors stated they would have established their businesses in Malawi regardless of the existence of investment incentives, and the incentives did not influence the nature of their business establishment.
• Current investment incentives in Malawi's tourism sector, including tax holidays, tax rate reductions, and allowances, conflict with basic sustainable and environmental development principles. Analysis of the top ten imports qualifying for these incentives indicates that policy targets have been missed.
• Bureaucratic hurdles at the Malawi Revenue Authority, the agency responsible for implementation, hinder the use of incentives. The process for following up on waivers is described as long and expensive, sometimes outweighing the value of the incentive itself. The document recommends simplifying the application and granting process for waivers to reduce costs and time for investors.
• The document suggests several areas for policy reorientation to better support sustainable development and the wider society, including: consulting local communities during planning, creating private sector partnerships, liberalizing immigration regulations for tourists, and developing a tourism infrastructure policy. Additionally, it calls for a policy to ensure tourism benefits are spread more evenly across society and the creation of clear, measurable, and specific incentives targeting particular activities or operators.

APA

Kiratu,, N. N. (2010). Sustainable Development Impacts of Investment Incentives: A Case Study of Malawi's Tourism Sector. International Institute for Sustainable Development. https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-malawis

Chicago

Kiratu,, Nelson Nsiku,Sheila. Sustainable Development Impacts of Investment Incentives: A Case Study of Malawi's Tourism Sector. International Institute for Sustainable Development, 2010. https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-malawis.

Wikipedia

{{cite report |last1=Kiratu, |first1=Nelson Nsiku,Sheila |title=Sustainable Development Impacts of Investment Incentives: A Case Study of Malawi's Tourism Sector |publisher=International Institute for Sustainable Development |date=10 February 2010 |url=https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-malawis |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kiratu2010sustainable, author = {Kiratu,, Nelson Nsiku,Sheila}, title = {{Sustainable Development Impacts of Investment Incentives: A Case Study of Malawi's Tourism Sector}}, institution = {International Institute for Sustainable Development}, year = {2010}, month = feb, url = {https://www.iisd.org/publications/report/sustainable-development-impacts-investment-incentives-case-study-malawis}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }