Consultant to Develop the Regulatory Framework for Special Economic Zones (SEZs) in Malawi

Consultancies

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Result of Service

  1. To develop the regulatory framework for Special Economic Zones (SEZs) in Malawi; and
  2. To ensure alignment and harmonization of the existing industrial policy framework with the regulations.
Expected duration

Two (2) Months
Duties and Responsibilities

Introduction and Background
Supporting Inclusive Industrialization through Special Economic Zones (SEZs) in Malawi
The development of Special Economic Zones (SEZs) is one of the strategic tools towards supporting inclusive industrialization for job creation and poverty and inequality reduction. Although SEZs have diverse characteristics and are called different names in different jurisdictions – export processing zones, industrial parks, free trade zones, etc – their key defining elements include: a distinct and demarcated geographical area under a unique regulatory regime distinct from the rest of the economy, most often with specially configured customs and fiscal rules, foreign ownership rules, access to land and employment rules and the guaranteed availability of infrastructure support. As a precursor to the SEZ initiative, the Government of Malawi (GoM) had initially taken the Export Processing Zone (EPZ) route (via the EPZ Act 1995) to provide a “more liberal administrative, regulatory, and fiscal regime as well as retaining the designation of a foreign territory such that all imported goods into the zone are duty free”.
Furthermore, under the Malawian EPZ environment, incentives are provided regardless of location and businesses are not required to locate within a designated zone in order to receive incentives and privileges. As such, the result was the establishment of single factory EPZ units all over the country. This has resulted in inefficiencies from the point of (i) monitoring the EPZ activities, (ii) provision of support services and infrastructure, and (iii) developing clusters and linkages to the domestic economy.
Special Economic Zones Policy, Legal, Regulatory and Institutional Framework
The Government of Malawi (GoM) is in the process of facilitating the establishment of SEZs in the country with the aim of spurring industrialization through increasing productivity, value addition, export development and import substitution utilizing SEZs. The SEZs are envisioned to target investment in agro-processing, manufacturing (export and domestic-oriented), textiles and clothing, and technology sectors in which the country already has some comparative and competitive advantage and are strategically important for triggering economic growth and stimulating employment. The establishment of SEZs will accelerate economic growth and diversify exports in line with Malawi 2063 and and its first 10-year implementation plan (MIP1); the draft National Industrial Policy (2024-2029) which recognizes the importance of SEZs for export development and import substitution; the National Export Strategy II (NES II) which has prioritized specific value chains that feed into the industrialisation agenda and bolster the growth of both domestic and export-focused businesses; the National Strategy (2021-2026) for the African Continental Free Trade Agreement (AfCFTA) which places an emphasis on agricultural productivity and commercialization, with linkages to downstream activities of agro-processing, and also seeks to promote value chain development at both national and regional levels; and, finally, the country’s new Mega Farms initiative which seeks to ramp up agricultural production and enhance the competitiveness of the sector.
To this end, a Special Economic Zones Act was assented in February, 2024 and the Government of Malawi has requested technical support from the United Nations Economic Commission for Africa (ECA) Sub-regional Office for Southern Africa (SRO-SA) to operationalize the Act. The SEZs Act intends to address many of the aforementioned challenges through promulgation of a new and comprehensive legal regime to effectively regulate SEZs. However, the Act cannot be enforced without the attendant regulations to support implementation. It is against this background that GoM through its Ministry of Trade and Industry (MoTI), with support from ECA SRO-SA, would like to engage a consultant to review the SEZs policy framework and develop the attendant regulations to support implementation of the Act. The work will be undertaken in partnership with the Malawi Investment and Trade Centre (MITC), which is the SEZs Authority responsible for implementation of the Act and superintendent of the SEZs regime. The regulations are aimed at operationalizing the Act and providing regulatory instruments to guide implementing agencies, particularly the SEZ Board(s), as well as provide transparency to the private sector, including domestic and foreign investors making use of SEZs facilities.
Duties and Responsibilities
ECA SRO-SA, the Ministry of Trade and Industry and Malawi Investment and Trade Centre will jointly supervise the consultants. The consultants will report to the Economic Affairs Officer, working closely with the Chief of the Inclusive Industrialization Section at ECA SRO-SA. The Deputy Director in the Department of Industry, MoTI will be the contact point for the Government of Malawi.
Specifically the consultant will be expected to:
  1. Develop modern and best practices regulations that are in line with the SEZs Act.
  2. Develop the governance and management regulations for the SEZ Board(s).
  3. Develop regulations that will define institutional roles, responsibilities (including KPIs), powers and procedures for establishing and implementing SEZs in Malawi and financing mechanisms for the concerned institutions.
  4. Ensure the SEZ regulations are in alignment with the National Industrial Policy – which anchors SEZs – and other related policy frameworks.

Scope The scope of the work will include but not limited to:

  1. Summarizing from existing studies, the indicative key achievements, (regulatory) challenges and lessons learnt from implementation of the EPZ regime with reference to government objectives, to captured in a short appendum;
  2. Reviewing the EPZ Act (2013) and Regulations (2020), the Investment and Export Promotion Act (2024), the draft National Industrial Policy (NIP 2024), NES II (2021- 2026) and other relevant existing strategies, policies, laws and regulations to provide policy and regulatory direction for SEZs in Malawi to inform the drafting process and to ensure alignment;
  3. Identifying and assessing benchmark countries in formulating the SEZs regulatory framework for Malawi; Policy framework: The policy framework sets out the broad parameters including the expectations and responsibilities of government and other key stakeholders. The scope of work will include, inter alia:
  4. Undertaking an assessment of the SEZs policy framework, particularly the National Industrial Policy, to ensure the SEZ regulations are drafted in alignment;
  5. Identification of gaps in the SEZs policy framework and proferring of recommendations drawing on best practice from benchmark countries, for consideration in the future; Regulatory framework: The (legal and) regulatory framework(s) make the policy aspirations justiciable. The scope of work will include, inter alia:
  6. Summarizing the existing legal and regulatory frameworks relevant/applicable to the SEZs regulatory framework;
  7. Drafting comprehensive SEZs Regulations for Malawi in consultation with stakeholders, ensuring harmony with other relevant national regulations (e.g. EPZs Regulation) as well as drawing from benchmark countries;
  8. Drafting specific governance and management regulations for the SEZ Board(s);
  9. Assessing if there are may be any legal/regulatory/procedural hurdles that would impede effective implementation of the SEZs Act and Regulations, identifying the existing regulations that may need recalibration, and proffering recommendations to refine these;
  10. Developing a roadmap with timelines for the completion of any adjustments needed on existing regulation and documents; and, Policy and regulatory frameworks:
  11. Facilitating the validation and finalization of the policy and regulatory framework report by local stakeholders. The regulatory framework should be gender sensitive supporting women and youth enterprises to benefit from the opportunities arising from the development of SEZs in Malawi. The regulations on labour issues in the SEZs should emphasize the need for decent work and the development of a conducive operating environment for all stakeholders and the equitable distribution of benefits. The regulatory framework should be cognisant of specific environmental regulations dealing with the circular economy issues in the value chains.

The consultancy will also be undertaken in full collaboration and participation of the UN Country Team and the UN Resident Coordinator’s Office in Malawi, leveraging already existing collaboration within the UN Sustainable Development Cooperation Framework (UNSDCF) in the country. ECA SRO-SA is actively involved in the work of the ‘Sustainable, Diversified, and Inclusive Growth’ Pillar of the UNSDCF in Malawi where the focus is on inclusive economic transformation, improved productivity and incomes and balancing economic, social, and environmental goals for sustainability. Specifically, the growth pillar is aligned to Malawi 2063 with the objective of increasing agricultural productivity and commercialization and diversifying the economy in an inclusive manner, including through industrialization, mining, tourism development and digitalization, while at the same time improving food security and employment creation especially for the most vulnerable. Collaboration with COMESA and SADC will ensure harmonization and alignment of the national SEZs policy and regulatory framework with the regional directions and support the growth of regional value chains.

Qualifications/special skills

  • An advanced Masters Degree in Law (Commercial and Corporate LLB) is required. A first degree with Two additional years of experience could be acceptable in lieu of the Advanced Degree.
  • At least 10 years professional experience in legislative drafting.
  • Demonstrable experience in reviewing policy documents related to industrialization and trade.
  • Experience in dealing with Government processes and proven ability to work well at high-level with Government officials, private sector, donor community and civil society.
  • Excellent knowledge of Public Service and private sector.
  • Excellent communication and writing skills in English reforms.
  • Working understanding of industrialization and trade Taxation and banking experience is desirable
Languages

English and French are the working languages of the United Nations, for this assignment, Fluency in English both written and oral are required .

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