Overview

  • Country Overview

    The Southern African nation of Malawi is bordered by Mozambique to the south and west, Zambia to the east, and Tanzania to the north. As of 2015, it has an estimated population of 17.2 million. With the support of the International Monetary Fund (IMF) and the World Bank, Malawi has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade. Nevertheless, poverty is still widespread and the economy remains undiversified and vulnerable to external shocks.

    Political Context

    Malawi continues to enjoy a stable and democratic government. Since the end of the one party regime in 1993, it has organized five peaceful presidential and parliamentary elections, one of which was a tripartite including local government elections. Current president Prof. Arthur Peter Mutharika is in his first five-year term which started in 2014. The next elections are due in 2019.

    Economic Overview

    Real gross domestic product (GDP) grew by 5.7% in 2014, but slowed down to 2.5% in 2016 after two consecutive years of drought, which has adversely affected the performance of agriculture, which accounts for about a third of the country’s GDP.  Flooding in southern districts, followed by countrywide drought conditions, caused a decline in agricultural production. Maize, the key crop for food security purposes, had a 30.2% year-on-year drop in production. With the decline in maize production, the Malawi Vulnerability Assessment Committee estimates that 6.5 million people will require food assistance.

    The major challenge for the government continues to be balancing its efforts to restore fiscal discipline with its efforts to effectively respond to the need to address Malawi’s food security needs. The extent to which the government succeeds in this endeavor will have a major impact on the economic outlook for 2017 and for the medium-term outlook. With persistently large deficits (projected to reach the equivalent of 4.1% of GDP in FY2016/17), Malawi has very limited fiscal space to respond to the crisis. The Government continues to face a number of significant risks, mostly related to a second consecutive year of adverse weather; the threat of yet another climatic shock (La Niña); declining and volatile on-budget ODA flows; persistently high inflation (overall annual rate expected to stand at 22.5%); and weak global demand for Malawi’s agricultural produce.

    Social Context

    Encouraging progress has been made in terms of human development over recent years. However, poverty and inequality remain stubbornly high in Malawi.  Poverty has been increasing in rural areas where 85% of the population lives, compared to urban areas where it fell significantly from 25 to 17%. A key obstacle to reducing poverty is low agricultural productivity. The majority of the poor remain locked in low productivity subsistence farming. New estimates on poverty numbers are expected in 2017. 

    Development Challenges

    Malawi is currently facing twin pressures arising from two separate issues - vulnerability to climate induced shocks and fiscal management challenges. Both issues would be causing macroeconomic instability on their own, but together the impact is amplified. Climate shocks such as floods and droughts have made food security a recurrent challenge, and have exacerbated energy and water delivery which are adversely affecting private sector investment. Other challenges include addressing a scarcity of skilled human resources, provision of health care, and managing population growth.

    Last Updated: Jan 23, 2017

  • World Bank Group Engagement in Malawi

    The World Bank Group’s Country Assistance Strategy (CAS 2013-2016) for Malawi has been extended to FY2017. The next Country Partnership Framework is due in 2018.

    The current CAS is organized around three main pillars: (1) promoting sustainable, diversified and inclusive growth; (2) enhancing human capital and reducing vulnerabilities, and (3) mainstreaming governance for enhanced development effectiveness. The current portfolio comprises 11 national projects with a total commitment of about $849 million and four regional projects with a commitment of $128 million. The key sectors addressed in the whole portfolio include: agriculture, education, energy, mining, water, finance, private sector development, social protection, natural resources management, nutrition and HIV/AIDS.

    International Finance Corporation (IFC)

    IFC in Malawi is focusing on identifying investment opportunities in agribusiness and banking (SME finance), advisory opportunities in PPP (water and energy), and improvement of the business climate by streamlining business processes. IFC is also active in the agribusiness sector, aiming to help Malawi diversify its export base and improve the livelihood of producers as well as providing advisory support to the Malawi Warehouse Receipt System. IFC’s portfolio in Malawi consists of five projects with a total committed balance of $28.9 million as of the end of June 2016.  

    Last Updated: Jan 23, 2017

  • Among others, the World Bank Group (WBG) has contributed to Malawi’s development performance in the following areas:

    Improving the Ease of Doing Business

    IFC and the Bank have worked together to help Malawi improve its doing business performance. In 2016, there were three outstanding improvements: 1. The Personal Property Security Registry system, that enables all businesses use movable assets to get a loan. 2. The Malawi Business Registration System (MBRS) facilitates online registration of businesses, and automatically generates a taxpayer identification; 3. The trade portal, a one-stop website for trade related regulatory information on import, export and transit trade. 

    Improving Public Financial Management (PFM)

    The government has been facing deep challenges related to PFM especially after the embezzlement of government funds that was dubbed “cashgate.”  Through the Financial Reporting and Oversight Improvement Project (FROIP) “cashgate” related challenges are being addressed. The government has cleared the backlog in its financial reporting obligations, becoming current for the first time in a decade. A payroll audit has cleaned up the wage bill. Information security has been strengthened to help close the loopholes that allowed “cashgate” to happen. The existing IFMIS has been reinforced and a successor system is under competitive procurement.

    Responding to natural disasters

    In January 2015 Malawi was hit by floods which destroyed livelihoods of millions of people. The Bank responded through the Malawi Floods Emergency Recovery Project which provided agricultural inputs that improved productivity and cash that helped meet other needs. Communities have rehabilitated and reconstructed infrastructure essential for public service delivery and economic recovery.  By end 2016, about 1,400 hectares of irrigation schemes, 480 hectares of afforestation, and just over 1,500 km of roads had been restored or rehabilitated benefitting 81,097 people. Through various irrigation schemes, communities testify how they are now financially resourced to build better houses, buy household property, and send their children to schools that have been built-back-better.

    Countering drought and disease for improved food security

    The Agricultural Sector Wide Approach - Support Project is a multi-faceted project whose aim is to improve the effectiveness of investments aimed at food security and sustainable agricultural growth. The Farm Input Subsidy Program has been improved allowing greater private sector participation, and better beneficiary targeting. Farmers have benefited from drought-resistant cassava and sweet potato planting materials to strengthen food security in 2016/2017. The banana industry is being resuscitated after an attack by the banana bunchy top virus disease.  5,218 farmers (3,351 females) have benefitted from clean banana plantlets. Soil maps have been produced to help in proposals for fertilizer recommendation. The project has also supported the review of key policies that will lead to the commercialization of agriculture.  

    Higher Level Skills Development

    Under the Skills Development Project, the Bank has supported four university and one vocational level institution develop and implement institutional improvement plans which cover increasing student enrolment, improving infrastructure, development of programs responsive to the country’s economic development needs in consultation with the private sector, and staff development. Student enrolment in targeted priority programs such as science teachers, agribusiness, and engineers increased by at least 70 percent. Two of the institutions now have open distance learning modules and centers running. TEVETA, the vocational training authority has developed a harmonized curriculum, assessment and certification framework for 11 programs, a major reform area for the technical and vocational education subsector. 

    Last Updated: Jan 23, 2017

  • The European Union, African Development Bank, United Nations agencies, bilateral donors such as DFID, USAID, Germany, Norway, and China, World Bank Group, and IMF are among Malawi’s key partners. In 2014, the Malawi Government and its cooperating partners endorsed a Development Cooperation Strategy (DCS) to guide development cooperation in the country from 2014 to 2018. The strategy is in line with principles encapsulated in the Paris Declaration on Aid Effectiveness, the Accra Agenda for Action, and the Busan Global Partnership for Effective Development Cooperation. The DCS advocates for inclusive partnerships, government leadership and country ownership of the national development agenda, and alignment around national systems and strategies. It also embraces a focus on results that matter to the poor. The DCS encourages partnerships among development actors based on mutual trust; and transparency and accountability to one another.

    Last Updated: Jan 23, 2017

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LENDING

Malawi: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

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In Depth

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Africa's Pulse, No. 15, April 2017

Economic growth in Sub-Saharan Africa is projected to recover to 2.6 percent in 2017, following a marked deceleration in 2016.

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International Development Association (IDA) in Africa

IDA, the World Bank’s fund for the poorest, contributes nearly 50% of its funds to 39 African countries.

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World Bank Africa Multimedia

Watch, listen and click through the latest videos, podcasts and slideshows highlighting the World Bank’s work in Sub-Saharan Africa.

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Doing Business in Malawi

The Doing Business Project provides objective measures of business regulations and their enforcement. See where Malawi ranks on the "Ease ...

Additional Resources

Country Office Contacts

Main Office Contact
Mulanje House, City Centre
Lilongwe 3, Malawi
+265-1-770-611
Lilongwe
Zeria N. Banda
Communications Officer
+265-943223
zbanda@worldbank.org
Washington
Preeti Arora
Country Program Coordinator
1818 H Street NW
Washington, DC 20433
+1-202-458-4097
parora@worldbank.org