Overview

  • Country Overview

    The Southern African nation of Malawi contains Lake Malawi, one of Africa's largest, longest lakes, and is bordered by Mozambique to the south and west, Zambia to the east, and Tanzania to the north. It has an estimated population of 18 million (2016). With the support of the International Monetary Fund (IMF), the World Bank, and other development partners, 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 has had stable governments and a democratic multi-party system since the end of one-party rule in 1993. It has held five, peaceful presidential and parliamentary elections, one of which included local government elections. Its current political leader, President Arthur Peter Mutharika, was elected in 2014 and is in his first five-year term. The next elections are due in May 2019.

    Economic Overview

    In 2017, Malawi’s GDP growth rate is expected to rebound to about 4.5% from 2.5% in 2016. Improved weather patterns with increased rainfall in 2017 are expected to result in higher levels of agricultural output than were recorded in 2015 and 2016. Agriculture contributes 30% of GDP. The country's headline inflation rate continues to decelerate faster than anticipated, falling to 9.3% in August 2017, compared to 22.8% in August 2016. This downward trend has largely been due to a sustained decline in food prices resulting from the increased availability of maize, and a stable exchange rate.

    Sustainable growth is predicated on sound macroeconomic management and structural reforms to lay the foundations for a more resilient and diversified agriculture sector. For Malawi’s economy, the weather will remain a major part of the economic cycle, with the negative impact of bad weather compounded by factors such as population growth and environmental degradation.

    Social Context

    Encouraging progress has been made in terms of human development in recent years. However, poverty and inequality remain stubbornly high in Malawi. Rural poverty persists with one in two people still poor, driven by poor performance of the agriculture sector, volatile economic growth, population growth, and limited opportunities in non-farm activities. Life expectancy is up to 63.9 years in 2017 from 62.8 last year. 

    Development Challenges

    The macroeconomic outlook faces significant downside risks. These risks relate primarily to Malawi’s continued vulnerability to external shocks, amplified by the risks of fiscal slippages. The country (and its growth performance) is expected to remain vulnerable to climate variability for some time. Similarly, despite encouraging efforts towards fiscal consolidation, experience suggests that Malawi has struggled to contain recurrent expenditure over the political-business cycle. Elections are coming up in May 2019. Households’ welfare in Malawi remains vulnerable to natural shocks such as drought and flooding, and food price inflation. Building families’ resilience to shocks through investments in basic services, asset building, the improvement of early warning systems, and the revamping of safety-net programs continue to be the major challenges going forward. 

    Last Updated: Oct 10, 2017

  • World Bank Group Engagement in Malawi

    The World Bank Group new Country Partnership Framework (CPF) for Malawi is due in FY19. The CPF is expected to focus on growth and resilience, human development, and institutions for implementation. It will support the Third Malawi Growth and Development Strategy (2017-2022) which has five priority areas: (1) Agriculture and climate change; (2) Education and skills development; (3) Energy, industry, and tourism development; (4) Transport and ICT infrastructure; (5) Health and population.

    The current Bank strategy 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 15 projects with a total commitment of about $1.1 billion.  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)

    The IFC in Malawi is focusing on agribusiness, banking, improving the business climate, and advisory opportunities for PPPs in infrastructure. In the agribusiness sector, IFC is supporting value addition enterprises, diversification of the export base, and strengthening the warehouse receipts system. In the banking sector, it is providing advisory services to increase access to finance for SMEs, and the implementation of collateral registry and credit reference systems. Under the infrastructure and natural resources program, IFC is primarily oriented towards providing PPP advisory services in water, transport, and energy, and to support private sector involvement in the prioritized hydro-electric power projects identified in Malawi’s Integrated Resource Plan. Further, IFC is supporting an investment climate program aimed at implementing regulatory reforms. IFC’s portfolio in Malawi consists of five projects with a total committed balance of $26.4 million (as of July 2017).  

    Last Updated: Oct 10, 2017

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

    Improving agricultural productivity

    The Agricultural Productivity Program for Southern Africa (APPSA) is helping smallholder farmers improve the productivity of maize and rice using low cost technologies. For 3 years, the farmers have been participating in trials of the technologies, namely a System of Rice Intensification (SRI) and conservation agriculture for maize. The result has been at least a 50% increase in productivity for both staple food crops. This has in turn meant more income from harvest sales and the betterment of household welfare. The results will be shared with Zambia and Mozambique, which are also participating in APPSA and trying out other technologies.

    Development of policies to improve agricultural markets and fiscal management

    The Bank has been helping Malawi achieve its development goals through a program of policy and institutional actions or reforms supported through a Development Policy Operation (DPO) called  Agricultural Support and Fiscal Management Development Policy Financing. Through this DPO Malawi has completed a number of policy and institutional reforms that will improve incentives for private sector participation in agricultural markets, as well as undertaking reforms to strengthen fiscal management through more effective expenditure controls and greater transparency. Specific reform areas in agricultural markets include the Farm Input Subsidy Program, the Strategic Grain Reserve, the Agricultural Marketing and Development Corporation, legislation affecting access to land, and the social cash transfer program. Reforms in public financial management include civil service management, financial reporting and oversight. Examples include auditing the civil service payroll system, appointing controlling officers who are also held accountable for their votes, publishing audited financial statements up to 2014/15, and designing legislation to strengthen the National Audit Office. 

    Whereas the release of funds for the DPO (also called budget support) affirms confidence in the steps taken so far and a motivation to stay the course, Malawi still has much more to do in terms of reforms to strengthen overall governance and accountability and the better functioning of its institutions.

    Setting the stage for energy development

    Just about 10% of Malawi’s population has access to electricity. Malawi has a total installed generation capacity of 365MW against demand estimated at about 440MW. Almost all its power (98%) is from hydropower resources along the Shire River. The Bank has supported the country do feasibility studies for hydro-generation potential and regional interconnection. It has also supported the development of an integrated resource plan for least cost generation. All these have been completed under the Energy Sector Support Project (ESSUP). The infrastructure for energy distribution network is under the same project.

    Building back better after floods

    In 2015, Malawi was hit by floods that destroyed infrastructure in the education, health, agriculture and water sectors. The Bank responded through the Malawi Floods Emergency Recovery Project to rehabilitate and reconstruct infrastructure to standards more resilient to future floods. Work is still in progress but a number of results have already been achieved. So far, 20 of 80 targeted schools have been rehabilitated in nine districts benefiting about 26,500 pupils. In all the 15 affected districts, water supply distribution networks were damaged either partially or totally. The project has rehabilitated 3 gravity-fed rural water supply schemes in Chikwawa East Bank, Zomba Chingale, and Machinga Kawinga. Four treatment plants have been rehabilitated, together with storage tanks, conveyance mains, and distribution lines. An estimated 260,520 beneficiaries have benefitted from the interventions.

    Last Updated: Oct 10, 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 Government of Malawi 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 inclusive partnerships, government leadership and country ownership of the national development agenda, and alignment around national systems and strategies. It also embraces focusing on results that matter to the poor, and encourages partnerships among development actors based on mutual trust, transparency, and accountability.

    Last Updated: Oct 10, 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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A Rare Need for Urban Growth

Urbanization is often a problem but Malawi’s largely rural economy could do with more of it. It also has a chance to plan.

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Oct 11, 2017

Africa's Pulse, No. 16, October 2017

Africa needs to improve the quality of its education and teach basic skills to adults, too, says Africa’s Pulse.

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Oct 30, 2017

Monitoring Progress in Policy

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

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Oct 30, 2017

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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Oct 30, 2017

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 report provides objective measures of business regulations and their enforcement. See where your country ranks.

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