Overview

  • Located in southern Africa, Malawi is landlocked and shares a border with Mozambique, Zambia and Tanzania. According to the 2018 Census, the country has an estimated population of 17.5 million, up from 13.02 in 2008.

    In the past decade, Malawi has been able to make significant economic and structural reforms and sustain economic growth but remains one of the poorest countries in the world. The economy is heavily dependent on agriculture, and it is vulnerable to external shocks.

    The country’s development is guided by the Malawi Growth and Development Strategy (MGDS), a series of five-year plans that contribute to the long-term development goals outlined in Vision 2020. Currently in MGDS III, with the theme “Building a Productive, Competitive and Resilient Nation,” will run through 2022 and focuses on education, energy, agriculture, health and tourism.

    Political Context

    Malawi is generally a peaceful country that has had stable governments since independence in 1964. One-party rule ended in 1993, and since then the country has held multi-party presidential and parliamentary elections every five years.

    The country’s 6th tripartite elections will be held on May 21, 2019. President Peter Mutharika, who was first elected in 2014, will stand for re-election. Other major parties contesting for presidency are the Malawi Congress Party, United Democratic Front, and the United Transformation Movement led by current Vice President Saulos Chilima.

    Economic Overview

    In 2018, growth of Malawi’s real gross domestic product (GDP) is projected to have moderated to 3.5% from 4% in 2017. This is due to lower output in agriculture caused by dry spells and fall armyworm infestation. Performance in industry and service sectors was also subdued because of erratic energy supply and a generally weak business environment.

    The FY2017/18 fiscal deficit widened from 4.8% the previous year to 7.8% of GDP. The deterioration was largely a result of lower than expected revenues and grants, securitization of payment arrears dating back to FY2012/13, and expenditure associated with the bailout of a parastatal. Year-on-year headline inflation has receded to single digit reaching an annual average headline rate of 9.2% in 2018. Continued stability of the Kwacha relative to the US Dollar since 2017 has partly helped contain inflation in single digits. The Reserve Bank of Malawi reduced its policy interest rate to 14.5% in early 2019.

    Social Context

    Malawi has made progress in building its human capital—the knowledge, skills and health that people accumulate over their lives—in recent years. Life expectancy is up to 64.2 years in 2018 (World Health Organization) from 63.9 in 2017. The total fertility rate in 2015/16 was 4.4 children per woman down from 6.7 in 1992. Self-reported literacy (reading and writing in any language) is 81% for males and 66% for females (15+ years of age). However, poverty and inequality remain stubbornly high. The national poverty rate increased slightly from 50.7% in 2010 to 51.5% in 2016, but extreme national poverty decreased from 24.5% in 2010/11 to 20.1 in 2016/17. Poverty is driven by poor performance of the agriculture sector, volatile economic growth, population growth, and limited opportunities in non-farm activities.

    Development Challenges

    Malawi’s development challenges are multi-pronged, including vulnerability to external shocks such as weather and health. Weather remains a key part of the economic cycle, with the negative impact of bad weather compounded by factors such as population growth and environmental degradation. Energy shortages still stand out, with about 11% of the population having access to electricity. Infrastructure development, the manufacturing base, and adoption of new technology are low, and corruption levels remain high with Transparency International ranking Malawi at 122/180 economies in 2018.

    Last Updated: Apr 12, 2019

  • World Bank Engagement in Malawi

    The new World Bank Group Country Partnership Framework (CPF) for Malawi is planned for delivery in the first quarter of FY20. Stakeholder consultations to develop the CPF were held in July-August 2018 across the country.

    The CPF is expected to focus on human capital, growth and job/wealth creation, governance and macro economy, energy and infrastructure; and environmental and rural resilience. 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, and (5) health and population.

    The current portfolio comprises 15 projects with a total commitment of about $1.13 billion. Four of the projects are regional. The key sectors include agriculture, education, energy, mining, water, finance, private sector development, social protection, responding to natural disasters, and natural resources management.

    International Finance Corporation (IFC)

    In Malawi, the IFC is focusing on infrastructure, finance and insurance; agribusiness and forestry, construction and real estate for both investment and advisory services. IFC is supporting value addition enterprises in the agribusiness sector, along with 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 small-medium enterprises (SMEs), and the implementation of collateral registry and credit reference systems.

    Under the infrastructure and natural resources program, IFC is primarily oriented towards providing public-private partnership 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. Currently, IFC is working on the development of a hydropower project, public-private partnerships in the water and agriculture sectors, and development of various cost-effective energy efficiency and captive power solutions in the large estates. 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 $15.3 million.  

    Last Updated: Apr 12, 2019

  • The World Bank Group (WBG) continues to contribute to Malawi’s development performance in various sectors. Here are latest results from some of its active projects:

    Making Malawi’s Agricultural Markets Work Better

    Malawi has benefitted from an $80 million Development Policy Operation (DPO) which supported a series of policy and institutional reforms that the government is undertaking to reduce distortions in, and improve the performance of, the agricultural sector; and to restore basic public financial management and accountability systems. The following results were achieved in reforming agricultural markets:

    • Farm Input Subsidy Program reformed by allowing private suppliers to retail inputs to beneficiaries via a coupon model, resulting in 79% of the fertilizer retailed by the private sector, far exceeding the target of 60%. Development of Strategic Grain Reserve guidelines prescribing the rules for drawing down of grain in three major situations of emergency, non-emergency, and price stabilization.  The guidelines specify the steps to be followed, the actors, and the timeframes for taking action.   Enactment of 10, bills affecting access to land.

    Changing the face of higher education to meet the needs of a growing and diversifying economy

    Under the Skills Development Project, public universities have constructed new science laboratories and lecture theaters to create space for increasing intake in science subjects. The universities are UNIMA (Chancellor College and Polytechnic), LUANAR, and MZUNI which is constructing a tourism school. New courses have also been introduced with the Polytechnic launching 10 new technician level engineering diploma programs to transform availability of skilled technicians. Other skills courses are running at TEVETA. In the various universities, more faculty members are being trained at Masters’ and PhD levels. The project has establishment the National Council for Higher Education to regulate higher education.

    Rolling Back Tuberculosis (TB)

    The 2013 Malawi TB prevalence survey findings suggest that about half of the cases remain undetected. The situation is now changing through support of the Southern African Tuberculosis and Health Systems Support Project. Case finding activities have increased through community awareness campaigns in districts with mining activities, complemented by community sputum collection points. Mines have improved their safety standards and good hygiene practices. A sourcebook on TB for primary schools has been developed and ready for use by teachers.  

    Last Updated: Apr 12, 2019

  • 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. Government and its cooperating partners have a Development Cooperation Strategy (DCS 2014-2018) which is currently being updated.  It guides development cooperation in the country. 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 poor citizens and encourages partnerships among development actors based on mutual trust, transparency, and accountability.

    Last Updated: Apr 12, 2019

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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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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
For general information and inquiries
Henry Chimbali
Communications Officer
+265-1-770-611
hchimbali@worldbank.org
For project-related issues and complaints
malawialert@worldbank.org