Overview

  • The Southern African nation of Malawi is landlocked sharing borders with Mozambique, Zambia and Tanzania, and an estimated population of 18 million (2016). Malawi has been able to make important economic and structural reforms and sustain its economic growth rates over the last decade. Nevertheless, poverty remains widespread, and the economy undiversified and vulnerable to external shocks. The country’s development is guided by a series of five-year growth and development strategies; the third strategy covering 2017-2022, focuses on education, energy, agriculture, health and tourism.

    Political Context

    Malawi will hold its 6th tripartite elections on May 21, 2019.  Current President Peter Mutharika was first elected in 2014 and 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.  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 holds multi-party presidential and parliamentary elections every five years.

    Economic Overview

    In 2018, Malawi’s real gross domestic product (GDP) is projected to moderate to 3.5% from 4% in 2017. This is due to lower output in agriculture caused by dry spells and fall armyworm infestation. Furthermore, performance in industry and service sectors was 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 7.3% of GDP. The deterioration was largely a result of lower than expected revenues and grants, securitization of payment arrears dating back to FY 2012/13 and expenditure associated with the bailout of a parastatal. Year-on-year headline inflation has receded to the Sub-Saharan Africa regional average rate standing at 9.3% in August 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 has maintained a tight monetary stance with its policy rate standing at 16%.

    Social Context

    Encouraging progress has been made in human development in recent years. Life expectancy is up to 64.2 years in 2018 (WHO) from 63.9 years in 2017. The total fertility rate is down to 4.4 children per woman from 6.7 between 1992-2015/16. Self-reported literacy (reading and writing in any language) is 81% percent for males and 66% for females (15+ years of age). However, poverty and inequality remain stubbornly high.  National poverty rate has increased slightly from 50.7% in 2010 to 51.5 percent in 2016, but extreme national poverty has 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 challenges are multi-pronged. Vulnerability to external shocks (e.g. weather, health) is a major challenge. The weather will remain a key part of the economic cycle, with the negative impact of bad weather compounded by factors such as population growth and environmental degradation. Shortage of energy still stands out with about 10% of the population having access to electricity. Infrastructure development, the manufacturing base, and adoption of technology are low. Corruption levels remain high with Transparency International ranking Malawi at 122/180 economies in 2017.

    Last Updated: Oct 10, 2018

  • World Bank Engagement in Malawi

    In preparation for the FY19 World Bank Group Country Partnership Framework (CPF), stakeholder consultations were held across the country in July and August 2018. Based on the results, the CPF is expected to focus on human capital, governance and macroeconomy; energy and infrastructure; and environmental and rural resilience. The CPF FY19 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.

    International Finance Corporation (IFC)

    In Malawi, the IFC is focusing on infrastructure, finance and insurance; agribusiness and forestry and construction and real estate for both investment and advisory services. . 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 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 toward providing public private partnership (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. Currently, IFC is working on the development of a hydro-power project, PPPs in the water and agriculture sector 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: Oct 10, 2018

  • The World Bank Group (WBG) continues to contribute to Malawi’s development performance in various sectors. The current portfolio is comprised of 17 projects with a total commitment of about $1.3 billion. Four of the projects are regional. The key sectors addressed in the whole portfolio include: agriculture, education, energy, mining, water, finance, private sector development, social protection, responding to natural disasters, and natural resources management. Here are 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, as well as 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:

    1. Farm Input Subsidy Program reforms allow 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%.
    2. New Development of Strategic Grain Reserve guidelines prescribe rules for the 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.
    3. Enactment of 10 land related bills affecting access to land.

    Changing Higher Education to Meet the Needs of a Growing, 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 Master’s and PhD levels. The universities are also conducting tracer studies to establish relevance of the courses they offer. The project has establishment the National Council for Higher Education to regulate  public and private universities.

    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.  

    Improving Malawi’s Mineral Prospects
    Traditionally known as an agricultural country with no mineral resources, between 2013 and 2015, Malawi carried out an airborne geophysical mapping to acquire data to promote the mining sector. The data is available from the Geological Survey Department (GSD) in hard copy or digital form. A geodata management center has also been established at the GSD. The Mining Governance Project also helped produce the first ever Artisanal and Small-Scale Mining Policy in Malawi. Further, artisanal and small-scale miners were trained and formed cooperatives in for mining districts of Ntcheu, Lilongwe, Mzimba and Mzuzu. Under the project, the Malawi Polytechnic college at University of Malawi introduced three mining-related undergraduate courses; mining engineering, metallurgy and geological engineering. The courses are currently running, with 134 students—56 women, 78 men—attending the classes.

    Last Updated: Oct 10, 2018

  • The European Union, African Development Bank, United Nations agencies, bilateral donors such as DFID, USAID, Germany, Norway, and China, World Bank Group, and the International Monetary Fund (IMF) are among Malawi’s key partners.

    The government and its cooperating partners have a Development Cooperation Strategy (DCS 2014-2018) which is in the process of being updated. The DCS guides development cooperation in the country, and advocates inclusive partnerships, government leadership and country ownership of the national development agenda. The DCS also supports alignment around national systems and strategies, embracing a focus on results that matter to poor people, and encourages partnerships among development actors based on mutual trust, transparency, and accountability.

    Last Updated: Oct 10, 2018

Api


LENDING

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

*Amounts include IBRD and IDA commitments


PHOTO GALLERY

More Photos Arrow

In Depth

image

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.

Apr 19, 2018

Africa's Pulse, No. 17, April 2018

A new analysis of African economies shows the region’s growth is projected to reach 3.1% in 2018, and average 3.6% in 2019–20.

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.

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.

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.

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
Zeria N. Banda
Communications Officer
+265-1-770-611
zbanda@worldbank.org
For project-related issues and complaints
malawialert@worldbank.org