Overview

  • Located in southern Africa, Malawi is landlocked, sharing its borders with Mozambique, Zambia and Tanzania. According to the 2018 Census, the country has an estimated population of 17.5 million, which is expected to double by 2038.

    Malawi remains one of the poorest countries in the world despite making significant economic and structural reforms to sustain economic growth. The economy is heavily dependent on agriculture, employing nearly 80% of the population, and it is vulnerable to external shocks, particularly climatic 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 goals outlined in Vision 2020. The current MGDS III, Building a Productive, Competitive and Resilient Nation, will run through 2022 and focuses on education, energy, agriculture, health and tourism.

    Political Context

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

    Malawi’s sixth tripartite elections were conducted in May 2019. President Peter Mutharika was re-elected against other Presidential aspirants, Lazarus Chakwera of the Malawi Congress Party and Saulos Chilima, former Vice President and President of UTM Party.

    Economic Overview

    In 2019, Malawi’s economic growth is projected to reach 4.4%, increasing over the medium term to 5.0 - 5.5%. Growth in 2019 is buoyed by a good harvest overall, despite the impact Cyclone Idai. Solid agricultural growth is likely to support agro-processing and households’ disposable incomes, which should, in turn, drive the service sector. However, the political impasse that has prevailed in the country following the May 2019 elections will weigh on growth.

    The FY2018/19 fiscal deficit is expected to stand at 6.4% of gross domestic product (GDP), lower than the previous year (7.8% of GDP) but higher than budgeted (3.8% of GDP). Despite missing its target, the expected deficit demonstrates progress over FY2017/18, particularly for an election year. The higher than anticipated deficit is due to lower revenues and grants and higher recurrent expenditure, the latter due to higher than budgeted interest payments, election-related spending, and Cyclone Idai disaster relief.

    Headline inflation has continued in single digit standing at 9.3% in July 2019 compared to 9.0% in July 2018. The decline of inflation in general has been largely aided by a steady deceleration in non-food inflation which reached 5.5% supported by a relatively tight monetary policy. Food inflation, however, remains elevated at 14.2% with continued pressure from maize prices which by the end of July were 75% higher than July 2018 and 66% higher than the five-year average

    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 at birth is 63.7 years (2018 Population and Housing Census). 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 71.6 for males and 65.9 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 low productivity in the agriculture sector; limited opportunities in non-farm activities; volatile economic growth, rapid population growth, and limited coverage of safety net programs and targeting challenges.

    Development Challenges

    Malawi’s development challenges are multi-pronged, including vulnerability to external shocks such as weather and health. Other challenges include rapid population growth and environmental degradation. Energy shortages still stand out, with about 11.4% 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: Oct 10, 2019

  • World Bank Engagement in Malawi

    The new World Bank Group Country Partnership Framework (CPF) for Malawi is under preparation. Consultations to inform the concept note preparation were conducted in FY19 with various stakeholders across the country including the government, parliamentarians, Civil Society Organizations, academia, private sector and development partners. The CPF is planned for delivery to the World Bank Board of Directors in the third quarter of FY20.

    The CPF focuses on (i) addressing foundational issues of governance, citizen engagement and macroeconomic stability; (ii) economic diversification and job creation; and (iii) building human capital and resilience. It is informed by the Systematic Country Diagnostic (SCD) analysis and guided by GoM priorities as outlined in the Third Malawi Growth and Development Strategy (2017-2022) and further incorporates lessons from the previous strategy.

    The current portfolio comprises of 18 projects with a total commitment of about $1.4 billion, of which four ($127.8 million) are regional operations. The key sectors include water, disaster response and resilience building, education, agriculture, energy, and social protection

    International Finance Corporation (IFC)

    IFC’s engagement in Malawi focuses on investment and advisory activities that help diversify the economy, develop the micro, small and medium enterprise (MSME) sector, and improve access to finance.

    IFC’s portfolio in Malawi consists of five major projects with a total committed balance of $15.3 million.

    Under the infrastructure and natural resources program, IFC is providing public-private partnership advisory services to the water, transport, and energy sectors. IFC supports private sector involvement in hydro-electric power projects identified as priority in Malawi’s Integrated Resource Plan. Aligned with Malawi’s energy diversification program, IFC is also considering investment in solar Independent Power Producer (IPP) projects.

    IFC is supporting value addition enterprises in the agribusiness sub-sector, diversification of Malawi’s exports, and is working with the government to help strengthen the warehouse receipts system.

    In the financial sector, IFC provides advisory support to Malawi’s financial institutions with the aim of increasing access to finance for small and medium enterprises (SMEs), and to help improve the country’s collateral registry and credit reference systems.

    Last Updated: Oct 10, 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:

    Transforming the Agricultural sector through reforms

    Malawi continues to benefit from a $80 million Development Policy Operation (DPO) which supported a series of policy and institutional reforms that the government undertook to reduce distortions in, and improve the performance of, the agricultural sector. The following results were achieved:

    • Through Farm Input Subsidy Program reforms, private suppliers are now retailing farm inputs directly to beneficiaries through the coupon model. The private sector is retailing 88.6% of the farm inputs, far exceeding the target of 60%. The subsidy level demand has reduced to 65.2% in 2018/19 due to the fixing of the coupon value and letting farmers pay the market value shortfall.
    • The Malawi Agricultural Development and Marketing Cooperation (ADMARC) functional review study was completed and validated by stakeholders. The government has committed to restructure ADMARC by creating social and commercial arms, under a joint holding company and its board has been diversified to include representatives from the private sector.

    Delivering efficiency through systems strengthening in public universities

    The Skills Development Project has enabled 20,906 beneficiaries from public universities and TEVETA to acquire skills and knowledge to improve the quality of education and community development projects in rural areas respectively. The trainees from TEVETA have created a huge skills-set in the communities that will have a greater impact in the quality of various projects based in rural areas. While the Polytechnic has achieved the female beneficiaries target of 24.7% (target was 25%), the overall success rate of female beneficiaries across all institutions is 3.6%, less than the 30.8% target. Deep rooted issues in the system require to be addressed to ensure gender equity in the access to higher education.

    A management information system is operational at Higher Education Student Loans and Grant Board (HESLGB) to facilitate better management and tracking of beneficiaries of the loan scheme to students in the public universities.

    The Skills Development Project has also supported the development of the higher education management information system with up to date data for planning and management of higher education data. The system is currently operational at Chancellor College and is expected to be rolled out to the remaining four public Universities.

    Improving land and water management resources for sustainable social, economic and environmental benefits

    The 15-year Shire River Basin Management Program (SRBMP) aims at generating sustainable social, economic and environmental benefits by developing and managing the Shire River Basin’s natural resources. The first phase which ended in January 2019, has established the framework for integrated watershed/landscape planning and piloted sustainable approaches to land, forests and protected areas management. Kamuzu Barrage was upgraded to improve its operation and management of discharges to the Shire river such that the regulated level of Lake Malawi was increased by 40cm thereby improving the inter-seasonal storage capacity.

    The project has also supported improvements on water resources management and allocation at basin level including sustaining energy and irrigation investments on the Shire river through the installation of 100 hydromet monitoring stations and 25 river flow gauging stations. The monitoring stations provide real-time hydro-meteorological information for improved planning, operational decision support and flood forecasting to the Department of Climate Change and Meteorological Services (DCCMS) and the Department of Water Resources (DWR).

    Last Updated: Oct 10, 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: Oct 10, 2019

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.

Empowering Women = Growth

The latest Africa’s Pulse says initiatives to empower poor people, women and girls are essential to progress.

CPIA Africa

Africa’s poorest countries saw little to no progress on average in improving the quality of their policy and institutional frameworks in 2018.

IDA in Africa

With IDA’s help, hundreds of millions of people have escaped poverty—through the creation of jobs, access to clean water, schools, roads, nutrition, electricity, and more.

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