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Overview

  • Malawi Context

    Located in Southern Africa, Malawi is landlocked, sharing its borders with Mozambique, Zambia and Tanzania. The country has an estimated population of 18.6 million (2019), which is 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 Malawi Growth and Development Strategy (MGDS), a series of five-year plans, guides the country’s development. The current MGDS III, Building a Productive, Competitive and Resilient Nation, will run through 2022 and focuses on education, energy, agriculture, health and tourism. The process is underway to develop a successor plan of Vision 2020, the country’s long-term development plan.

    Political Context

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

    Malawi’s sixth tripartite elections were conducted in May 2019. The presidential results were nullified in February 2020 by the Constitutional Court. New presidential elections were held on June 23, 2020 where Lazarus Chakwera of the Malawi Congress Party and Saulos Chilima of the United Transformational Movement Party (known as the UTM Party) were elected as president and vice president respectively after getting 58.6% of the votes. They won against Peter Mutharika of Democratic Progressive Party and United Democratic Front coalition, who received 39.4% of the votes. President Lazarus Chakwera and Vice President Saulos Chilima lead a coalition of nine political parties.

    Economic Overview

    Malawi’s three-year pathway of fast economic growth has been interrupted by the COVID-19 (coronavirus) pandemic. The full extent of the pandemic’s negative impact is still uncertain as the crisis unfolds but the widespread impact of the COVID-19 crisis is expected to be felt in the fourth quarter and beyond, with reductions in tax revenue paired with increased expenditure on health and economic policy responses.

    Malawi’s economy grew by 4.4% in 2019, a marked increase from 3.5% in 2018 supported by a rebound in agriculture production, as maize and key crops apart from tobacco increased. Real gross domestic product (GDP) growth for 2020 was projected in September 2019 at 4.8% due to an expectation of the second consecutive year of strong harvests, offset by continuing political uncertainty weighing on business activity and investment. 

    Revenue and grants totaled 10.3% of GDP through December 2019, below the target of 12.2% of GDP. Total expenditure and net lending were below budgeted levels as the government spent 0.9% of GDP below the mid-year target of 14.0%, due to under-spending on development expenditure which was partially offset by recurrent expenditure overruns of 0.6 percent of GDP. 

    Repeated high fiscal deficits have contributed to an accumulation of domestic debt such that the stock of domestic debt increased from 28.2 to 29.7% of GDP between 2018 and 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 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 latest poverty figures show 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. The COVID-19 pandemic has further negatively impacted economic growth. 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 123/180 economies in 2019.

    Last Updated: Jul 31, 2020

  • 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 initiated in FY19 and continued in FY20 with various stakeholders across the country including the government, parliamentarians, civil society organizations, academia, private sector and development partners. 

    Informed by the Systematic Country Diagnostic (SCD) analysis, the CPF will focus on addressing foundational issues of governance, citizen engagement and macroeconomic stability, economic diversification and job creating, and building human capital and resilience. The CPF is also guided by government priorities as outlined in the Third Malawi Growth and Development Strategy (2017-2022) and further incorporates lessons from the previous strategy.

    As of July 1, 2020, the World Bank’s portfolio consists of 15 International Development Association lending operations for a total of $1.62 billion in commitments and is complemented by $138.11 million in trust funds. The portfolio includes financing for national programs on agriculture, sustainable land management, basic service delivery (including health, education, and water and sanitation), as well as support in the energy, transportation, trade logistics, and financial sectors. 

    COVID-19 Response

    The government continues to undertake significant actions to address the health and economic impact of COVID-19 (coronavirus) guided by the COVID-19 Preparedness and Response Plan. Other mitigation measures include the expansion of social protection, fiscal and monetary measures, as well as steps to support the financial sector and the expansion of mobile money services. The immediate health response has focused on detection, treatment and prevention. Social protection benefits were announced to expand to over 185,000 new urban households and frontloaded four months of the rural cash transfer program for existing beneficiaries.

    In April, World Bank approved $7 million in immediate funding to support Malawi’s response to the pandemic under a new Malawi COVID-19 Emergency Response and Health Systems Preparedness Project. In addition to the new operation, $30 million was made available from the Disaster Risk Management Development Policy Financing with a Catastrophe Deferred Drawdown Option (Cat-DDO) to strengthen the country’s response to the pandemic. 

    The government fully recognizes that additional measures are needed while carefully considering the trade-off between social distancing policies to reduce the spread of the virus and losses to livelihood. Containment measures are intended to flatten the epidemic curve and to allow as many people as possible access health care options, while biding time to ramp up extensive testing. 

    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 sector, and improve access to finance.

    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 a priority in Malawi’s Integrated Resource Plan. 

    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: Jul 31, 2020

  • The World Bank Group (WBG) continues to contribute to Malawi’s development performance in various sectors including energy, health, agriculture, education, infrastructure development, private sector development and emergency response. Below are examples of results achieved in some World Bank-supported sectors.

    Linking farmers with markets through better roads

    Farmers in 12 districts are benefiting from improved access to rural markets through the Second Agriculture Sector Wide Approach Support Programme (ASWAp-SP II). The World Bank-financed program is facilitating improvement of rural roads through labor intensive rehabilitation and upgrades, which provide  cost-effective solutions to relatively low-trafficked roads, easing the burden of access to markets for the local farmers. The roads are further linking agricultural productive areas to markets so farmers are reached with farm inputs and easily able to take their produce to markets. The upgrading of a total of 74km and rehabilitation of 1118km is expected to link up to 143 markets. More than 14,500 people have been employed on the ongoing works, of which 56% are women.

    Strengthening Safety Net Systems in Malawi Project- Fourth Malawi Social Action Fund (MASAF IV)

    Now in its sixth year, the fourth Malawi Social Action Fund-Strengthening Safety Net Systems Project (MASAF IV) focused on strengthening Malawi’s social safety net delivery systems and coordination across social protection programs

    By December 2019 MASAF IV supported the Malawi government to implement productive community driven public works (PPWP) that have built productive community assets and provided temporary employment for close to a million people, of which slightly over half were women, disbursing $57.4 million in wages. 

    The project further supported the Malawi government to implement social cash transfers in 11 out of 28 rural districts in Malawi, supporting close to 127,000 extremely poor, most vulnerable and labor-constrained households—including elderly, disabled, and sick citizens—with social cash transfers amounting to $24 Million. The project has also supported the rolling out of Malawi’s social Unified Beneficiary Registry in 12 out of 28 districts, facilitating the capturing of at least half of household population in these districts. 

    The successor to MASAF IV, the Social Support for Resilient Livelihoods Project (SSRLP) was declared effective June 1, 2020 and will continue supporting the government implementation of the government’s National Social Support Programme II.

    Last Updated: Jul 31, 2020

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

    The 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: Jul 31, 2020

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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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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
External Affairs Officer
+265-1-770-611
hchimbali@worldbank.org
For project-related issues and complaints
malawialert@worldbank.org