Urbanization Key to Malawi’s Future Growth Prospects

June 1, 2017

As World Bank Projects a 4.4% GDP Growth Rate in 2017

LILONGWE, June 1, 2017 — The World Bank says Malawi needs to better manage its urbanization process as this will be critical to the country’s efforts to boost resilience, reduce poverty, and achieve sustainable, inclusive growth.

In the fifth edition of the Malawi Economic Monitor (MEM) titled Harnessing the Urban Economy released today, the Bank says Malawi is still at an early stage of urbanization and the slow urban transformation rate well-positions the country to formulate plans to maximize the benefits of urban agglomeration into the future. It however cautions that a more rapid rate of urbanization might result in urbanization of poverty unless more public resources are allocated to meet investment needs in urban areas, and capacities of local governments strengthened to manage increased urbanization rates. 

The MEM suggests that a systematic effort should be made to improve revenues of city councils from their own sources with emphasis on property tax, and better management of resources and services. Recommended measures include modernizing payment systems, reducing leakages, updating regulatory provisions, and outsourcing some services to the private sector.

The MEM also reviews the latest economic developments in the country, estimating GDP growth to increase to 4.4 percent in 2017, driven by improved conditions in the agriculture sector. A favorable weather pattern with increased rainfalls in 2017 is expected to result in higher levels of agricultural output than was recorded in 2015 and 2016. With improved agricultural production and reduced pressure on food prices, the average inflation rate is projected to decelerate to 15.2 percent in 2017.

In its analysis, the MEM acknowledges the efforts Government is making in containing public debt, containing spending, improving fiscal management, and implementing reforms in key areas as agricultural markets, all of which are helping to lay the foundations for future growth. “Government however still needs to be cautious about the macroeconomic environment, continue efforts to consolidate its fiscal position and begin to focus on medium term policies and investments to improve the country’s resilience against climate-related shocks,” said Richard Record, lead author of the MEM.

The MEM is a series of biannual country flagship reports that provide an analysis of economic and structural development issues in Malawi with the aim of fostering better informed policy analysis and debate. Previous MEMs were Emerging Stronger, Absorbing Shocks, Building Resilience.Adjusting in Turbulent Times,  and  Managing Fiscal Pressures

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