Malawi Country Profile 2014-2015

Malawi is often called the “warm heart of Africa” ​​and is considered a peaceful and friendly tourist destination. Areas of the vast Malawi Lake are particularly popular. But Malawi is a poor country. In 2015, Malawi ranked first among the world’s poorest countries in terms of gross domestic product (GDP) per capita. The country is facing obvious challenges that do not appear to be easier in the face of climate change, rising food security and persistent budget deficits. A significant step was taken when a new marriage law was passed, which sets the minimum age for marriage to 18 years. This is an important legal measure to prevent child marriage.

In 2013, the corruption scandal “Cashgate” was revealed in Malawi. The scandal involved several high-profile politicians and MPs. President Joyce Banda and the ruling party were also spared no suspicion, and many Malaysians demanded Banda’s departure as a result of her handling and possible involvement in the scandal. The corruption scandal led to distrust of the Malawian authorities and administration among the country’s aid donors. Several significant donors, including Norway, decided to withdraw the budget support and rather channel the assistance in other ways.

This had obvious consequences for a country that in 2011 financed about 40 percent of the state budget with aid funds. The 2014 presidential election resulted in a change of government, with former President Bingu wa Mutharika’s brother, Peter Arthur Mutharika, taking power. The election was not without complications, and Joyce Banda had long argued that the election was characterized by irregularities and irregularities. Nevertheless, she accepted the defeat and Mutharika was inducted as President on May 31, 2014.

One of Mutharika’s political fancies has been to clean up after Cashgate and restore trust among donors. Many have wondered whether Mutharika’s pledge to prosecute guilty in the Cashgate scandal is the reason Joyce Banda still has not returned to Malawi after leaving the country just after the election defeat. The follow-up to Cashgate has generally been good: Nearly 70 people have been indicted and several people convicted. Nevertheless, most bilateral donors have hesitated to resume budget support pending the government to implement the necessary reforms to improve budget discipline and financial management.

Growth with challenges

In 2015, the World Bank released a report stating that the floods that hit Malawi in January and February of the same year are unlikely to have a significant impact on GDP growth, as traditional export goods such as tobacco, coffee and tea were not affected. Nevertheless, there are several factors that hinder economic growth in the country, which the government must address if they want to ensure macroeconomic stability and future growth. According to the report, the budget deficit must be reduced, foreign loans limited and a number of subsidy programs reformed if the country is to deal with the economic challenges.

In January 2015, Malawi ended up in the less glamorous first place of the world’s poorest countries in terms of GDP per capita, according to World Bank data. As in previous years, Malawi ended up at 174th place on the UN Human Development Index (HDI). Development takes place very slowly in a number of areas. For example, a Millennium Goal report from 2014 shows that Malawi is nowhere near reaching the poverty target for 2015, which meant reducing the proportion of those living below $ 1 a day to 27 percent of the population. Despite a somewhat reduced percentage, the process has been slow, and 48.8 percent of Malawians still live below the UN poverty line. Even more shocking is that the proportion of extreme poor has increased, from 23.6 percent in 2000 to 25.7 percent in 2015. The report claims that the authorities are struggling to implement a number of necessary measures to eradicate poverty and hunger as a result of, among other things, illiteracy and lack of economic infrastructure in rural areas. These conditions make it difficult to apply new methods and technologies to increase agricultural productivity and cultivate high value crops (cash crops), which will limit the ability to drive economic activity and value creation.

President Mutharika has on several occasions expressed how crucial donor funds are to ensure positive economic development and to avoid the Treasury running out of funds. The joy was therefore great when the International Monetary Fund (IMF) announced that they wanted to resume assistance to Malawi with USD 18.1 million. Finance Minister Goodall Gondwe has also expressed the expectation that the African Bank, as well as the EU and the World Bank, will resume budget support during 2015-2016. In early January 2016, Ambassador Kikkan Haugen informed that Norway will not resume general budget support for Malawi.

Malawi is heavily dependent on agriculture and predictable weather conditions for planting and harvesting and therefore very vulnerable to climate change. This became evident when Malawi in January 2015 experienced unusually heavy rainfall and flooding in 15 of the country’s districts. The extreme masses of water led to loss of life, internally displaced persons and major material damage. The rainfall also washed away much of this year’s corn crops. The subsequent drought has made it difficult to plant new crops. This has had a significant impact on food security, and the UN has estimated that as many as 3 million Malawians will be affected by food crises in the time ahead. The situation will present new challenges for a fairly financially constrained government, and the president’s follow-up to this situation will be crucial.

Despite the economic and climatic challenges, the government is receiving praise in several areas. In February 2015, President Mutharika launched a public sector reform plan that contained a number of recommendations that, if implemented, would improve efficiency. He expressed a desire and need for change. He should have referred to the public sector as the oil that causes the machinery to run, but which must nevertheless be replaced regularly if the machinery is to run smoothly. To meet some of the challenges Malawi is facing, the President has already initiated cuts in public spending by limiting, among other things, the ministers’ domestic trips to eight a month and foreign trips to six a year.

Social conditions

Earlier this year, Malawi took a significant step in the right direction when a marriage law was passed in parliament. This law sets the minimum age for marriage to 18 years, which strengthens women’s rights and is an important legal measure to prevent child marriage. The law is also likely to have an indirect positive effect on girls’ schooling in that they can no longer marry at an early age, which can result in girls becoming longer in school. Admittedly, the law is not perfect: Among other things, polygamy is still allowed at certain types of marriage. Nevertheless, the law signals that the government is more concerned with women’s rights and equality than previous governments. According to Assistance News, Malawi’s Minister of Social Affairs should have canceled as many as 600,000 child marriages in 2015.