Malawi’s ambition to mobilise $7.06 billion (about K12.3 trillion) by 2035 for climate action faces a major financing test, with about 61 percent of the funding expected to come from international climate finance, according to the country’s new climate plan.
The Third Nationally Determined Contribution (NDC), which has since been submitted to the United Nations Framework Convention on Climate Change, indicates that only $2.78 billion or 39 percent, will come from domestic resources, leaving $4.28 billion (about K7.5 trillion) investment dependent on donors and international climate funds.
This comes at a difficult time for aid-dependent economies such as Malawi, with official development assistance projected to decline globally after a nine percent fall in 2024 while the Organisation for Economic Cooperation and Development (OECD) projected a further nine to17 percent drop in 2025.
Minister of Natural Resources Patricia Wiskes said in an accompanying statement to the plan that while the government remains committed to mobilising domestic resources and strengthening national capacities, the scale of the challenge goes beyond what can be achieved through national efforts alone.
She said that Malawi is banking on the international community to fulfil its commitments under the Paris Agreement by providing predictable, adequate and accessible climate finance as well as support for technology transfer and capacity building.
Said Wiskes: “Countries like Malawi contribute only a negligible share of global greenhouse gas emissions, yet they bear a disproportionate burden of the impacts of climate change, including growing loss and damage to lives, livelihoods and national development.
“As a party to the United Nations Framework Convention on Climate Change and the Paris Agreement, Malawi remains committed to contributing to global efforts to limit the increase in global temperatures while pursuing sustainable and climate-resilient development.”
According to the NDC, the required funding will have to be mobilised through a combination of grants, concessional loans, results-based payments, carbon markets and public-private partnerships, rather than relying solely on traditional aid.
However, the plan has identified limited institutional capacity, financing constraints, fragmented data and inadequate capacity to develop bankable proposals as barriers to securing funds.
In response, government plans to develop NDC Investment Plan to convert climate priorities into bankable investment packages and by strengthening mechanisms for accessing international climate funds.
It also proposes a National Climate Change Management Fund and greater use of financial instruments that can crowd private capital into climate investments, including green bonds, carbon markets, climate insurance and blended finance.
Malawi continues to recover from a series of climate-related shocks, including Tropical Storm Ana and Cyclone Gombe in January 2022, Cyclone Freddy in March 2023 and the 2024 El Niño, which repeatedly disrupted economic growth projections.
Economic growth fell from a projected 5.2 percent to 1.2 percent in 2022, from 2.7 percent to 1.5 percent in 2023 and from 3.2 percent to 2.3 percent in 2024, largely due to the effects of weather-related disasters.
Food and Agriculture Organisation estimates show that the 2024 El Niño resulted in losses of about $341 million (about K600 billion), equivalent to 2.4 percent of gross domestic product (GDP) while the World Bank has warned that climate change could reduce Malawi’s GDP by between three and nine percent by 2030 if the country does not accelerate adaptation measures.
Centre for Social Concern economic governance programme officer Agnes Nyirongo said climate shocks remain a major threat to the country’s economic stability because of heavy dependence on agriculture for food, employment and export earnings.
Economics Association of Malawi president Bertha Bangara-Chikadza also noted that “climate change has become one of the biggest threats to economic growth” as any disruption in agriculture affects food prices, export earnings, household incomes and overall economic activity.
World Bank data show that GDP is higher with climate change and adaptation when compared to the counterfactual with no climate impacts; losses range from negative one to three percent in 2030 and 2040, and one to four percent in 2050.
