The National Planning Commission (NPC) says there is need to go beyond gross domestic product (GDP) to determine productivity of sectors that can power the country’s national development plans.
In a follow up interview following the 2025 Economists Association of Malawi (Ecama) Lakeshore Conference in Mangochi where he made a presentation on balancing fiscal discipline and development Aspirations, NPC director general Fredrick Changaya observed that much of the evidence supporting fiscal and monetary policies is based on GDP contribution.
He said using incremental capital-output ratio (Icor) would help identify sectors that Malawi can best rely on for long-term development. Icor measures a country’s productivity.
Said Changaya: “If you compute macro efficiency, agriculture is the least sector as of now. But even before we go to other sectors which the efficiency and Icor values can reveal as best, why can’t we just improve current arable land utilisation by cropping high valued crops like vanilla, black pepper etc.”
“What we measure and what we choose after we measure matter most. Wrong choice of sectors and value chains could lead to fiscal indiscipline of capital proportions.”
Changaya observed that reeling from the post-pandemic shocks, GDP growth is yet to make a full recovery from a combination of climatic shocks and rising international prices.
Reserve Bank of Malawi data show that in terms of sectoral contribution to GDP, at 21.7 percent, agriculture, forestry and fishing tops the list, followed by manufacturing at 11.5 percent, wholesale and retail trade at 11.1 percent while mining and quarrying lags at 0.7 percent.
NPC estimates that for Malawi to meet the 2030 goals, the economy needs to grow by an average of 10.6 percent in the next five years.
However, review of official Malawi Government figures show that in recent years, real economic growth has hovered around two percent.
This growth rate is below the country’s population expansion pace of around 2.6 percent and falls short of the six percent benchmark that can enable the country to become a lower middle-income economy by 2030 and an upper middle income nation by 2063.
Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha observed that Malawi needs to diversify its sources of growth, and ensure that reforms are sustainable and inclusive.
“Through collective effort, Malawi can transition from crisis management to sustainable economic transformation through increased production,” he said.
Through MW2063, Malawi envisions to be “an inclusively wealthy and self-reliant nation” by 2063. The strategy is premised on three inter-related and inter-dependent pillars of agricultural productivity and commercialisation, resource-based industrialisation and urbanisation.
Governments and international organisations (like the Asian Development Bank or the UNCTAD for analysis in Africa) frequently use Icor to estimate required investment levels to achieve specific growth targets and to guide development aid and loans.
