United States Ambassador David Young says while his government backs the “bold” economic reforms Malawi has undertaken to secure an International Monetary Fund (IMF) programme, trade and fiscal discipline are critical to consolidating the gains.
Briefing the media at his residence in Lilongwe yesterday, he said the US supports the Malawi Government’s commitment to tough economic reforms, including the 44 percent kwacha devaluation last week, but urged local authorities to cut on unnecessary and “frivolous” expenses.
Said Young: “DSAs [daily subsistence allowances] associated with conferences and trips [for civil servants] must be curtailed.
“We applaud the focus on addressing this issue head on by closely scrutinising trips and conferences and we hope that the government will go further to address this issue, which takes away much needed funds that could help cushion the poorest Malawians.”
He also urged authorities to curb dependence on aid and instead prioritise trade to stimulate economic growth.
Said Young: “Foreign aid by partners will continue and play a supportive role, but it is trade and investment that will create jobs and lift Malawians out of poverty. Aid is a short-term bandage.
“It is not the long-term solution. Attracting investments is about creating the right enabling environment for private sector companies, Malawian and foreign, to grow the economy and create jobs.”
The US emphasis on using trade mirrors a call made by British Foreign, Commonwealth and Development Office senior economist Nick Lea at the launch of the Malawi Value Chain project, British-funded project to prioritise exports as a way to generate forex for catalysing growth.
During the briefing, Young said the US will continue to leverage its financial support to create opportunities for Malawians and support growth through its programmes such as the African Growth and Opportunities Act and the Millennium Challenge Corporation compact.
Through its US Agency for International Development, the US has launched the Growth Poles project, a $40 million initiative designed to support agricultural diversification and expand centres of economic opportunity. It is a successor to the Malawi Agricultural Diversification Activity projected to help 500 000 Malawians to increase their income.