Malawi is 2013 second worst economy
Malawi is the second 2013 world’s worst performing economy after war-torn Central African Republic, according to ranking by the International Monetary Fund (IMF) which rates countries by at least one measure.
According to the ranking available on CNNMoney, Malawi has an estimated average income of $215.22 (less than K100 000) while around half of the country’s mostly rural population live on less than one dollar (about K450) a day.
But in an interview on Sunday, Ministry of Economic Planning and Development spokesperson Jollam Banda asked for more time to look at the report to give a comment.
The report, however, notes that food security is a constant challenge for Malawi, which has a history of underdevelopment.
The report adds that a severe foreign exchange shortage left Malawi unable to import critical goods like fuel and medicine in 2012, prompting a series of economic reforms that helped secure much-needed foreign aid.
In September last year, Malawi launched the Economic Recovery Plan (ERP), a blue print which aims to ensure that the country returns on track to prosperity.
Some of the measures introduced under the ERP include the devaluation of the kwacha by 49 percent and its subsequent flotation in May 2012, restoration of bilateral and multilateral relations and the repealing of punitive laws.
The ERP also included a focus five sectors: Tourism, agriculture, mining, transport and Information Communication Technology (ICT).
Under the ERP Malawi targeted a 5.7 percent GDP growth rate, a single digit inflation, 100 percent food security, and import cover at three months by end December 2013.
However, the IMF projects a five percent growth in 2013, inflation is projected to average 28.6 percent up from 21.4 percent in 2012 while official gross forex reserves stand slightly above two months.
According to the Malawi Vulnerability Assessment Committee (Mvac) about 1.8 million will require food assistance during the lean period, from January to March 2013.
This is too sad and I mean too sad for a country so blessed like Malawi with no wars and no natural disasters. In any case this is not surprising when you have people in the driving seat who have no vision for the country. Without a vision the people perish. The country has its policy makers who are very well educated in their field but why we swallow the Britton woods institutions’ prescription without due regard to the local prevailing conditions baffles me. From 2012 we have been driven by the IMF prescription and the executive has touted it as the best for our country to get out of the forex shortages, fuel shortage etc. But it is not only having fuel that a country develops and neither is it only by having forex. After we got these we sat on our laurels and applauded ourselves that we got the formula when in fact we had more problems than answers. Bingu said devaluation the Kwacha is not the only solution and that is why all big economies do not rush to devalue their currencies as a solution to their economic problems. USA, UK have had a very bad economic period in the past years but what did they do? they went around promoting trade not begging, not devaluing. Cameron was in China where they found market for 100,000 Landrover cars in the next year and wooed Chinese investors into infrastructure and energy development in the UK. These two examples mean a lot of jobs for their people and thereby addressing their economic malaise. Those exports alone are a boost to their economy.
In Malawi after getting the aid taps open and fuel and forex available we should have resumed the infrastructure development that boosted our economy during the 1st Bingu era and the more jobs we create the more money gets into the people. the executive has been traveling around the globe but have not been promoting our manufacturing industry that we should have investors coming but instead we have gone begging for cash which we consume and don’t generate any more cash at all. We end up in a vicious cycle of begging and consuming while the masses languish in poverty. worse still we have unpatriotic people trusted with our local cash at Capital Hill who end up stealing the little instead of directing the same to public service but we go telling the public ndinapeza mulibe chilichonse muboma. Anali atamalizamo zonse ndalama. Cry my beloved country. Malawi is not poor! God gave us everything but we need people that can use the resources available for the public good. May God help us.
Malawi is a pathetic country with pathetic leadership both ruling and opposition. Clueless is the word. We are failing to do even the simple basic things like, infrastructure eg roads. Lilongwe the capital is not developed neither is the commercial city to attract investment. who would like to invest in a country with power and water shortage, poor roads, no security( robbers on free range). We have neglected the North probably the answer to Malawi development. The north has huge potential, land, minerals, water, sparcely populated for infrastructure and industrial development.
I would like to agree with you Wawa. Our country’s leadership seems to have no big ideas to stir economic development. What tend to surprise me is that even Bingu, the economist, was stuck with farm input subsidies which in effect was funding consumption not excess production. The country is rich in resources which are not being utilised properly to stimulate and align development in a path that creates real opportunities for the people. From my limited understanding of how other countries have done it, the government should have a deliberate policy working with our banks to provide guarantees for strategic ventures which will have wealth creating potential in the medium to long-term. Examples to include robustly vetted business plans in commercial farming ventures, followed by Agro-processing activities so that we should capture value at each and every point of the value chain before we export these farm products. This will in turn spur the growth of other service industries such as marketing and transportation. The more we think of these chains the more the government can concentrate on prioritising resources in the areas with growth potential. Our road, rail and air infrastructure will need to be given the seriousness they deserve as without these, costs of products will always be high. All developed economies invest heavily in transport infrastructure and it surprises me that our leaders are either don’t care or have no clue. We need to have a good road network backed by robust maintenance programs to keep goods flowing up and down.
It also surprises me that in the days when IT is helping economies develop beyond what we could imagine, our internet penetration is still the lowest in the world. Do our leaders appreciate the strategic importance of IT these days. The UK has invested heavily in IT infrastructure to the extent that almost every citizen has access to the internet via mobile, desktop, tablet at such speeds that recognises the importance of speed when it comes to communication. Our leaders should realise that good communication is one of the pillars of development of modern economies.
To see our president giving out one cow to to one family is not only sad but negates all economic logic. We have to change our thinking and start dreaming big for our country to be called successful.
Tikuchita kuposedwa ndi somalia,heee! MALAWI MAYO INE!
One thing which Malawians should know is that according to statistics, donor aid has not developed any country in the world. if the country is depending on aid, the govt has no control over its citizens. Bingu was mad and crazy when he introduced zero deficit budget but he had a vision. His idea came too early but to some extent it could help Malawi to economically grow with some percentages. Anyway I really like the way Malawi is so stable now even though things are worse. Munthu akakutsonyeza bread kukamwa siuyankhula.
Hoooooo! Our dear Mother Malawi, do you real allow yourself stoop so low just because your children are unable to listen to your advice. Yes its sad to have such kind of children in your family. You have been given everything to make you a good mother, but haaaaa! what ever is said to your children goes in and out. When shall we be convinced or be assured? And when shall we be told the truth about our economy. Is it only when we are in good terms with our donors? When will the donors real tell us the truth? During Kamuzu era we were told Malawi is a star performer. During the UDF we were rate another higher rating. During DPP. we were second to one of a well to do country.
But the citizens have never seen any change. What the citizens hear from any of the leaders who jump in is I found empty bag. Now you start wondering is this praise on papers or in reality?
One thing Malawians have to know is no donor would like to loose praise from an African. Hence when we try to prosper on our own. he will try to find a faults to make us bow down. Please Malawians lets be trust worth that what ever we produce is used properly by each one of us. As of now we hear that the Donors we give us the support in March. Do you know why? Because we will be about to starting sell our famous Tobacco. Then they want to get it the price that will profit them not us. Because by that time we will be real stack , then they will tell us how much they can buy our produce.
lets jack up Malawians.
The tobacco you mention which we sell at $1.90 per kg and we go rejoicing; that we have a good market price that we even go on a political podium and tell the poor farmer that I have found good prices for you, the same when it reaches the west they are selling it at $10 per 20 cigarette pack (I don’t know how many grams that is). Why cant we woo these manufacturers to set up factories in Malawi and export finished products. Does anybody wonder why tobacco companies in Malawi are the richest next from banks when the tobacco farmers are poor year in year out?
The tobacco companies actually need the tobacco more than us. The government via legislation should impose a certain percentage of tobacco to be processed into cigarettes before it is exported. The tobacco buyers know that our leaders have no idea how much tobacco is worth in developed economies. The buyers will complain at first and threaten to take their business elsewhere but the truth is that they don’t have that much choice as it will still be lucrative for them anyway and the tobacco industry in Malawi is developed to the extent that it will still be viable for them to remain. We have given away tobacco for nothing for all these years and nobody has the balls to change the way this product is traded in our country. Shame
That’s foolish