Malawi needs $3.9bn/year to end poverty—AfDB

The African Development Bank (AfDB) says Malawi requires an additional $3.95 billion (about K6.8 trillion) annually to move out of poverty by 2030.

The amount is equivalent to 29.1 percent of the country’s gross domestic product (GDP) and the revelation comes at a time when at least 30 percent of the national budget is lost to corruption.

In its latest Africa Economic Outlook, the AfDB said road infrastructure remains the main contributor to the financing gap, followed by education, energy and productivity to achieve global Sustainable Development Goals (SGDs).

Reads the report in part: “Since 1990, Malawi’s economy has been dominated by services at 55 percent of value-added and agriculture at 31 percent.

“Manufacturing contributed an average of about 10 percent of value added over the same period, while all the other sectors contributed a meagre five percent.”

The bank said to radically transform the economy, manufacturing capacity, underpinned by agricultural-based diversification in the minerals sector, should be expanded.

The AfDB further said for Malawi to meet these financial needs, it requires increasing both external and domestic resource mobilisation, including debt and non-debt sources.

But economic and research analysts have said the country needs to go beyond production and look at value-addition, manufacturing and industrialisation of goods for exports, and also seal loopholes on corruption.

In an interview yesterday, University of Malawi economist Farai Chigaru said the country needs to seal loopholes where resources leak and ensure that any debt obtained goes towards productive sectors.

He said: “Let us ensure that any debt above the recommended threshold should go towards productive sectors which can give us higher returns. These are sectors in which we have comparative advantage among other countries.”

On his part, economist-cum-marketer Fredrick Changaya said Malawi has witnessed huge foreign direct investment (FDI) and now needs to structure her economy to enable it support the whole value chain.

He said: “We are relying on the ATM [agriculture, tourism and mining] strategy, which is good. But we need to add manufacturing and industrialisation.

“If productivity is in agriculture, and we have a bumper harvest, without value addition we remain with nothing.”

Lilongwe University of Agriculture and Natural Resources (Luanar) agriculture economist Horace Phiri said the country needs to be holistic in its approach.

“We need value addition for exports in agriculture, for instance, but there is little or no investment in the manufacturing or other sectors meant to assist in this,” he said.

In a separate interview, National Planning Commission head of research Andrew Jamali agreed with Phiri, saying that without resources, Malawians will remain trapped in poverty, and all the country needs is to prioritise and get away freebies.

Minister of Trade and Industry Sosten Gwengwe is on record as having said the country was using the National Export Strategy II to increase exports but also import substitution for goods such as tomatoes and other horticultural products.