Malawi rated poorly on economic freedom
The Malawi economy has been rated “mostly unfree” in the 2019 index of Economic Freedom, an annual guide published by The Wall Street Journal and The Heritage Foundation.
Malawi’s economic freedom score at 51.4 percent makes the economy the 153rd freest in the 2014 index, which has since ranked 177 economies.
Economic freedom is defined in the report as the fundamental right of every human to control his or her own labour and property.
The index covers rule of law, government size, regulatory efficiency and open markets.
As compared to five years ago, the score has declined from 55.4 percent, with big drops in scores for fiscal health, judicial effectiveness, and business freedom exceeding improvements in monetary freedom, labour freedom, and trade freedom.
In the sub-Saharan region, Malawi has been ranked 32 out of 48 economies, which is also ten steps down from what was attained five years back 22 out of 46 countries in the sub-Saharan Africa region and its overall score is below the world average.
“Historically, landlocked Malawi’s economic performance has been constrained by policy inconsistency, macroeconomic instability, limited connectivity to the region and the rest of the world, poor infrastructure, rampant corruption, high population growth, and poor health and education outcomes that limit labour productivity.
“The government has run large fiscal deficits in recent years, and the costs of debt service are rising. Pervasive corruption deters foreign investment. The judicial system is independent but also slow and inefficient,:” reads the report in part.
On rule of law, the report says protection of property rights remains poor with more than half of the arable land is untitled while the judicial system is independent but inefficient and weakened by poor recordkeeping; a shortage of judges, attorneys, and other trained personnel; heavy caseloads; and lack of resources.
The report observes that progress on improving Malawi’s regulatory framework has been slow with inefficient state-owned enterprises continuing to undercut the development of a dynamic private sector with government spending nearly $250 million on subsidies each year for the past decade, about half of it for agriculture.
Government has been running the Decent and Affordable Housing Subsidy Programme (Dahsp), launched by President Peter Mutharika in Lilongwe in December 2014 to build decent, affordable, durable and safe houses for low income and vulnerable groups while boosting local economies through job creation.
Beneficiaries receive a maximum of 30 Iron sheets of 30 gauge, a maximum of 30 fifty kilogramme bags of cement and other related building materials. Government provides a 50percent subsidy while beneficiaries required to repay the other 50 percent as loan.
Repayment of the loan is on a monthly basis for five years with the first two months as grace period for construction.
Government has also been running the Farm Input Subsidy Programme (Fisp) for 15 years to ease access to farm inputs, has dominated the agriculture and food security discourse in Malawi.
During the 2018/19 pre-budget consultation meetings in March last year, various stakeholders called for the abolishment of the programme, arguing that it drains the public purse and has not produced the intended results.
Neighbours South Africa (102) and Zambia (138) have outperformed Malawi while Mozambique and Zimbabwe at 163 and 175, respectively, are below Malawi.
Based on the rankings, Hong Kong’s economic freedom score is 90.2 percent, making it the top-rated economy in the index for the 25th consecutive year.
