Economists and environmental advocates have lamented low allocation to climate financing initiatives, noting that the amounts were too low to mitigate against the impact of climate shocks such as floods, droughts and cyclones.
In an analysis of the proposed K10.9 trillion National Budget that Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha tabled in Parliament on February 27 202, Malawi Economic Justice Network (Mejn) said while the allocation towards climate financing K595.2 billion or about 5.42 percent of the total budget represents a 3.8 percent increase from the K311 billion in the previous budget, the amount is insufficient considering the scale of climate-related economic losses.
Mejn observed that the size and composition of climate financing have remained consistently low over the past four years.
too small. | Nation
In an interview on Monday, Mejn executive director Bertha Phiri said that while the government’s macroeconomic assumptions may be achievable, the economy remains highly vulnerable to climate shocks; hence, the need to allocate more resources to cushion against the climate-induced shocks.
She said if the budget continues to disregard disasters, the country’s economic performance will continue to be undermined by climate shocks.
“The increase from K311 billion in 2025/26 to K595.2 billion is largely nominal. In real terms, the allocation remains too small to build meaningful resilience in the economy,” Phiri said.
To reverse the trend, she said that government needed to increase climate financing.
Phiri proposed expansion of the tax base by formalising informal businesses, improving corporate tax compliance and strengthening property taxes as some avenues that can build resources for climate financing.
In a separate interview, Economics Association of Malawi (Ecama) president Bertha Bangara-Chikadza agreed with the Mejn analysis, noting that the underground economy has surged to about 46 percent of gross domestic product (GDP), thereby weakening tax productivity.
But she warned that increasing the tax base alone would not guarantee adequate climate financing.
“Government should ring-fence revenues such as carbon credits, carbon tax levies, and a percentage of other taxes for climate-related programmes,” said Bangara-Chikadza who teaches economics at the University of Malawi in Zomba.
Civil Society Network on Climate Change executive director Julius Ng’oma said continued underfunding risks leaving Malawi exposed to increasing climate disasters.
Meanwhile, Mzuzu University economics lecturer Christopher Mbukwa said the government must also address inefficiencies in public spending.
“There is a need to tighten financial leakages, implement austerity measures, and demonstrate strong political will in managing public resources,” he said.
Parliamentary Committee on Natural Resources and Climate Change chairperson Tiaone Hendry said her committee has also reviewed the analysis made by Mejn and will lobby for a more inclusive budget during the debate.
Cyclones in 2021 limited growth to 3.8 percent against 4.6 percent projection while in 2022 the economy grew by a paltry 1.2 percent compared to a projection of 5.2 percent.
