LILONGWE, December 13, 2023 – Malawi’s per capita economic growth has been insufficient to reduce high and stubborn rates of poverty, according to the latest World Bank Country Economic Memorandum (CEM). The report argues that the pathway to achieve Malawi 2063, while achievable, is increasingly narrow and requires a fundamental shift in policy.
Malawi, facing a "poly-crisis" from 2020-2023, has experienced negative per capita GDP growth, a surge in poverty levels, and severe food insecurity affecting more than one in five Malawians. The CEM identifies four core challenges that have hindered growth: declining exports, low savings and investment, slow structural transformation out of subsistence agriculture, and high vulnerability to climate.
The CEM, published every five years, provides a deeper analysis of Malawi’s economic situation. This edition, “A Narrow Path to Prosperity” highlights the urgent need for Malawi to adopt a new development model that can break this pattern and put the country back on track to achieve its development goals.
“Malawi’s current crisis offers an opportunity to rethink and reboot. Declining aid flows, rising global fragmentation, and the increasing frequency of climate-related disasters all mean that countries need to aim for resilient and inclusive growth; the cost of inaction is high. While the policy prescriptions are known, implementation and results are elusive. Our CEM seeks to explore not only the “what” but also the “how” of these reforms, based on case studies of Malawi’s own successes,” says Hugh Riddell, World Bank Country Manager for Malawi.
The CEM outlines a comprehensive reform agenda focused on restoring macroeconomic stability; deepening private sector led commercial agriculture and reducing barriers to trade and investment. The CEM also draws lessons from case studies of success in Malawi’s recent history (high growth macadamia and soybean value chains, well-performing State-Owned Enterprises like the Lilongwe Water Board and the Roads Fund Administration, and effective public programs such as the HIV/AIDS response) to explore what are the critical factors that can ensure Malawi moves from vision to action.
“While Malawi has made significant strides in many areas of human development including increasing the life expectancy by over 20 years since 1990, the country is at a critical juncture in its development journey as it enters the seventh decade since independence. We therefore have taken difficult but important decisions to stabilize the macroeconomic foundations and we welcome the timely release of the World Bank CEM at this time where the need to re-strategize and adopt new modes of development including drawing lessons from the past successes is very necessary,” says Simplex Chithyola Banda, M.P Minister of Finance and Economic Affairs.
The CEM has been developed over a period of two years through intensive consultation with a wide range of Malawian stakeholders from government, the private sector, civil society, and academia. The final report identifies key short and medium-term policy priorities emerging from five chapters, which seek to anchor and guide a shift from “business as usual” towards the delivery of a bold structural reform agenda.
