The World Bank says the country’s reliance on subsistence and rain-fed agriculture as well as an unpredictable business environment remain main challenges affecting the country’s economic and development potential.

In its recent update for Malawi, the Bretton Woods institution said the country’s dependence on traditional farming methods is making the country vulnerable to weather shocks, thereby creating food insecurity.

Malawi largely depends on
subsistence farming

Read the update in part: “Due to climate change shocks, low agricultural productivity and slow structural transformation, poverty levels remain high in Malawi at about 50.7 percent at 2022.”

According to the update, the country’s unpredictable business environment continues to impede investment and commercialisation as well as erratic electricity supply.  

Reads the report: “In addition, the country’s weak fiscal management and economic policies have contributed to recurring and large fiscal deficits, mostly funded by high-cost domestic borrowing, resulting in a surge in public debt.

“Together with external shocks, economic management choices have compounded the acute balance of payments crisis, which needs addressing urgently for Malawi to realise its economic and development potential.” said the Bank. 

Meanwhile, Malawi public debt has risen to K6.38 trillion, more than double this year’s national budget pegged at K2.8 trillion.

According to World Bank projections,  the rising public debts in Malawi and other sub-Saharan African countries are projected to remain high at about 58.6 percent of gross domestic product.

In an interview, Malawi University of Business and Applied Sciences associate professor of economics Betchani Tchereni said government business should not be crippled, but said the level of the country’s borrowing is worrying and concerning.

Economics Association of Malawi executive director Frank Chikuta is quoted as having said that if the economy was at a level where it had built resilience to shocks, the impact of recent shocks would have been lessened.

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