At the peak of national desperation created by an acute food shortage and the 44 percent devaluation in November last year, President Lazarus Chakwera Friday spoke hope in his State of the Nation Address (Sona) in Parliament.
Chakwera said the economic pain that Malawians are going through is because of a combined effect of geopolitical factors; over 20 years of public policies that have effectively destroyed Malawi’s production and manufacturing as well as four devastating cyclones that hit Malawi over the past four years.
He said despite the anxiety, there are clear signs that the economy is recovering and that it was time to use that progress to achieve even greater and faster progress.
Among others, Chakwera said the fact that the country’s Human Development Index (HDI) moved up five steps from position 174 to position 169 means recovery is happening.
He further said the fact that Malawi made advances in five different Sustainable Development Goals (SDGs) means recovery is happening.
He added that the fact that food inflation has been going down for several weeks and is set to go down further when harvesting starts is cause for optimism.
“The fact that we have stabilised non-food inflation by adopting a tight monetary policy stance of raising the policy rate and the reserve requirement on domestic currency deposits in the wake of last year’s devaluation means that recovery is happening and we must take advantage of it and spread it to more people,” he said.
He added: “…the fact that my administration has brought back fiscal discipline in public finance management and implemented economic reforms to the point of regaining donor confidence and securing investments from the International Monetary Fund, the World Bank, the European Union, and others towards direct budgetary support in the coming fiscal year means that recovery is happening and we need to take advantage of it and spread it to more people.”
Chakwera said Malawi is nation in a state of great and compounded pain, requiring seriousness in focussing on priorities of food security, wealth creation and job creation.
“In our context, those priorities can best be achieved by ensuring that every ministry, department and agency, including this House, is doing its part to promote and stimulate productivity in the ATM strategy areas of Agriculture, Tourism, and Mining,” he said.
Chakwera said the Tonse Administration is much determined to turn Malawi into a heaven for investment.
He said to spur local investment, government has established the Malawi Development Corporation Holding Limited (MDCHL). He said government wants the resources of Malawians to be used for production and development that yield returns.
“One mechanism we have employed for doing that is improving access to finance for Micro Small and Medium sized Enterprises (MSMEs) through initiatives such as the Financial Inclusion and Entrepreneurship Scaling (Fines) project, Neef and Agriculture Commercialisation (Agcom) Project,” he said.
According to Chakwera, in the 2023-2024 financial year, Neef alone disbursed a total of K34.7 billion in loans to 107,505 MSMEs, while Fines distributed K51 billion to 43,887 MSMEs.
“These finances are creating wealth for Malawians as we speak, and it is the kind of progress we will build on to keep our recovery going,” Chakwera said.
On job creation, Chakwera said in the current financial year the local economy has created 197,809 new jobs, bringing the cumulative total of new jobs since 2020 to 1,358,809, mostly in the agriculture, health, education sectors and management support services.
He said government is now on course to sign a government to government labour export agreement with Israel, aimed at exporting 100,000 young people, which would bring $6 million a year in remittances.
Commenting on the Sona, National Planning Commission (NPC) Director General Thomas Munthali described the address as the most Malawi-2063- centric Sona.
He said the address sends the correct signals to Parliament, MDAs, non-state actors and citizens on the importance of getting serious in living the talk of wealth creation.
“His final message of asking all stakeholders to get serious is powerful and timely.
“The most immediate test to getting serious and operationalising the Sona is the forthcoming national budget for which this Parliament is sitting. He has set the most important tone of wealth creation, and we all have to hold each other accountable to get this into action. Truth is if we don’t, we will perpetually beg and borrow. Both of which are demeaning and not sustainable,” Munthali said.
On his part, Minister of Finance Simplex Chithyola Banda said the Sona highlighted six areas that show that the economy is working.
“If you are able to refuel at filling station without long queues, then the economy is moving. If you can get a dollar at any commercial bank and that our reserves are improving, then it means our economy is moving.
“If you observe that maize prices are going down and that food inflation is being reduced, then it means Malawi’s economy is working. If you have heard that Malawian youths are going to Israel and that dollars have started been remitted into this country, then this means our economy is working,” Chithyola Banda said.
He added that the President also highlighted the importance of the ECF programme with IMF and direct budget support resumption as being key indicators that the economy is recovering.
“If you have heard that Malawi qualified for IMFs ECF then it means our economy is working
“If you have heard that donors have resumed direct budget support after 10 years or so then it means our economy is working,” he said.
