Vice-President Saulos Chilima has challenged the country’s economists to cultivate and nurture new sources of economic growth.
Chilima was speaking in Mangochi Wednesday when he opened the 2020 Economics Association of Malawi (Ecama) annual conference under the theme ‘Going Beyond Macroeconomic Stabilisation: the Need for Building Resilience to External Shocks.’
He observed that, for a long time, Malawi had relied on agriculture, meaning that the nation’s growth fortunes rise and fall with agricultural growth.
Chilima said agricultural growth was not climate-proofed.
“Achieving transformation is hard because it requires both structural change as well change of mindset. Malawians have always taken a deterministic view of the economy. We revel in the fact that Malawi is an agro-based economy and we do little to alter this reality. Even our fiscal allocations testify to this agro-bias and mindset.
“It also requires that the State will assure economic rights. We commit to have a fiscal policy that does not reduce the net worth of the State; and a monetary policy that ensures internal and external balance. We also need to uprate the quality of our Regulatory institutions to ease the cost of doing business; a trade policy regime that is predictable and minimises bureaucracy in business to government interactions,” Chilima said.
He said Capital Hill had devised a number of strategies premised on restoring economic growth. Among others, Chilima said, government is committed to resolving infrastructure deficits in the shortest period.
He added that Malawi was exploring the scope for issuing a foreign-currency-denominated development bond or Euro-bond.
He also underscored the need to rejuvenate the private sector by clearing arrears to private firms which currently hover around K250 billion.
The arrears emanate from unpaid water bills by ministries, departments and agencies, compensations arising from court cases, unpaid roads construction works and other supplier who provided goods and services to government.
This injection will both relieve liquidity constraints that companies are facing and also jump-start the economy.
In his keynote address, World Bank Country Manager Hugh Riddell spelled out four key elements for restoring economic resilience in Malawi.
Among others, Ridell said a strong macro-fiscal anchor was crucial to achieving this.
“Secondly, diversification of the economy is key. As is well understood, the structure of Malawi’s small, open economy makes it highly subject to terms-of-trade shocks such as oil and fertiliser price increases and tobacco price declines.
“Economic diversification – both within agriculture and ultimately re-balancing between agriculture and other sectors – is critical to restoring resilience. Diversification within agriculture calls for predictable and transparent trade policies for agricultural products,” he said.
Ecama President Lauryn Nyasulu said the indaba was crucial for both economists and the country at large as it provided a platform through which they could find solutions to some of the challenges facing the country.