Limping towards the middle-income mark
By 2030, just about seven years away, Malawi aspires to become a lower middle-income economy.
Lower middle-income economies are those with a gross national income (GNI) per capita of between $1,086 and $4,255.
But the country’s per-capita income, which is derived by dividing national income by population, is ranked one of the lowest in the world at around $600.
The predominantly agrarian economy is also rated as the third poorest in the world, with more than half of Malawi’s population living below the poverty line.
For almost a decade, Malawi’s rural poverty rate alone has stagnated at 56 percent.
The country, susceptible to exogenous and weather-related shocks, while being faced with myriad structural challenges, has been wobbling on the path towards sustainable growth.
And, available figures are not as amusing.
Sluggish growth
In the past 10 years, annual economic outturn in real gross domestic product (GDP) terms has averaged 4.5 percent.
But to hit the middle-income mark, Malawi needs to be growing by at least six percent per year for over 10 years.
But in the past three years, the situation has seen worse as the economy has been an annual growth rate of not more than 2 percent.
The International Monetary Fund (IMF) predicts a 2.4 percent GDP growth for Malawi in 2023, as economic growth is set to slow in sub- Saharan Africa.
The Bretton Woods institution sees the local economy further growing by at least 3.2 percent in 2024.
The IMF’s 2023 growth projection for Malawi is way higher than the 1.6 percent revised GDP growth estimate by the government in the aftermath of Cyclone Freddy from the earlier projected 2.7 percent made by Finance Minister Sosten Gwengwe when presenting the 2023-24 national budget recently.
The estimate is also higher than the 1.4 percent revised GDP projection by the World Bank.
Aspirations versus reality
After the botched Vision 2020, in January 2021, Malawi launched its second long-term development blueprint, the Malawi 2063 (MW2063), aimed at transforming Malawi into an upper middle-income nation within four decades.
It is segmented into 10-year Malawi Implementation Plans (MIP), and MIP-1, estimated to cost $15 billion (about K12 trillion), was crafted to propel growth towards the lower middle-income status.
Its priority strategies and interventions are to set Malawi on a path to actualise MW2063 with clearly outlined ‘quick wins.’
The MIP-1, which runs from 2021 to 2030, replaced the Malawi Growth and Development Strategy III as the country’s new medium-term development strategy.
It is also aimed at helping Malawi achieve most of the Sustainable Development Goals.
But the National Planning Commission (NPC), a government entity entrusted with the task of formulating and overseeing implementation of long-term national development plans, says rollout of the first 10-year plan has been very slow with some interventions being off-track.
Speaking in Lilongwe during the 2023 National Development Conference recently, NPC Director General Thomas Munthali said out of the implementation interventions that Malawi was expected to start within 2021-2022, about 80 percent have started, of which, 60 percent are either very slow or off-track.
The slow pace could be partly attributed to a number of exogenous shocks such as the Russia-Ukraine War, the Covid pandemic and tropical storms.
On the other hand, the slow progress was as a result of failure to allocate enough resources to key strategic areas which could trigger the much needed growth, in addition to sheer laxity by people trusted with responsibilities to play in the implementation process.
While 2020 draws near, it appears a foregone conclusion that the desired mark remains far from being met.
Time to review targets?
The Reserve Bank of Malawi Governor Wilson Banda recently recommended a downward review of Malawi’s medium-term gross domestic product (GDP) target ‘to reflect current economic trends.’
But the NPC believes the current situation requires doing things differently other than lowering GDP growth projection.
Banda said factors do not permit Malawi’s growth estimate, hence the need for review.
“The theoretical response to this is that other things will be held constant, like we are not suffering from external shocks. And two, we are doing everything that is proposed within the growth strategy. As a result, the country should attain those high growth rates.
“[But] in practice, it becomes a challenge. So, as a nation, I say we should be aiming at those high growth rates but we should also be mindful of the fact that we are living in the real world and there are all sorts of external shocks that can take us off course,” Banda said.
But Munthali said the country needs not to downgrade its growth estimate and, instead, should work towards addressing the structural economic challenges.
“I don’t think the issue is about downgrading [the growth projection] because the moment we are downgrading, it means we can’t do anything about it. That is accepting defeat. I strongly believe that the target should remain intact,” Munthali said.
Conclusion
Needless to say the Malawi 2063, just like its predecessor document, the Vision 2020, was unveiled with pomp and fanfare. Except that the former seem to be relatively specific and is espoused by political will.
But these attributes alone will not convert the dream into reality, until concerted efforts are deployed by implementing agents.
Malawi has never been devoid of good development plans, but the country continues to lack the vigour required in implementing the ideas.
Malawians have over the years succeeded in complaining and listing down limitations to attaining their national growth aspirations.
But that alone has remained top on the list of causes for our failure.
