Economic risks facing Malawi have exacerbated following a mess surrounding the government’s Affordable Input Programme (AIP) coupled with prolonged droughts and flooding in some African countries, a financial advisory firm, Bridgepath Capital Limited, has said.
These, coupled with other structural challenges and exogenous shocks, continue to threaten the food situation in the country as the economy’s mainstay, the agriculture sector, is shaken.
Further, the situation could affect overall Gross Domestic Product output.
In its October Economic Report, Bridgepath Capital Limited says the challenges have compounded other long-standing risks such high commodity prices.
For instance, in September 2022, prices of Maize— Malawi’s staple commodity — averaged K334 per kg, an increase from K324 per kg in August 2022.
“If these occurrences continue to persist, domestic inflation may be expected to maintain an upward trajectory, ultimately lowering the standard of living for the general population,” the report reads.
Agriculture remains the anchor of the Malawi economy, like in many African countries, where production is done or both consumption and commercial purposes.
Malawians are in the interim eagerly waiting for policies that will offset these risks in the coming midyear budget review which is expected to start from Monday next week.
Minister of Finance Sosten Gwengwe recently admitted that the National Budget needs some re-alignments during mid-term budget review meetings to place the economy in line with current trends.
Economist from the Malawi University of Business and Applied Sciences Betchani Tchereni said it is unfortunate that instead of catastrophes in the horn of Africa presenting Malawi with export opportunities, they are further threatening the economy.
Tchereni said the oncoming budget review meeting presents the Malawi government with an opportunity to make things better by aligning the financial plan with current recovery.
“The minister [of finance] should look at how the country can leverage on the misfortunes of others, reducing consumption and expenditure and put policies that will fast-track revamping of the agriculture sector such as mega farms and the Shire Valley Transformation project,” he said.
But lately, Malawi’s economy has been riddled with both exogenous and structural challenges which have stifled chances of growth, with the IMF projecting a GDP growth of 0.9 percent in 2022, from an earlier 2.7 percent projection.
The IMF says it expects the local economy to grow by 2.5 percent in 2023 before strengthening further to 4.5 percent by 2027.
According to statistics, Malawi grew her economy by an average 4.5 percent within a decade to 2019.
The economy grew by eight percent in 2009, 6.9 percent in 2010, 4.9 percent in 2011, 1.9 percent in 2012, 5.2 percent in 2013, 5.7 percent in 2014, three percent in 2015, 2.3 percent in 2016, four percent in 2017, 3.2 percent in 2018, and 4.5 percent in 2019.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.