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Poor power, internet choking economy

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The latest Malawi Economic Monitor (Mem) by the World Bank has revealed that Malawi’s low levels of electricity access, high internet prices, unpredictable connectivity, high cost of smart devices, and lack of digital skills hinder a potential of $189 million (about K152 billion) in additional Gross Domestic Product and $33 million (K26.4 billion) in tax revenues per year.

The 13th edition of the Mem, title Investing in Digital Transformation, released on Friday, says although the government has established the essential foundation for public digital platforms with a relatively well-developed digital infrastructure, connectivity remains unpredictable and expensive for many people, contributing to persistent gender and rural-urban divides in accessing and using digital technology.

Among other things, the Mem proposes pathways that would help the government improve the enabling environment for the digital economy to grow and thrive in Malawi, which includes rolling out digital financial services in rural areas by developing broadband and financial infrastructure.

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The bank says new public-private partnerships could help drive digital transformation and demand by developing links with regional and global incubators and accelerators.

It observes that competencies for digital skills and entrepreneurship should be strengthened as well as linkages between the government, academia and private sector to co-curate ICT curricula.

World Bank Country Manager for Malawi Huge Riddell said on Friday that developing Malawi’s digital economy would diversify and strengthen economic growth, job creation and innovation.

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“Digital technologies can help lower the cost of economic and social transactions for firms, individuals and the public sector.

“They can also help improve safety nets, delivery of public services and transparency for better fiscal management and management of future crises,” Riddell said.

The Mem has projected that Malawi’s economic growth would increase to 2.8 percent in 2021 with good weather and the Affordable Inputs Programme (AIP) which supports a strong maize harvest.

It, however, says, looking toward 2022 and beyond, continued universal fertilizer subsidies are unlikely to lead to another boost of maize production but they will not help diversify growth.

The bank says, instead, the AIP will deplete fiscal space and divert resources away from badly needed investments in economic diversification.

“Additionally, sustained economic recovery is at risk from high levels of debt and continued government expenditure towards consumption at the expense of critical investments.

“Therefore, Malawi needs to implement policies to strengthen and diversify growth while reducing domestic borrowing. It needs to improve growth by 5 percent and above to increase incomes and employment, as well as to reduce a growing domestic debt burden,” the Mem says.

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