World Bank outlines energy sector gaps
A bi-annual publication by the World Bank (WB) dubbed the Malawi Economic Monitor (MEM) shows that Malawi faces an infrastructure investment gap in energy and water and sanitation sectors of approximately $332 million [about K249 billion] per year.
According to the publication, this is due to limited fiscal space combined with weak public investment management and inefficient State-owned enterprises (SOEs) contributing to slow economic growth, poor health outcomes and poverty levels.
The 12th edition of the publication titled ‘Doing More with Less: Improving Service Delivery in Energy and Water’ says investing in infrastructure builds the foundation for long-term recovery.
It further highlights that SOEs responsible for delivering energy and water infrastructure in Malawi are performing poorly and lack the resources to make adequate investments.
This is due to weak sector policies including tariff policies and regulatory frameworks, poor project selection by line ministries, poor project implementation, and significant outstanding receivables with the Central Government.
In a statement accompanying the report, World Bank Country Manager Hugh Riddell says improving service delivery especially in the energy sector, where the electrification rate is only at 11 percent, will be challenging in light of the precarious fiscal situation, particularly given a growing infrastructure gap and the poor performance of SOEs.
“…however, these challenges are not without solutions, and the government has already made some key decisions, signalling its intent to undertake needed reforms to strengthen corporate governance and their performance,” Riddell said.
In an interview, African Institute for Corporate Citizenship Chief Executive Officer Felix Lombe said the challenges were stemming from negative political influence on projects within the sectors.
“Firstly, public investment management processes are not based on sound cost benefit analysis and most of the times negotiations are either shallow and are captured by vested interests of politicians.
“The second reason on State owned enterprises is inefficiency. This case entails leakages of revenues and minimal controls on expenditure. Water boards, Escom and Egenco are best known for this and the reason is as simple as political elite capture,” Lombe said
Again, the World Bank report further notes that Malawi has one of the lowest electricity access rates at 11 percent compared to 42 percent in low income countries and 48 percent in sub-Saharan Africa excluding high-income countries.
It says the country is significantly off track to achieve the Sustainable Development Goals for water, with 67 percent access to basic water supply and 26.2 percent access to basic sanitation.
The Bretton Woods’ institution projects that current generation capacity of about 485 Megawatts (mw) is not adequate to meet the demand, which is expected to reach 1,873mw by 2030 and 4,620mw by 2040.
