CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS
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Malawi |
ECONOMY
The author pinpoints two areas of concern for Malawi this year:
the economy and management of the country’s water resources
The economy
Malawi is in the throes of an economic quandary due to the suspension of financial aid by its traditional donors, and the drought that has left over three million people in need of emergency food relief. This has raised fears of more problems to come in the year 2003.
A monthly economic newsletter from one of the country’s commercial banks, the National Bank of Malawi, indicates that the country’s Gross Domestic Product (GDP) has taken another nose-dive, chalking a up a negative 1.8% this year, following the year 2001’s 1.5% plunge. The slump in GDP is due to economic stagnation, high interest and inflation rates, over-expenditure, hunger, the freeze on aid and company closures. Over twenty companies have been closed in Malawi in the past eight years.
The newsletter says that the government has renewed its commitment to clamp down on expenditure. This will be achieved by sustaining the budget through domestic revenue collection and not donor aid; and cutting down on excessive spending. Although revenue collection tends to be satisfactory, the long-term prognosis does not look encouraging; the budget is largely being exceeded.
Malawi’s economic growth next year depends very much on whether the country will receive normal rains as its economy is agro-based. Assuming the rains will be normal, the newsletter states that the economy might grow by 2%. But this might not be the good news needed because that figure is way off the 6% needed to check poverty.
Malawi has found itself in an economic mess following the withholding of aid by its donors due to its financial indiscipline, non-compliance with structural reforms, poor governance, top-level corruption and intolerance of political dissent. The British government has said it will only release funds to support the 2002/03 budget, if the government improves on its fiscal control.
At the same time, the European Union (EU) has asked the Malawi government to return a substantial sum of money the government is accused of misusing. The money was meant to have been used for the construction of the Chileka road in Blantyre. According to the EU, the government did not follow procedures for the awarding of contracts for the construction. This resulted in money being «lost» in dubious circumstances. The Malawi government has agreed to pay back the money, but as yet, nothing has happened.
Mismanagement of water resources
Despite having abundant water resources and the fourth largest fresh water lake in Africa, Malawi has been ranked as worst on the Water Management Index for the Southern Africa Development Community (SADC) region. Experts from the World Water Council (WWC), together with researchers from the United Kingdom Centre for Ecology and Hydrology developed the Index. On a worldwide basis, Haiti was named as the worst offender, with Japan and the USA as «fairly poor» in water management.
The Water Poverty Index, (WPI), grades 147 countries according to five different measures: Resources; access; capacity; use; environmental impact; to show where the best and worst water situations existed. In addition to Malawi, Ethiopia, Eritrea, Chad, Benin also fair badly on the Index.
Malawi’s perilous situation vis à vis its water supply can be attributed to poverty, as 65% of the population live on less than a dollar-a-day. Malawi’s Secretary for Water, Ben Mbewe, has been quoted by the local press as saying the WPI conclusions that water poverty is linked to income poverty, are correct as far as Malawi is concerned. However, he noted that it was only from 1997 onwards that Malawi started giving water the serious attention it deserves. A large number of people in the country still have no access to good quality drinking water.