World Bank paints gloomy picture for Malawi economy: Tips govt to invest in agricultural resilience

The World Bank has urged Malawi to develop a better system to mitigate agricultural shocks that may arise due to uncertainty of agricultural production factors like weather.

The World Bank sounded the alarm Wednesday in Lilongwe after the launch of its third Malawi Economic Monitor report titled Absorbing Shocks, Building Resilience which has a special focus on agricultural risk management.

According to the report published in May, 2016 key ways to promote agricultural resilience include connecting farmers to markets and strengthening farmer capacity to risk management practices, initiating measures that would promote freer trade in agricultural products and improved transparency and clear roles of key maize markets like Admarc.

It says Malawi has to develop a better system to mitigate agricultural shocks while continuing fiscal discipline to set itself on economic growth recovery path in 2017.

According to Laura Kullenberg, World Bank Country Manager for Malawi, the key measures would help in mitigating agricultural shocks like those experienced the past two years.

“The country has experienced severe weather conditions in terms of droughts which have been experienced in the past two years.

“This report shows Malawi having a gross Domestic Production rate of 2.8 percent resulting from the said weather conditions and macroeconomic instability. Yet still, there is need to develop a better system that would ensure the mitigation of agricultural shocks that could happen at any time,” said Kullenberg.

Kullenberg further said the report also highlights on the achievements government has done in implementing fiscal disciplines in its operations.

“On the other hand, there have been some improvements in the fiscal deficit. In this case, there are a couple of things that are being put in place to consolidate public expenditure which was very wide but is now narrowing, but there is still need to continue tightening controls,” he proposed.

However, one of the crucial elements in the report is the observation by the World Bank that the Farm Input Subsidy Programme are showing progress.

It says direct retailing by the private sector to beneficiaries, reduced level of subsidy, fixed value of coupons amongst others have provided a green light on the potential success of the FISP. However, the bank observes there are still other things that have to be taken on board as far as FISP is concerned.

Some of the key observations in the report indicate that Malawi is still receiving a large amount of development assistance, the Kwacha continues to follow a volatile pathway and that export performance has been mixed.

Priscilla Kandoole, World Bank Country Economist said the aim of the report is to help create an environment with better informed policy analysis and debate.

However, when taken to task on the different growth estimates provided by the World Bank of 2.8 and that provided by government of around 5 percent, Kandoole said there are several aspects that come into play which at the end of the day provide different estimates.

“There are several factors that are taken into consideration when coming up with the estimates, for example the frequency of producing the estimates. It may happen that the factors we are using are different from those used by the government and at the end of the day the estimates would be different,” said Kandoole.

Previously, the World Bank released similar reports in 2015 titled Managing Financial Pressure and Adjusting in Turbulent Times.

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