World Bank has tipped Malawi and other sub-Saharan Africa countries who are continuing to grow, albeit at a slower pace, due to a more challenging economic environment, that there is need to embark on structural reforms to alleviate domestic impediments to growth.
Growth will slow in 2015 to 3.7 percent from 4.6 percent in 2014, reaching the lowest growth rate since 2009, according to new World Bank projections, Africa’s Pulse
These latest figures are outlined in the World Bank’s new, the twice-yearly analysis of economic trends and the latest data on the continent.
The 2015 forecast remains below the robust 6.5 percent growth in GDP which the region sustained in 2003-2008, and drags below the 4.5 percent growth following the global financial crisis in 2009-2014. Overall, growth in the region is projected to pick up to 4.4 percent in 2016, and further strengthen to 4.8 percent in 2017.
“To withstand new shocks, governments in the region should improve the efficiency of public expenditures, such as prioritizing key investments, and strengthen tax administration to create fiscal space in their budgets.” says Punam Chuhan-Pole, Acting Chief Economist, World Bank Africa and the report’s author
Speaking to journalists during a video conference which was coordinated in Washington DC, Chuhan-Pole said Malawi is undergoing a fair share of fiscal stress.
“in Malawi there has been a fair amount of fiscal stress in terms of the absence of strong fiscal discipline. These are subsidies, wage bill and the debt is also rising ,” he said.
The World Bank has been arguing that Farm Input Subsidy Programme (Fisp), which currently takes up 70 percent of the agricultural public expenditure and 10 percent of the national budget, has not contributed significantly to poverty reduction as in Malawi as hoped.
The bank advised Malawi to increase farmers’ contribution towards the Fisp from three percent to 30 percent if it is to relieve its strain on public expenditure.
Civil Society Agriculture Network (Cisanet) Executive Director Tamani Nkhono supported the bank’s proposal to increase farmers’ contribution in Fisp to 30 percent, saying the subsidy programme has “failed to reduce household poverty due to the enormous flaws on its design.”
Moving forward, World Bank argues that beyond macroeconomic policies, there was the need for structural reforms to ignite and sustain productivity growth in all sectors in the region.
Chuhan-Pole, also said the region should focus on policies that would promote growth, adding that the poor should be considered when implementing structural reforms.
World Bank also calls for boosting revenues through taxes and improved tax compliance., saying complementing these efforts, governments can improve the efficiency of public expenditures to create fiscal space in their budget.Follow and Subscribe Nyasa TV :