BRIEF: Building Stable Recovery Plan for Malawi's Economy & the Role of Fiscal Policy

1.0 Introduction

The COVID-19 pandemic has struck amid a promising economic growth outlook for Malawi at the start of 2020 characterized by reducing interest rates, low headline inflation rate and a stable exchange rate. However, with the pandemic causing local, regional and global supply disruptions as well as a deterioration in consumer and business confidence levels which have in turn reduced aggregate demand; the reality now is that these stable macroeconomic foundations are under threat and the economy stands to suffer from the potential negative spillover effects. The Ministry of Finance, Economic Planning & Development has since revised its 2020 economic growth projections from 6.0 percent to 1.9 percent while the International Monetary Fund’s projection is at 1.0 percent all pointing to slowing down in economic activities.

These projections have been made under the assumption that the pandemic will fade in the second half of the year 2020 and that containment efforts like lockdowns will have been lifted by then. The expectation is that once normal economic activity returns through resumption of global value chains and trade links; Malawi’s economy will experience a substantial growth of 4.5 percent in 2021 as per the Ministry of Finance’s projections. 

Therefore, during this period (year 2020) when reduced economic activity and increased pressure on public health resources is expected for Malawi; the need for fiscal policy intervention has been elevated to an unprecedented level and rightly so because of the following reasons:

  • Firstly, our health system is very weak as such this has created the need to boost health resources in the country and thus the expenditure outlay needed in the sector has increased.
  • Secondly, holding all other things constant, the general decline in economic transactions has had acute effects on aggregate demand in the economy because the key determinants of aggregate demand such as demand for private consumption, demand for new capital goods (private investments) as well as net demand for domestic goods and services by foreigners have sharply declined.
  • Thirdly, this has then created the need for the Government to increase public investment (increased government expenditure) while at the same time provide tax incentives like tax graces or waivers (reduced government revenue) in order to offset this downward pressure on aggregate demand.

The fiscal response however is likely to be constrained due to a low fiscal space and ultimately this weak fiscal position is expected to deteriorate further with the crisis, which will aggravate high borrowing needs. On the other hand, the external debt service relief that was provided by the IMF to Malawi could not have come at a better time and will go a long way at freeing up financial resources that can be used in policy response.

The analysis below tries to look at how Malawi can build a more robust fiscal response to the economic effects of COVID-19 while at the same achieving a stable economic recovery that is characterized by the following:

  • Public domestic debt levels that are sustainable to avoid public debt distress.
  • Stronger fiscal management that avoids financial resource leakages.
  • Targeted expenditure on priority areas like the health sector and agriculture sector.
  • Social support services through provision of income support to local people and businesses.

2.0 Fiscal financing, public debt stock & target areas

According to the IMF policy response tracker, currently the Malawi Government’s fiscal response plan includes: a US$20 million (0.25 percent of GDP) expenditure outlay on health care and targeted social assistance programs; tax waivers on imports of essential goods to manage and contain the pandemic as well as an Emergency Cash Transfer Program of about $50 million (0.6 percent of GDP), that is mostly going to be financed by development partners to support small businesses in major urban areas and will run between May to November 2020. Financing the response mechanisms particularly for Government funded programs is likely going to be very challenging and this is due to among others: the lack of fiscal space as evidenced by the fiscal deficits that have persisted so far throughout the 2019/20 fiscal year as indicated in the Reserve Bank of Malawi March 2020 Monthly Economic Review and the high overall risk of public debt distress with RBM statistics quoting the Debt/ GDP ratio for Malawi at 62 percent at the close of 2019.

Even though the Debt/GDP ratio for Malawi is already high; the weak fiscal position that the economy finds itself in makes Government borrowing the only available alternative to quickly finance the fiscal response. However, as (Bi, Shen and Yang 2016) note, high public debt levels are usually associated with lower multiplier effects of discretionary fiscal policies; this then presents the need for the Government to manage the fiscal response in a way that maximizes impact on the economy while at the same time keeping an eye on debt sustainability to avoid public debt distress.


Figure 1: Trend of Malawi's Public Debt/GDP percentage vs External debt and Public domestic debt.

Graph 1

Source: Data from RBM & World Bank


Figure 1 shows that the Public Debt/ GDP ratio has increased rapidly in the last couple of years mainly due to the rapid increase in public domestic debt. World Bank statistics indicate that from 2012 to June 2019 external debt increased from 26.5 percent of GDP to 30.2 percent of GDP while during the same period public domestic debt increased from 13.8 percent of GDP to 32.6 percent of GDP surpassing external debt in the process with the total debt stock standing at

62.8 percent of GDP. As at June 2019, Word Bank estimates show that public domestic debt was at MK1.9 trillion while external debt was at MK1.8 trillion. Furthermore, at the close of 2019 RBM statistics show that the Debt/ GDP ratio was down to 62 percent mainly due to the decrease in public domestic debt that was at MK1.4 trillion.

Figure 2: Malawi Government Expenditure vs Total Revenue Collection and Overall tax performance.

Graph 2

Source: Data from RBM

Figure 2 shows that fiscal deficits have persisted throughout the 2019/20 fiscal year most likely due to failure of achieving revenue targets. During the same period the trend of tax performance has not been too volatile with significant drops in revenue collection experienced in November 2019 and February 2020. However, the tax waivers and tax graces that Government has put into place are going to lead to a drop in revenue collection and this will increase the fiscal pressure even more. 


2.1 How should the Government manage the fiscal space?

The first step in this is to focus on the lines for which the Government has been consistently overspending. The Government should ensure that recurrent expenditure is within budgeted levels and if there are opportunities to save resources these must be utilized. Government should identify areas that can easily be forgone to improve revenues. Government is associated with a lot of inefficiencies and misuse of resources. There is need to reduce off workplace meetings, unnecessary trips, among others; thus Government should focus more on essentials.

Furthermore, the Government must strengthen commitment controls to avoid incurring of arrears and most importantly improve planning and execution of the development budget (public investment) as this is what will be key in implementing the fiscal stimulus. Many times when revenue collection has performed badly, it has been the trend that during mid-term budget reviews development expenditure usually takes the hit and is revised downwards while recurrent expenditure usually goes up. Such developments undermine the growth prospects for the country as public investment plays a crucial role in determining the long-run productive capacity of every economy and it is what triggers domestic private investment as well as foreign direct investment.

Figure 3 Trend of Malawi Government expenditure vs growth of Gross Capital Formation and growth of Foreign Direct Investment Inflows

Graph 3

Source: Data from World Bank & RBM

Figure 3 shows that since 2010 growth of gross capital formation has been inconsistent characterised by two huge troughs in 2011 and 2016. This can be attributed to poor planning and execution of the development budget as evidenced by the increase and decrease in development expenditure over the period under review while recurrent expenditure has been consistently increasing throughout the same period.

Furthermore, figure 3 shows that over the same period growth of Foreign Direct Investment inflows has been negligible at best with the only significant growth experienced in 2011 when it grew at 10.1 percent of GDP but almost immediately in the following year 2012 growth shrunk to -0.1 percent of GDP. Foreign investors have not been too keen to invest in our economy among others: due to lack of quality public investment in road infrastructure necessary to enhance market linkages as well as lack of investment in electricity which is in adequate and unreliable. With the economic effects of COVID-19 being felt globally we must expect FDI inflows to shrink further as foreign investors will be focusing more on boosting growth in their own economies. Therefore, Government must take the lead in promoting domestic investment by investing in areas that could trigger domestic private investment.


2.2 Choosing target areas

In making decisions on how much and whether to scale up quality public investment (through increased public borrowing), the Government must make full considerations of fiscal costs vs. benefits by paying careful attention to domestic absorption capacity. Holding all things constant, currently both private consumption and private investment are experiencing downward pressure due to low consumer and business confidence levels as well as the increased uncertainty about future income which is in turn causing precautionary saving. Therefore, the fiscal response should target sectors which have large positive externalities, sustained domestic demand and also those which could crowd in private sector investment.

For instance, the agriculture sector should be one of the sectors the response should target. The Government should invest in the Green Belt Authority (GBA) projects to build resilience for the sector to weather shocks as well as revitalizing idle estates for production of essential food crops to cushion 2021 food stocks. In the very short term, Government should also support irrigation farming to utilize waters that are still prevalent in many parts of the country and Government should partner with private sector companies in this endeavor. Resilience of the agriculture sector will have positive effects on the economy due to significant contributions to employment as well as its linkage with other sectors in terms of supply of raw materials; while food security will influence the economy by strengthening human capital through improved nutrition. Furthermore, the Government should also invest in health infrastructure and emergency services to improve quality of public health, enhance resilience, and help mitigate risks from future epidemics.

Figure 4: Trend of Malawi Government expenditure in the Agriculture & Health sectors

Graph 4

Source: Data from RBM, FAO & World Bank

Figure 4 shows that Government expenditure in these two sectors has consistently been on the rise in the last couple of years however to mitigate the impact of COVID-19 the expenditure outlay in these sectors has to increase even more.

In addition, on top of the K2 billion announced and earmarked for lending to Small Scale Enterprise businesses the Government must also look to provide special lines of credit that can be accessed by larger businesses as a way of revitalizing the economy. The Government must prioritize firms that belong to the sectors that contribute significantly to the country’s GDP in order to maximize impact as well as firms in hardest hit sectors like the accommodation and food service (tourism) whose total output is expected to contract by -9.9 percent in 2020 as per the Ministry of Finance’s statistics.

Figure 5: Shows the top 3 sectors that contribute the most to Malawi’s GDP vs. Annual GDP Growth

Graph 5

Source: Data from RBM, Ministry of Finance & World Bank

The fiscal response should look to lender support to sectors that contribute significantly to the country’s GDP but also those that have economic linkages with these sectors. The agriculture, manufacturing and wholesale & retail sectors are the top 3 contributors to the country’s GDP and also employ a huge portion of the labour force as such they should be targeted to safeguard jobs for the local citizenly. Other sectors like transport and storage services that provide logistical support to these three sectors and the rest of the other sectors should also be supported to keep the business transmission channels running in the economy.

Lastly, the fiscal response should target the energy sector as availability of energy is an important determining factor to cost of production and ultimately production capacity. Government must commit to addressing the long standing problem of electricity in the country by moving forward and implementing in the medium term at least one of the following projects: Kammwamba Coal Fired Power Generation Plant, Mozambique-Malawi Regional Interconnector Project, Zambia-Malawi Interconnector Project or Mpatamanga Hydro Power Plant. Private sector companies have been failing to produce goods at maximum capacity due to frequent electricity outages that force companies to use alternative sources of power such as diesel powered generators which is an additional cost of production. Moving forward in the aforementioned projects to support more reliable power supply will promote economic growth among others: through expansion of digital technologies across all the sectors of the economy that will promote economic diversification and improve financial inclusion levels in the country. If anything the impact of COVID -19 has taught us the importance of digital technology in an economy.


3.0 Fiscal leakages and corruption

As the country continues to grapple with the reality of the pandemic the Government has put much emphasis in efforts to blunt the health impact. This has involved enhanced screening and testing, monitoring of infected people as well as suspected cases and mobilizing additional health care workers. In regards to the socio-economic impact of the pandemic the Government has also set in motion two separate cash transfer programs with the first one targeting small businesses in major urban areas mostly using donor support while the other one is targeting poor households by enhancing the Mtukula Pakhomo Program that is already in existence.

Even though all these interventions are necessary it is important to note that they also present opportunities for corruption and abuse of funds. Given the unprecedented nature of the crisis and the need for cooperation across agencies and levels of Government; oversight mechanisms could be compromised. Therefore to ensure accountability in use of COVID-19 related funds, Government must adopt the following measures:

  • Government should publicly disclose all grants, procurements or provision of emergency funds over a set amount within a specified number of days after funds are released and/or used.
  • Clear rules on eligibility are needed to mitigate the risk of corruption skewing the distribution of financial support that is meant to help struggling businesses and individuals.
  • Shorten feedback loops by increasing the frequency of audits and spending reviews.
  • Grievance redress mechanisms are needed to ensure that communities and intended program beneficiaries know what to do when they do not receive their expected payments.


4.0 Conclusion

Over the past few years Government revenue collection has regularly performed below set targets while expenditure has consistently been above budget and this has plunged the country into more domestic debt with RBM statistics quoting public domestic debt at MK 1.4 trillion at the close of 2019. However, due to the unprecedented nature and size of the shock that COVID-19 has posed to our economy; it is inevitable that the Government will have to engage in more borrowing in order to mobilize resources to counter the pandemic. MCCCI acknowledges that the speed with which normal business activity can return depends on how quickly the country can neutralize the threat of the pandemic and thus fighting the pandemic should indeed be a priority for the Government. Therefore, the Government is urged to practice fiscal restraint especially for recurrent expenditure, improve execution of development budget, strengthen oversight and tighten controls in use of financial resources.

We are aware that the monetary policy interventions that the RBM has instituted particularly in regards to the reduction of the Lombard rate and the Liquidity Reserve Requirement on domestic currency deposits have freed up financial resources which private sector companies could borrow. However, we still urge the government to provide special lines of credit that can be accessed by larger firms as a way of revitalizing the economy. The Government must channel financial resources to sectors with a potential for high returns.

Furthermore, the channels of communication between the private sector and the Government must remain wide open to ensure a coordinated effort that takes input from both sides. In formulating the policy response Government must therefore take private sector recommendations very seriously as they contain real issues that could help stimulate businesses.

Economic Update - April 2020

Overview & Structure

Malawi is an agro-based economy with agriculture contributing above 28 percent of GDP and contributing to over 80 percent of export revenues. The figure below shows the sectoral contribution to the national income in Malawi.

Sectoral Growth rates 2020

The table below represents output growth by type of activity (at 2010 prices)


output growth by type of activity - at 2010 prices

The projection for 2020 are based on assumptions in 2019

Inflation Rates

The inflation rates have been floating around between 9 and 8, with the occasional extremes being at 11 from January 2018 to march 2020.

Trends in monthly headline inflation rates


Trends in monthly headline inflation rates


Import Cover and Foreign Exchange Reserves

Import cover was on the higher side in December 2019 where it hit 4.05.

Foreign exchange reserves in Malawi hit the highest peak in December 2019 at MWK786 Billion, and lowest being MWK 631 Billion, in between January 2018 to February 2020.

  Foreign exchange reserves

Source: RBM



Policy Rate, Deposit rates and Bank rates trend


The Policy rate has been on a declining trend. Rates declined from 16% in 2018, to 14.5% in January 2019 then again to 13.5 in May 2019 to date.


The base lending rates have been fixed at 13.20 for the minimum and 25.35 for the maximum end.

As of November 2019, the deposit rate was at 4.47.


Policy rates

Source: RBM



1. Introduction


The outbreak of the novel coronavirus (Covid-19), is rapidly evolving and spreading to a number of countries around the world. The first human infections were reported at the end of December 2019 in Wuhan, Hubei Province in China when a cluster of 41 pneumonia cases was identified. The rapid outbreak of this coronavirus has caused an unprecedented health crisis which the world is grappling with right now. In addition to the human impact, there is also significant commercial impact being felt globally. As viruses know no borders, the impacts will continue to spread to every corner of the globe. The 2019 novel coronavirus or COVID-19 (2019-nCoV) spread to multiple countries across the world starting from February, with confirmed cases reported in 196 countries, areas or territories as on 24th March 2020, according to the World Health Organisation (WHO). The total number of suspected cases reported from countries where no case is confirmed is on the rise.


The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) conducted a survey on the impact of the coronavirus on businesses in Malawi. The virus has rapidly spread from China to European countries and the United States of America, and recently it has been reported in 44 African countries as on 24th March 2020. Though Malawi still has no confirmed cases, the country remains at risk. Measures have been put in place by most countries, including Malawi to ensure that the epidemic is contained such as limitation on travel into the country, school closure and a ban on meetings with more than 100 people. Flow of goods, services and people face ever-increasing restrictions in the wake of this epidemic.


This survey is one of the surveys undertaken throughout the year by MCCCI at a given point in time to assess the impact of different factors on businesses.  The survey measures the impact that the COVID-19 has had on businesses in Malawi which is important in guiding business planning and decision making. The survey has been conducted in such a way that all sectors where enterprises conduct business are interviewed to give a perception of doing business in Malawi.


The survey was conducted during the week beginning, 13th March 2020 and the responses are based on the recent events that have taken place since the onset of the Covid-19 outbreak.


2. Expected Economic Effects


COVID-19 which has been declared a global pandemic is affecting many economies throughout the world. The following are some of the potential economic effects that may be transmitted to Malawi:

  1. Disturbance of trade links with rest of the world as Malawi depends on a number of imports for its small industry. This is likely to happen as countries close and/or restrict movements of goods, services and people. Factories where Malawi’s imports originate may also be inactive as countries restrict activities.
  2. Disruption of global value chains will affect Malawi’s main export products which are mainly raw materials. Besides border closures, the dip in demand in foreign markets especially in Europe and America as a result of possible recession will lead to a loss of Malawi products’ market. Malawian industry however does not have the necessary capacity to absorb these raw products for local processing.
  3. Fiscal expenditure pressure is imminent due to higher expected spending in the health sector whilst revenues are declining partly to slowdown in industrial and commercial activities.
  4. Malawi depends on imported petroleum products which have price transmission effects in goods and services and any sudden supply shock will have consequences on our economy. On the hand, the impending global recession will lead to a reduction in global oil demand and the consequent decline in oil prices may benefit the economy.
  5. Tourism, one of the priority growth sectors in Malawi, will be greatly affected since it depends largely on the movement of people. Local hotels are already witnessing massive cancellations of bookings due to travel restrictions as well as health safety considerations.

It is expected that the growth prospects of 5.9 percent for 2020 will be hampered due to slow down of economic activities.


3. Responses According to Sectors 


Figure 1 below shows that majority of businesses that responded to the questionnaire are from agriculture, transport, manufacturing, wholesale/retail, and accomodation and food service sectors.


Figure 1: Share of Responses according to Sector

Figure 1



4. Responses according to Exports or Imports


According to the responses presented in figure 2 below, 66.67 percent are import products and 42.42 percent are exports. Some of the companies trade in both exports and imports sectors.


Figure 2: Businesses in Export and Import Trade


Some of the products identified by respondents include import of raw materials for production, building materials, pens, rulers, utensils, services and exports of macadamia nuts, coffee, among others.


5. Malawi Trade with high Risk Countries


The survey segregated the countries into high risk and low risk countries. High risk countries comprised all countries with the highest count of COVID-19 and low risk countries were grouped as ‘others’. South Africa, though not considered high risk according to the statistics was also specially recognised and included in the high risk category since it is Malawi's major trading partner. Any impact on its economy would be significantly felt by Malawi.

Figure 3 below confirms that majority of trade is with South Africa at 70 percent followed by China with 43.33. A total of 67.86 percent of responses also trade with other countries outside the prescribed risk countries.


Figure 3: Trading with High Risk Countries



6.Impact on Exports and Imports


Figure 4: Impact on Trade


Figure 4 above shows that majority of businesses who import and export their products and services have been affected. Some businesses that transact with China have indicated that their imports from China have reduced by at least 50 percent and have not received their consignments from January to date. Small businesses which rely on imports from China have seen their business come to a standstill. Some of the transit ports are also being closed. This has compounded the problem.


7.Extent of Impact


Businesses were also asked to assess the impact of the COVID-19 virus on turnover, production, availability of inputs, products and services. The responses are provided in the figure below.


Figure 5: Impact on Business Parameters


As shown in figure 5 above, majority of businesses have been affected in all areas of turnover, production, and the availability of inputs, goods and services. It is clear from the graph above that some businesses have been significantly and extremely affected by this epidemic. Tourism and travel industry, in particular, has been heavily affected in terms of provision of services.


8.Notable Issues Raised by Businesses


The following are some of the issues raised by businesses that should be taken into consideration:

  • There are a lot of cancellations of bookings particularly faced by the hotel industry from both local and international customers.
  • Some businesses do not want to access sea ports such as Dar es Salaam port which are considered risky.
  • Some Countries have instituted cross-border travel restrictions and Malawi must adopt the same.
  • Some businesses have been affected mildly, but are worried of the future outlook and therefore are taking precautionary measures.
  • Local activities which attract larger gatherings such as market events are being cancelled as cautionary measures
  • Some businesses are worried that Malawi border remains open and goods are moving across thus putting the country at risk of having the virus.
  • There has been a concern by some businesses particularly on strategic products such as fuel which is imported. Malawi should ensure that there are adequate reserves for all imported essential items including fuel
  • Some businesses in the health sector are concerned with movement of patients and experts. There are instances where some of the patients are stuck in hospitals outside the country because of airport closures. Others are unable to go for international treatment due to the same challenges. It is also projected that patients suffering from other diseases such as heart attacks will not be adequately assisted as most hospital personnel will be focusing on COVID-19 patients. The current level of service providers especially at clinics do not have the facilities to deal with COVID-19 on a large scale, and as such offering medical services to people on medical schemes will be a serious challenge. It is projected that once Government gives a directive that organisations should close, this will have an extreme impact on revenue of many people thus making it impossible to pay hospital bills and clinics, ultimately leading to serious shortages of medicines.
  • Some of the businesses have indicated that during the first quarter of the year, business is usually slow. It picks up after harvesting season so the effects of the outbreak may not be evident now. This was mostly noted in the construction sector.
  • Due to COVID-19, the transit time of goods from import countries has gone up due to non-availability of containers to move the cargo. Informal exports from customers coming from Mozambique & Zambia has gone down due to fear of denial of entry visa at the border.
  • Importation of goods from China and travel to China has come to a standstill. Furthermore, goods that were bought late last year are yet to be dispatched as there are not enough volumes to allow for containers to be fully loaded and shipped. To put it in perspective, in normal times with Malawians regularly travelling to China, goods could be loaded and shipped within a week or a fortnight. This has greatly affected many businesses.
  • Government should be more stringent with the entry of passengers from infected countries in order to avoid entry of COVID-19 into the country.
  • Some of the businesses have had all raw material orders from China withheld. The delay has resulted in slow down as well as reduction of production of goods. If the trend continues a shut down of production is likely.
  • Less international travel is affecting airline and ticketing companies. Travelling outside the country has reduced significantly in particular to and from Europe (especially Italy where connection flights pass through Rome extensively) and China. If this pandemic continues, it will bring business on its knees.




Malawi Confederation of Chambers of Commerce and Industry advances the following recommendations:

  1. Malawi Government should prioritize its expenditure to mitigate further negative impacts from COVID-19. Part of the expenditure should be in the form of provision of incentives to private sector which participate in the provision of health services in Malawi. Furthermore, the Government should review the whole health system to ensure adequate services are available and accessible to its citizenry.
  2. Government and the Reserve Bank of Malawi should have conversation with stakeholders especially businesses on how they can work together to curb the threat of the COVID-19 and ensure that the impact on businesses and economy is minimised. Some (even African) governments are promising to guarantee payment of wages for low level staff who are likely to feel the impact of the pandemic more.
  3. Banks should consider restructuring the loans owed to businesses whose cash flows have been affected by the COVID-19 pandemic.
  4. Government should ensure that Malawi has adequate reserves for all imported essential items including fuel and drugs.
  5. Government should institute and sustain cross-border travel restrictions for Malawi regardless of position of office.
  6. Banks should ensure that digital payment infrastructure is always operational to ensure digital payments are encouraged and consider reducing fees and removal of limits in amount of money transactions
  7. Businesses are also encouraged to adopt electronic methods of payment 


What is Coronavirus Covid-19?

Coronavirus disease (COVID-19) is an infectious disease caused by a newly discovered coronavirus.


Most people infected with the COVID-19 virus will experience mild to moderate respiratory illness and recover without requiring special treatment.  Older people, and those with underlying medical problems like cardiovascular disease, diabetes, chronic respiratory disease, and cancer are more likely to develop serious illness.


The best way to prevent and slow down transmission is be well informed about the COVID-19 virus, the disease it causes and how it spreads. Protect yourself and others from infection by washing your hands or using an alcohol based rub frequently and not touching your face.


The COVID-19 virus spreads primarily through droplets of saliva or discharge from the nose when an infected person coughs or sneezes, so it’s important that you also practice respiratory etiquette (for example, by coughing into a flexed elbow).


At this time, there are no specific vaccines or treatments for COVID-19. However, there are many ongoing clinical trials evaluating potential treatments.


How to protect yourself against Covid19

Covid 19 precautions

 The correct way to wash hands


How to wash hands


What are the symptoms of Coronavirus Covid-19?

The COVID-19 virus affects different people in different ways.  COVID-19 is a respiratory disease and most infected people will develop mild to moderate symptoms and recover without requiring special treatment.  People who have underlying medical conditions and those over 60 years old have a higher risk of developing severe disease and death.


Common symptoms include:


  • fever
  • tiredness
  • dry cough.


Other symptoms include:


  • shortness of breath
  • aches and pains
  • sore throat
  • and very few people will report diarrhoea, nausea or a runny nose.


People with mild symptoms who are otherwise healthy should self-isolate and contact their medical provider or a COVID-19 information line for advice on testing and referral.


People with fever, cough or difficulty breathing should call their doctor and seek medical attention.



The 2019/20 was approved at K1.74 trillion of total expenditure and net lending with inflows of revenue and grants approved at K1.58 trillion giving a total financing requirement of K162.1 billion. Out of this financing, K53.3 billion was planned as net domestic borrowing, while the balance, amounting to K109.7 billion was the projected net foreign financing.


Of the total annual approved revenue and grants of K1.58 trillion, it was projected that by the end of the first half of the current fiscal year, a total of K729.5 billion would be collected with estimated total domestic revenue of K655.2 billion and K74.3 billion in grants. The mid-year outturn recorded an underperformance in both tax revenue at K548.6 billion representing 83.7 percent and non-tax revenue at K23.7 billion representing revenue collection underperformance of 94.0 percent.

Grants registered lower than budgeted disbursements by about 31.6 percent. Of the total projected grants at K74.3 billion, only K50.9 billion was received by end December 2019. The shortfall in grants was mainly on account of non-disbursement by some development partners due to slow progress in project implementation

Expenditure Performance

Out of the K1.74 trillion of planned expenditure and net lending for the current financial year, K842.8 billion was projected to be spent during the first half comprising K624.8 billion of recurrent expenditure and K218.0 billion in development expenditure. As at end December 2019, the expenditure outturn was K780.0 billion consisting of K648.6 billion in recurrent expenditure and K131.4 billion in development expenditure.

Recurrent expenditure amounted to K648.6 billion against a target of K624.8 billion, representing a 3.8 percent over expenditure mainly on account of; increased spending on wages and salaries, public debt interest, and pensions and gratuities

Development spending during the first half of the fiscal year was lower than planned expenditure by K86.6 billion with K24.9 billion emanating from the domestically financed component and K61.7 billion from foreign financed component. Donor-funded development expenditure amounted to K90.8 billion against a planned expenditure of K152.5 billion. Locally funded development expenditure at K40.6 billion was also lower than planned first half target of K65.5 billion

The overall balance in the first half of the financial year was recorded at negative 2.1 percent of GDP. This was financed by a net domestic borrowing of 1.8 percent of GDP and a net foreign borrowing of 0.3 percent of GDP.

Key Expenditure Categories

Government effected an average general salary adjustment of 15 percent for Civil Servants as well as a once off payment on salary arrears and leave grant for teachers and as a result, the outturn on wages and salaries amounted to K226.2 billion, which was 10.3 percent higher than mid-year target of K204.9 billion.

The mid-year target for interest payments on public debt was K116.7 billion however actual expenditure amounted to K118.5 billion, of which interest on external debt was K7.7 billion while that on domestic debt was K110.7 billion. On the Farm Input Subsidy Program, K6.8 billion was spent against a mid-year target of K10.5 billion. It is expected that the remaining FISP payments will be processed during the third quarter.

NFRA and ADMARC faced challenges in sourcing maize within the country due to price speculation and hoarding by traders as a result, only K3.0 billion was spent by the end of the first half of the current fiscal year. Pensions and Gratuities were projected at K39.6 billion in the first half of the year however the mid-year outturn recorded a total of K41.3 billion.

The annual approved provision for medical drugs was K26.7 billion of this amount, K15.6 billion was for district hospitals and health centers, while K11.1 billion was for central hospitals. The mid-year outturn for this budget line was K13.8 billion of which K7.5 billion was spent on district hospitals and health centers, while the balance was spent on central hospitals.

Some Government Programs & Projects

The International Monetary Fund approved the second and third reviews the country’s performance under the Extended Credit Facility leading to disbursement of resources amounting to US$43.3 million in December 2019.

Government signed Loan Financing Agreements with the World Bank for two projects namely; the Malawi Electricity Access Project and the Malawi-Mozambique Interconnector Project amounting to US$150 million and SDR11.0 million, respectively.

Government is currently undertaking procurement processes for construction of houses for security institutions. Government has also completed designs for the construction of two stadia for Nyasa Big Bullets and Be Forward Wanderers and the procurement of contractors to commence actual works is at an advanced stage.

Projections for Second Half of the Financial Year

During second half of the current fiscal year, Government will focus on enhancement of domestic revenue collection to achieve set targets for smooth budget implementation. In this regard Malawi Revenue Authority has intensified its monitoring and enforcement activities.

All revenue collecting MDAs including the Immigration, Civil Aviation, Registrar General and Lands, Housing and Urban Development have been engaged to intensify their revenue collection efforts. Government also expects more revenues as a result of implementation of revised user fees and charges as well as improved remittance of dividends and surpluses following the approval of the new Dividend and Surplus Policy.

The budget in the current fiscal year is revised based on the following major assumptions:

  1.  A projected GDP growth rate of 5.0 percent in 2019 and 7.0 percent in 2020;
  2.  An average inflation rate of 8.0 percent during the fiscal year;
  3.  A stable exchange rate of about K750/US dollar;
  4.  A Policy rate of 13.5 percent; and
  5.  Upward review of user fees and charges.

In this regard, during the second half of the current fiscal year, total revenue and grants are projected at K926.9 billion of which K802.9 billion is domestic revenue and K124.0 billion are grants. Total expenditure and net lending are projected at K1.06 trillion of which K722.1 billion is recurrent expenditure and K339.3 billion is development expenditure.

Of the K722.1 billion for recurrent expenditure, K239.5 billion is for wages and salaries, K125.5 billion is for interest payment, K189.2 billion for goods and services, K84.3 billion for transfers to subverted organizations and K74.7 billion for social benefits. Under development expenditure, a total of K339.3 billion is projected to be spent during the second half, comprising K242.5 billion foreign financed expenditures and K96.8 billion locally financed expenditures.

Overall balance for the second half of the financial year amounts to a deficit of K134.3 billion, representing 1.6 percent of GDP. It is expected that foreign borrowing will amount to K88.6 billion and net domestic borrowing will amount to K45.7 billion.


1. Introduction

In 2012, the 55 member states of the African Union agreed to establish the African Continental Free Trade Area (AfCFTA) as a way of creating a single continent-wide market for goods and services as well as promoting the movement of capital and natural persons. While this trade agreement does not guarantee trade, it does create incentives for countries within the African continent to trade with one another more and hence its importance cannot be overemphasized. Malawi alongside 44 other countries signed the AfCFTA Agreement on 21st March 2018 in Kigali, Rwanda and this Agreement was expected to enter in force once 22 out of the 55 member states ratified it.

Over the course of the past year of 2019, several positive strides were made towards attaining the goal of making AfCFTA operational. This report therefore gives an update on the progress made under the AfCFTA between January and December 2019.

1.1 Developments made during the period January to June 2019

During the first half of 2019 negotiation meetings of the AfCFTA Negotiating Forum and Technical Working groups were conducted with the aim to conclude outstanding matters from 2018 and also to ensure that the technical support instruments for the Agreement were finalized ahead of the launch of its operationalization in July 2019, in Niamey, Niger. In this period great progress was made with respect to ratifications of the AfCFTA Agreement leading to attainment of 22 ratifications required for its entry into force.

1.2 Ratification of the Agreement and Official Launch of Negotiations

During the period between July to December 2019, the 12th Extraordinary Session of the Assembly was held on 7th July, 2019 in Niamey, Niger and this served as the official launch of the operational phase of the Agreement. At the summit an update of the AfCFTA process for the first half of 2019 was provided. In this the key issues that were highlighted were the main meetings for negotiation and policy structures that took place and the outstanding progress made with respect to ratifications. By the time of the launch 27 member states had ratified the agreement, well beyond the 22 ratifications required for the agreement to enter into force. It is important to note that as at 31st October, 2019, 2 more countries had deposited their instruments of ratification with the depository making the total to be 29 countries however Malawi was not among the countries that had done so. Malawi is undergoing the process to ratification by obtaining views from various stakeholders the private sector, government, academics, civil society and youth organizations. Some of the issues that are being discussed are: competitiveness of local industries in a much liberalized market, the issue of jobs associated with it and government revenue etc.

In addition several other meetings were held over this period:

  • 2 meetings of the Council of Ministers
  • 1 meeting for the African Union Ministers of Trade (AMOT)


2. Significant achievements made in 2019

2.1 Launch & Adoption of instruments

One of the significant achievements made during this period was the launch and adoption of the following instruments at the summit in Niger that will power and enable the AfCFTA to become operational:

  • Agreed Rules of Origin in Appendix IV to Annex 2 on Rules of Origin;
  • Trade in goods password protected online portal
  • The African Union Trade Observatory
  • The Non-Tariff Barriers Monitoring, Reporting and Elimination Mechanism
  • The Pan-African Digital Payments and Settlement Platform.

2.2 AfCFTA Adjustment Facility

Afrexim bank has availed US$ 1 billion line of credit to all African Union Member States to be used to meet adjustment costs related with the implementation of the AfCFTA. In addition, the Bank has availed US$ 2.5 billion for the African private sector who may require funds to scale up operations in the AfCFTA.

Despite the significant progress that was made during this period several key topics still remained under ongoing negotiations and some of which negotiations are still continuing to this day.


3. Topics still under ongoing negotiations

3.1. Annex 1 on Schedules of tariff concessions

As at 31st December, 2019, 11 countries had submitted their tariff offers, but a number of countries and Regional Economic Communities (REC’s) were still working on their tariff offers and were at an advanced stage. A recommendation was made at the 10th meeting of the African Union Ministers of Trade (AMOT) to give countries more time to finalize outstanding work on tariff offers and other issues.

3.2. Rules of Origin

Rules of Origin are legal standards supporting the differential treatment of some products based on their country or region of origin. During the second period of the year not much progress was made in regards to this issue. This was mainly due to inadequate funding availed to AfCFTA secretariat. Efforts were being made to engage relevant structures to secure funding for finalization of this work.

3.3. The G-6 reservation

During initial negotiations at the onset of the AfCFTA Agreement, 7 member states were of the view that the adopted modalities were too ambitious for them and hence sought some preferential treatment. After some time Djibouti consented to administer the modalities as agreed. The remaining countries (G-6) namely Ethiopia, Madagascar, Malawi, Sudan, Zambia and Zimbabwe requested an 85% tariff liberalization line instead of the 90% agreed by the rest. A decision at the 2019 summit in Niger was that this should be looked into further and there was hope that consensus would be achieved in February 2020 at the next assembly of the African Union (AU).

3.4. Trade in Services

The road map for finalization of regulation in trade in services was aligned as per the 2019 summit directives. Later it was agreed at the AMOT meeting that by January 2020 schedules of the commitments for priority sectors were to be finalized and that all other outstanding issues were to be finalized by June 2020.

3.5. Status of Signatures and Ratifications

In regards to signatures Eritrea was the only country out of the 55 members which was yet to sign the agreement and the AU was engaging the government of Eritrea on this. While in regards to ratifications as at 31st October, 2019, only 29 countries had submitted their instruments of ratification.

3.6 Phase II Negotiations

It was anticipated that by the end of the year most phase I negotiation issues would draw to a close and that phase II negotiations would commence shortly after. The African Union Commission was currently working on setting up Technical Working Groups for Phase II negotiations.

3.7 Collaboration with Regional Economic Communities

With regard to this issue the African union Commission Department of Trade & Industry (DTI) was still working on a framework of collaboration between the African Union Commission (AUC), AfCFTA Secretariat and the Regional Economic Communities (REC’s) to facilitate coordination and collaboration between the parties on matters of common interest (trade, investment, infrastructure development and private sector development) and to establish working arrangements. The idea was that once the document was ready it would then be brought before the executive council for endorsement.

3.8 Operationalization of the AfCFTA Secretariat

The Council of Ministers was tasked with the operationalization of the AfCFTA Secretariat. As at December, 2019 several major issues such as drawing up of an organizational structure and budget of the secretariat were yet to be finalized and they still remained work in progress. On the positive side, progress was made on issues such as recruitment of executive posts of the secretariat and a panel was appointed to facilitate the recruitment process. Accra, Ghana was chosen as the home of the secretariat.


4.0 Conclusion and Malawi Private Sector Recommendation

From the issues highlighted above we are able to see that in 2019 though significant progress was made on issues such as adoption of the agreements reached at the summit in Niger as well as steps towards appointment of executive members of the secretariat several important issues still remained far from being agreed. The hope is that most of these issues will have been resolved before the proposed date for the start of trading under AfCFTA which is 1st July, 2020.

Malawi on its part should prepare for its participation at the AfCFTA by ensuring that there is a private sector competitiveness plan to secure Malawi’s offensive commercial interests within the AfCFTA. There are challenges and risks as well as opportunities in the implementation of the AfCFTA and Malawi needs to address some of the supply side constraints such as competitive cost and supply of electricity, access to affordable finance, good access to infrastructure services (For Instance; rail, telecommunications, and good transport network), among others. 

There is also need to understand that countries institute non-tariff measures and non-tariff barriers. These frustrate the integration process and Malawi has already been affected by some countries despite existing preferential treatments on border taxes based on regional and bilateral agreements. There is need for Malawi to tread carefully with such countries because Malawi would be flooded by so many products that could potentially kill the domestic industry instead.


 Malawi’s ease of doing business score has improved from 59.59 in Doing Business 2019 to 60.9 in Doing Business 2020. Malawi’s overall position has improved from 111 to 109, in the Doing Business Index.


World Bank Malawi Country Manager’s position on Doing Business 2020

“Malawi Government is committed to create jobs for young people. Therefore, improving the business environment will be crucial to delivering that commitment. So, it is good news that Malawi has, overall, improved its business regulations and in absolute terms is narrowing the gap with global regulatory best practice,” says Greg Toulmin, Country Manager for Malawi.  “However, there is still much more   Malawi needs to do--and quickly--if this commitment is to be realized in full. We look forward to working with Government to help them deliver it.”


What are the ranking trends?

Mauritius (13) is the highest-ranking Sub-Saharan African economy overall. It is also the only economy from this region in the top 20 cohort.

The second highest ranked economy in the region is Rwanda (38).

Mauritius (13) and Rwanda (38) are the only two Sub-Saharan African economies in the top 50 on the ease of doing business ranking. South Sudan (185), Eritrea (189), and Somalia (190) are the lowest ranked economies in the region.

Other large economies in the region and their rankings are Kenya (56), South Africa (84), Ghana (118), Nigeria (131), and the Democratic Republic of Congo (183)

The region’s economies perform best in the area of   getting credit (113). Conversely, the region underperforms in the areas of getting electricity (146), trading across borders (140) and registering property (129). For example, the cost to obtain a permanent electrical connection in Sub-Saharan Africa is 3 times higher than the global average and 52 times higher than in the OECD high-income group. It takes over 200 hours in Côte d'Ivoire and Cameroon to comply with export border procedures for maritime transport, compared with 13 hours in OECD high-income economies. Ports in Sub-Saharan African are the least efficient of any region.

Sub-Saharan Africa remains one of the weakest-performing regions on the ease of doing business ranking with an average score of 51.8, well below the OECD high-income economy average of 78.4 and the global average of 63. Compared with the previous year, Sub-Saharan African economies   increased their average doing business score by 0.9 points.


She Trades second application phase is NOW OPEN!

The International Trade Centre’s SheTrades initiative aims to connect 3 million women entrepreneurs and women-owned businesses to international markets by 2021.

Under the umbrella of the SheTrades Initiative, SheTrades Invest is dedicated to supporting fruitful relationships between investors and women entrepreneurs in developing markets. In doing so, SheTrades Invest addresses the sixth global action of the SheTrades initiative - unlocking financial services for women-owned businesses. 

SheTrades Invest will:  

- Strengthen the financial and managerial capacity of women entrepreneurs, improve their investment readiness, and connect them to impact investors and financiers

- Build a pipeline for investors of women-owned businesses and SMEs that are benefitting women.

Application Process for Women-owned Small and Medium-sized Enterprises (SMEs) and SMEs Benefitting Women

Conditions to apply:
The enterprise must comply with at least one of the three criteria below:  

1. Be at least 51% owned by woman/women;
2. Be at least 20% owned by woman/women, has at least one woman as CEO/COO/President/Vice President; and has at least 30% of the board of directors composed of women, where a board exists; or
3. Be a SME benefitting women.

 - Your company would preferably be operating in one of the following sectors:

 - Agri-Business 
 - Agriculture
 - Artisanal
 - Beauty   & Wellness
 - Culture
 - Education
 - Energy
 - Environment
 - Financial     Services

 - Health

 - Housing Development
 - IT & BPO
 - Manufacturing 
 - Infrastructure and   Facilities Development

 - Sanitation

 - Textile & Apparel

 - Tourism
 - Transport & Logistics

 - Water









Benefits for women-owned small and medium-sized enterprises (SMEs) and SMEs benefiting women:
- Access to a range of local, regional and global investors and impact investors

- Access to capacity-building/technical assistance from ITC

- Increased level of competitiveness and a deeper understanding of business practices, trade and investment

APPLY HERE by filling out the survey in your preferred language (*existing applicants should only apply again if their details have changed): 




 Application Process for Investors

Conditions to apply:

- Financial institutions must be looking to invest particularly in small and medium-sized enterprises (SMEs) owned by women or SMEs benefitting women.

How to apply:

For investors who are interested to join SheTrades Invest and build a pipeline of women entrepreneurs, please send an email to  This e-mail address is being protected from spambots. You need JavaScript enabled to view it    

Benefits for investors and financial institutions:

- Support  the Sustainable Development Goals through a gender-lens investment approach;

Unlock an untapped trillion dollar market with an attractive risk and return profile; and

Build a pipeline with an investment-ready pool of diverse women–owned businesses from developing and emerging economies.

- SheTrades Invest has developed a comprehensive filtering mechanism that matches eligible women-owned businesses seeking for capital with investors. In addition, SheTrades provides technical assistance to improve the investment readiness of enterprises through online and in-person workshops, trainings, and mentoring.

- Connecting women entrepreneurs with investors will address and contribute to four important Sustainable Development Goals of the United Nations (SDG 1: No poverty, SDG 5: Gender Equality, SDG 8: Decent work and Economic Growth and SDG 17: Partnership for the goals) by:

1. Educating women entrepreneurs on business practices and requirements for participation in trade;

2. Driving competitiveness of Women Business Enterprises;

3. Bridging the gap in access to financial services for women entrepreneurs and reducing gender inequality;

4. Connecting women-owned businesses with investors;

5. Investing in women’s economic empowerment and promoting an inclusive economic growth;

6. Unlocking a largely untapped trillion-dollar market with a potentially attractive risk and return profile.



Government secures agriculture commercialization funding

The Minister of Agriculture, Irrigation and Water Development Honourable Kondwani Nankhumwa, last week opened the 16th National Agriculture Fair assuring stakeholders in the sector that funds to the tune of USD95.0 million to implement the Agriculture Commercialization Project across the country have been secured. The project which kicked off last year is currently selecting viable projects from farmer organizations for financing either through grants or partial credit guarantee, the Minister revealed.


In his remarks MCCCI President Prince Kapondamgamga said to attain sustainable and lasting solutions to promoting agriculture as a source of wealth, the grower must always make profit hoping that the funding government has secured will promote this.





Large-Scale Land Based Investments (LSLBI) platform in Malawi

The Large-Scale Land Based Investments (LSLBI) platform in Malawi is a multi-stakeholder platform that has been recently formed this year with an aim to provide space for dialogue for profitable, responsible and inclusive large-scale land-based investments in Malawi.

The formation of this platform was spearheaded and incubated by Oxfam in Malawi, following an international learning event that was organized by Interlaken Group.

The platform brings together representatives from government, companies, communities, traditional leadership and civil society organisations (CSOs). The Platform is currently headed by Malawi Confederation of Chambers of Commerce and Industry.

The Platform seeks to achieve the following outcomes:

• Reduced land conflicts resulting from LSLBI (co-existence between communities and the investors)

• Improved land registration systems and compliance to legislation regarding the LSLBI, including land use adherence

• Improved awareness among communities, private companies and CSOs on the new land related policies and laws in relation to Large-Scale Land-Based Investments As one of the ways in sharing best practices in responsible and inclusive investments,

The LSLBI Platform hosted a public event on 12 September to launch and discuss a case study that analyses the Phata Sugarcane Farmers’ Cooperative Irrigation Outgrower Scheme in Chikwawa. The in-depth case study on Phata Cooperative was done this year by Landesa (a US-based NGO focused on land rights) and LandNet (a Malawian NGO focused on land rights).

It analyses key features of how the Phata cooperative was designed, how it is being managed, and the results. The model shows, starting from 2011, how some members of the Phata community consolidated many small family fields into large blocks under the control of the cooperative. The cooperative receives technical and managerial support from Agricane – a local agriculture development company and investor. The cooperative sells the sugarcane produced under irrigation to Illovo.

The Phata model has lessons that show how farmers can organize themselves into cooperatives, scale up production, access infrastructure investment and partner with an investor for structured entry into the sugar market.

The LSLBI Platform hosted this event to launch this case study and to encourage debate and analysis of lessons learned that can be used for replication in other value chains. The event was supported by the Coca Cola Company and the Rights and Resources Initiative.

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