BERF’S Work in Malawi

BERF has yet to complete any projects in Malawi.

Context

Malawi is has a population of around 18 million and is ranked at 170 out of 187 countries in the United Nations Human Development Report (2016). This is one of the lowest scores in the low human development group and below the average for countries in Sub-Saharan Africa.

Encouraging gains have been made in human development which has seen improvements for example, in access to education for girls and poverty has declined from 25 percent to 17 percent in urban areas. Notwithstanding these gains, the World Bank reports that poverty is increasing in rural areas where more than 85 percent of the population live. This negative trend is a concern for policymakers and development partners as the majority of Malawians are rural small-holder farmers.

As one of the poorest countries in the world, the challenges of creating and sustaining an enabling business environment in Malawi are made more difficult by the country’s vulnerability to climate change and its landlocked geography, which increases the cost and distance to markets.

The World Bank reports that Malawi’s economic prospects remain at risk in part due to weather shocks which have a damaging effect on agriculture, in particular the volume in the production of maize which is needed for export markets and to meet local demand. Given these developments as well as low agricultural productivity, the World Bank suggests that it is likely that around 6.5 million Malawians will struggle to meet their food requirements in this fiscal year.

Malawi’s rate of economic growth was 2.5 percent in 2016 against previous forecasts of 2.8 percent and well below the 5.7 percent real economic growth achieved in 2014. In recent years problems related to weak fiscal management have added to the challenges faced by the government, according to the World Bank.

DFID’S Strategy in Malawi

DFID’s Operational Plan (2011-2015) for Malawi seeks to address entrenched poverty and inequality that affect women and girls and improve the resilience of poor rural households by focusing on three priorities:

  1. fostering human development and tackling inequality
  2. supporting vital reform in Government, building accountability and strengthening effective institutions and
  3. supporting economic growth and development and building resilience.

DFID works with non-state actors and multilateral partners like the World Bank and the United Nations Development Programme to deliver support to Malawi. Malawi currently benefits from Business Environment Reform earmarked funding through the Country Budget window but as well, gains substantially from several large scale regional projects that have a strong business environment reform component.

World Bank Doing Business

Latest data from the Doing Business Report (2017) indicate that Malawi made progress in efforts to reform the business and regulatory environment. These reforms have allowed the country to improve its Doing Business ranking by 8 points from 141 in 2016 to 133 in 2017.Malawi’s attempts to reform is reinforced in its Distance to Frontier score which increased from 51.11 in 2016 to 54.39 in 2017. With these improvements Malawi now ranks 9 points above the Sub-Saharan regional average of 143 in the ease of doing business and 4.88 points above the regional Distance to Frontier score of 49.41.

Substantial reforms were put in place to make it easier to start a business, access credit and get electricity.