Economic diversification key to recovery—AfDB
The African Development Bank (AfDB) has amplified calls for economic diversification to ensure quick recovery from the adverse effects of Covid-19 on the local economy.
In its Africa Economic Outlook for Southern Africa, the pan-African bank said that improving business environment competitiveness is critical to ensure countries, including Malawi, benefit from African Continental Free Trade Area (AfCFTA), which is projected to provide medium and long-term opportunities for markets to spur economic growth.
Reads the report in part: “To achieve economic diversification and structural change towards high-productivity sectors, a better skilled and more adaptable labour force is necessary.
“Domestic risks include weaker fiscal consolidation, debt distress, delays in structural transformation and weak public financial management.”
The bank has since issued policy recommendations, which include enhancing economic diversification, improving business environment competitiveness, promoting formalisation of the informal economy, making growth inclusive, broad-based and pro-poor.
AfDB has proposed the need for intensifying climate change response and action, integrating pro-decent employment macroeconomic policies and strategies, fiscal consolidation and the creation of fiscal space, including strengthening Covid-19 response and action.
Calls for economic diversification are critical, especially this time when the economy is shrinking coupled with the poor showing from agriculture commodities such as tobacco, cotton and tea, among others.
Minister of Trade Sosten Gwengwe agreed with AfDB’s recommendations, but said Malawi needs a v-shaped recovery to the Covid 19 economic crisis.
He said: “Surely for us opening the skies will rejuvenate the tourism sector and bring the much needed forex.”
On his part, Betchani Tchereni, associate professor of economics at The Polytechnic, a constituent college of the University of Malawi, said in the medium to long- term, government needs to diversify the economy in line with Covid-19 recovery measures.
The recent World Bank’s Malawi Economic Monitor indicated that with Covid-19, the key challenge for many countries, including Malawi, is the balance between immediate response—to save lives and livelihoods—and the need to protect future recovery. n
