The Economics Association of Malawi (Ecama) and other experts have predicted economic devastation in the wake of floods that threaten output.
Commenting on the likely economic cost of the floods which President Peter Mutharika has since declared a State of National Disaster in affected districts, Ecama executive director Maleka Thula said in an interview yesterday the impact will depend on the magnitude of the loss
He said, as a consequence, the expected fall in agricultural production will affect inflation rate—the rate of the general rise in the prices of goods and services in the economy.
Said Thula: “For now, we assume the impact is significant such that depending on the loss, it is more likely that we will have a decrease in agricultural output, less than earlier estimated.”
At the onset of 2019, agricultural output for the year appeared promising with the Ministry of Agriculture, Irrigation and Water Development projecting a 25 percent increase in maize production alone.
The likely drop in agricultural output, more especially maize as feared by Ecama, will potentially exert pressure on Malawi’s inflation rate, which has recently enjoyed a downward spiral on account of huge supplies on the market.
Inflation rate, which reached a high of 37.90 percent in February 2013, eased to 8.8 percent in January this year owing to tight monetary policy stance by Reserve Bank of Malawi (RBM) and adequate maize supplies.
Weighing in on the economic impact, Farmers Union of Malawi (FUM) director of programme development and learning Jacob Nyirongo yesterday said the union is worried with the scale and magnitude of the floods, more especially in the Southern Region.
He said the situation will “obviously see a decrease in overall output of maize” and other crops.
In a separate interview yesterday, Department of Disaster Management Affairs (Dodma) chief relief and rehabilitation officer Fyaupi Mwafongo said an assessment team is currently on the ground and that they expect to release a preliminary report on the overall impact and needs by this Friday.
He said the overall economic loss resulting from the floods could only be ascertained after conducting a post-disaster needs assessment (PDNA), most likely with support from the World Bank as “discussions are still underway”.
In recent years, the country has been experiencing serious effects of climate change as manifested by recurring floods or dry spell, or both almost yearly.
In 2015, Malawi experienced one of the worst and devastating floods in terms of geographical coverage, severity of damage and extent of loss.
While 15 districts were directly affected, the whole country suffered from water and electricity interruption coupled with severe damages on roads and bridges.
Consequently, an estimated 1 101 364 people were affected, 230 000 displaced, 106 killed and 172 reported missing.
Overall, the 2015 Floods PDNA Report showed that total damage and loss was valued at $335 million (about K247 billion) while cost of recovery and reconstruction was pegged at $494 million (about K465 billion).