Malawi struggles on economic freedom
Malawi has been ranked as a mostly unfree economy despite improving in global ranking on economic freedom, the 2021 Economic Freedom Index shows.
The index, published by the Heritage Foundation, shows that Malawi has nonetheless improved on the index from 152 out of 178 economies in 2020 to 145 this year.
The Heritage Foundation has attributed Malawi’s poor showing to poor performance due to repeated failures to implement policy changes aimed at improving the business and investment climate and strengthening the rule of law.
Reads the report in part: “The economic opportunities missed because of corruption and this represents a special tragedy for the region’s huge population of young people who lose developmental ground that is increasingly difficult to make up as such conditions persist.
“Perhaps the most tragic consequence of the dearth of economic freedom in sub-Saharan Africa is its correlation with severe food shortages and poor nutrition, which in turn directly and causally related to the region’s political instability.”
The index evaluates the extent and effectiveness of government activity in 12 areas known to have a significant impact on levels of economic growth and prosperity.
The areas include property rights, judicial effectiveness, government integrity, tax burden, government spending, fiscal health, business freedom, labour freedom, monetary freedom, trade freedom, investment freedom and financial freedom, which allow greater freedom in any of the areas measured that tend to spur growth.
The sub-Saharan Africa region, with a population of 1.2 billion people and an unemployment rate of 6.5 percent—excluding Sychelles, has registered a one-year average growth rate of 3.8 percent.
In 2020, economic growth in Malawi was revised downward by 100 basis points to 0.9 percent from the projected 1.9 percent.
The Heritage Foundation president Kay James said in a statement accompanyingthe report that in times of uncertainty such as the world has experienced with the Covid -19 pandemic, it is natural that people will look to their leaders for answers.
She said economies that have promoted economic freedom and opened themselves to the competition of the global marketplace have experienced startling bursts of productivity, innovation, and economic growth.
“On the other hand, leaders who have failed to join the march of freedom, have left their citizens lagging behind and, in the worst cases, in destitution,” he said.
To promote jobs and spur growth, Betchani Tchereni, economics professor at The Polytechnic, a constituent college of the University of Malawi, said government should consider tax incentives to industries, which have been affected to spur economic growth.
In his 2020/21 Mid-Year Budget Statement presented on February 26, Minister of Finance Felix Mlusu said that the economy continues to suffer from the adverse effects of the coronavirus pandemic.
