World bank shifts Focus on Malawi

The World Bank Group has shifted its Malawi focus to three areas of bolstering foundations for growth and accountability; promoting private sector-led jobs and livelihoods and strengthening human capital development.

The new priorities for the bank on Malawi, under its newly-crafted Country Partnership Framework (CPF), are a deviation from the group’s previous focus areas in the predecessor document, the Country Assistance Strategy (CAS), which was formulated around structural and macroeconomic policies to restore internal and external balance; creation of a business environment that promotes competitiveness and enhances productivity as well as improved delivery of public services.

The CAS—published on December 17 2012 and was updated through the Performance and Learning Review of March 25 2015—was implemented from 2013 to 2016 but extended by one year through 2017.

The bank could not divulge the total investment portfolio yesterday for the five-year framework.

But it signalled that financing of the CPF will be done through IDA cycles and the implementation of the first CPF will start with the current IDA 18 cycle and thereafter IDA 19 going forward.

The current IDA 18 is supporting 18 national projects and five regional investments with a net commitment value of $2.05 billion for Malawi.

By December 2020, Malawi owed the World Bank, presented as IDA, $1.1 billion (about K861.3 billion), making it Malawi’s largest external creditor, a position it has maintained for the past decade.

The new CPF, which will guide the World Bank’s work over the next five years in support of Malawi’s national priorities as set out in Malawi Vision 2063, which was launched officially on January 19, 2021 by President Lazarus Chakwera.

Malawi 2063 is targeting to transform the country into a lower-middle-income status by 2030 through a focus on three pillars of commercial agriculture, urbanisation, and industrialisation.

The new framework will lead the implementation of programmes by the three different arms of the World Bank Group—the International Development Association (IDA), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (Miga).

World Bank country director for Malawi, Tanzania, Zambia and Zimbabwe Mara Warwick said yesterday the bank’s new blueprint is informed by extensive consultations with a broad range of stakeholders in Malawi, including government, civil society, and development partners.

She said: “Our programme will consolidate World Bank Group investments where we can make an impact: particularly in opening new opportunities for commercial agriculture and in ensuring women are empowered to participate fully in the economy.”

Warwick described the timing in the formulation of the new strategy as “a pivotal moment for Malawi” as the bank renews its support for the country.

The 128-page new framework for the bank shows that under the first strategic area of bolstering foundations for growth and accountability, the bank intends to adopt a new and flexible approach to address selected, long-standing governance challenges that Malawi has been grappling with over the years.

“The World Bank Group will, therefore, help strengthen citizen voice and the demand for good governance. This area will also support ongoing government reforms to increase agricultural productivity and market access, increase access to reliable energy and strengthen fiscal management and governance. The overarching objective is to support the revived reform agenda and amplify the calls for greater transparency over public finances,” it says.

Under the second focus area of promoting private sector-led jobs and livelihoods, the bank says it targets key short and long-term strategies for boosting job creation and fostering sustainable livelihoods overhauling the country’s the enabling environment for business and create new opportunities for women- and youth-led micro, small and medium enterprises (MSMEs) with a major focus on commercial agriculture and regional trade.

On the same, the bank stresses that improving agribusiness, energy production and access as well as connectivity investments to support economic diversification for Malawi will be key in driving the job creation agenda.

On strengthening human capital development, which is the third focus area for the bank on Malawi, the global multilateral lender says in the new document that the CPF will address key bottlenecks to deepen gains that Malawi has already achieved by focusing on accelerating the demographic dividend through targeted health systems strengthening.

“Proposed new investment in human capital development will help consolidate existing efforts to upgrade Malawi’s health systems with a focus on women and girls’ empowerment.

“To address low learning outcomes at the lower primary level and significant gaps in the education sector, a programmatic approach to address system-wide inefficiencies in spending and provide targeted and needs-based financing to fully address constraints will be applied,” it says.

The CPF comes at a time lives and livelihoods of many Malawians continue to be impacted by the Covid-19 pandemic, an external shock that has knocked down the domestic economy as manifested by the lowering of the 2020 real gross domestic product (GDP) growth projections from 4.8 percent to a paltry 0.8 percent.

Key transmission channels that have hit Malawi, just like many other developing countries include a global recession, reduced demand, increased trade costs, and reductions in exports, remittances, tourism, and foreign direct investment (FDI).

Such effects have been exacerbated by a drop in domestic demand due to social distancing and other related policies being enforced by relevant authorities, aimed at reducing the spread of the virus.

IFC’s regional director for Eastern Africa Jumoke Jagun-Dokunmu said in line with the Malawi 2063, their advisory and investment services will focus on developing renewable energy and ICT infrastructure, increasing agricultural productivity, and supporting crop diversification, and boosting inclusive finance.

“This will be crucial to mitigate the economic impacts of Covid-19 and to support Malawi’s long-term growth,” he said.

Finance Minister Felix Mlusu has since welcomed the new World Bank guiding document, saying Malawi urgently needs critical investment to stimulate the much-needed economic recovery.

He said: “Covid-19 has slowed our economy. Investments are needed that can stimulate economic recovery and to support our vision of reaching lower-middle-income status by 2030. This requires a solid foundation and we are optimistic that over the next five years the World Bank Group will help us strengthen those foundations by supporting our reform agenda and investing in key sources of growth.”

In an interview yesterday, international development expert Peter Yakobe also hailed the World Bank for aligning its new focus areas in the new partnership framework to the country’s long term development plan, Malawi 2063.

“However, there is need to put much focus on promoting enterprises owned and led by the youth as they are key to the nation’s economic development and government’s one million jobs initiative.

“Despite Covid-19, most youth-led businesses have survived, they are still creating jobs, paying tax and contributing to the country’s GDP. They need support,” said Yakobe.