© Richard Randall

Caribbean

Sundries

This work is licensed under a Creative Commons Attribution 2.5 License.

Economy

Malawi is a landlocked, densely populated country. Its economy is heavily dependent on agriculture. Malawi has few exploitable mineral resources. Its three most important export crops are (in order) tobacco, tea and sugar. Malawi's president recently urged farmers to consider growing other crops, such as cotton ([2]), as an alternative to the country's principal crop, tobacco, as cigarette consumption in the West continues to decline. Traditionally Malawi has been self-sufficient in its staple food, maize, and during the 1980s exported substantial quantities to its drought-stricken neighbors. Agriculture represents 38.6% of the GDP, accounts for over 80% of the labor force, and represents about 80% of all exports. Nearly 90% of the population engages in subsistence farming. Smallholder farmers produce a variety of crops, including maize (corn), beans, rice, cassava, tobacco, and groundnuts (peanuts).The agricultural sector contributes about 63.7% of total income for the rural population, 65% of manufacturing sector’s raw materials, and approximately 87% of total employment. Financial wealth is generally concentrated in the hands of a small elite. Malawi's manufacturing industries are situated around the city of Blantyre.

Malawi's economic reliance on the export of agricultural commodities renders it particularly vulnerable to external shocks such as declining terms of trade and drought. High transport costs, which can comprise over 30% of its total import bill, constitute a serious impediment to economic development and trade. Malawi must import all its fuel products. Paucity of skilled labor; difficulty in obtaining expatriate employment permits; bureaucratic red tape; corruption; and inadequate and deteriorating road, electricity, water, and telecommunications infrastructure further hinder economic development in Malawi. However, recent government initiatives targeting improvements in the road infrastructure, together with private sector participation in railroad and telecommunications, have begun to render the investment environment more attractive.

Malawi has undertaken economic structural adjustment programs supported by the World Bank, the International Monetary Fund (IMF), and other donors since 1981. Broad reform objectives include stimulation of private sector activity and participation through the elimination of price controls and industrial licensing, liberalization of trade and foreign exchange, rationalization of taxes, privatization of state-owned enterprises, and civil service reform. Malawi qualified for Highly Indebted Poor Country (HIPC) debt relief.

As of late May 2004, the IMF program begun in 2000 was canceled and a Staff-Monitored Program (SMP) was implemented. In the wake of questions about fiscal credibility, the SMP’s goal is to give Malawi’s newly-elected government the chance to establish a track record of fiscal discipline.

Real GDP increased by an estimated 3.9% in 2004, from 4.3% in 2003 and 2.4% in 2002. Inflation has been largely under control since 2003, averaging 10% in that year and 11.1% (est.) in 2004. Discount and commercial lending rates also declined from 40%-45% in 2003 to 25% in early 2004. The Kwacha slid from 90 to 101 against the U.S. dollar in mid-2003 and was at 108 to the U.S. dollar at the end of 2004.

Malawi has bilateral trade agreements with its two major trading partners, South Africa and Zimbabwe, both of which allow duty-free entry of Malawian products into their countries.

Humanitarian situation

Life expectancy in Malawi is now as low as 36.5 years; five years lower than it was 50 years ago. This drop is due to the population's impoverishment, which is constituted by many factors, including:

• low income (the mean per capita income in Malawi is less than $1 per day)

• insufficient nutrition

• poor access to medical treatment

• insufficient school education

• spread of HIV/AIDS

• government economic restrictions

Health

Child mortality is 103/1000. There are more than a million orphans, 700,000 of which became orphans when their parents died of AIDS.

According to Malawi government estimates, 14.2 per cent of the population are HIV-positive, and 90,000 deaths in 2003 were due to AIDS. Unofficial estimates based on private hospital entries give a HIV infection percentage of 30 per cent.

Nutrition

Malawi's staple food is maize but like other countries in Southern Africa, Malawi has repeatedly been affected by famines since 2002, when food was scarce for almost one third of the population. In 2003, 30 percent of the population were affected.

According to a FAO report from June 2005, 4.22 million inhabitants of Malawi, 1/4 of the population, would not have enough food in 2005 to survive. In the south of the country, the rate of the population affected will be between 55 and 76 per cent. In the end of November 2005, the first famine deaths were recorded.

These repeated famines are caused by different factors including:

• widespread monocultures

• poor distribution of fertilizers

• droughts

• widespread AIDS epidemic

• Bilharzia

• Malaria

• government corruption and restrictions on economic freedom

From Wikipedia, the free encyclopedia

Oceania