Democracy and Governance in Malawi
The Development Challenge: In May 2004, Malawi conducted its third multi-party national election since emerging from decades of one-party autocracy in 1994. With this election, a window of opportunity opened for significant economic growth and democratic development. In his first six months in office, Malawi's new President, Dr. Bingu wa Mutharika, has demonstrated particular commitment to economic reform, fiscal restraint, and efficient reinforcement of anti-corruption measures. The next two to three years will be critical to the country's future.
Malawi's political and economic development are impeded by its landlocked status, dependence on a single cash crop (tobacco) for 60% of export earnings, poor incentives for foreign and domestic investment, low status of women, high population growth rate, and low levels of education. Life expectancy at birth is now under 40 years, due to the effects of the adult HIV/AIDS prevalence rate of 15%. The infant mortality rate (104 per 1,000 live births) and the child malnutrition rate (49% of children under age five) are among the highest in Africa. More than one-third of the population has no access to safe drinking water.
Malawi's per capita gross domestic product (GDP) was estimated at about $170 in 2004. External debt--primarily multilateral and concessional--was approximately $2.8 billion at the end of 2003. This represented 166% of GDP, with about one-fifth of domestic revenues required for external debt servicing. Malawi reached its decision point under the Enhanced Heavily Indebted Poor Countries (HIPC) initiative in December 2000, and received interim debt relief of approximately $30-$60 million per year until December 2004, as a result of Malawi's falling off its International Monetary Fund (IMF) Poverty Reduction and Growth Facility (PRGF) program. Although Malawi applied for interim relief, Paris Club creditors will not extend interim relief without a new PRGF. Malawi has no debt with the United States.
Malawi's PRGF collapsed over the 2001-2003 period due to fiscal policy slippages and other governance issues. Given the new administration's positive actions over the past six months, the World Bank recently released the first $25 million of structural adjustment credits. Balance of payment donors followed suit, and in November 2004 an IMF team concluded that Malawi's performance under its staff monitored program was strong and proceeding well. Prospects are cautiously optimistic for a new PRGF arrangement in April 2005.
The new administration's actions also were a key factor in Malawi's selection as a Millennium Challenge Account (MCA) threshold country. The country scored lower on MCA selection indicators in the areas of corruption control, fiscal policy, credit rating, and girls' primary education completion. USAID will encourage the Government of Malawi (GOM) as it identifies target areas for improvement and submits a proposal to undertake policy reforms to remedy deficient areas.
The United States has three strategic goals in Malawi: to increase economic prosperity and security; to strengthen democracy and human rights; and to address social and environmental issues, particularly improving health, containing the HIV/AIDS epidemic, and increasing the quality of basic education. Malawi is a strong ally with neighboring countries in the southern Africa region, and has demonstrated significant potential as a democratic pillar in an unstable region. Malawi continues to support U.S. interests in regional development and political issues. Promoting broad-based and private sector-led economic growth and supporting democratic governance will contribute to a more stable region and better business and trading partnerships between Malawi and the United States.
The USAID Program: In FY 2005, USAID is supporting the new GOM priorities for its MCA threshold program--which aims to improve GOM's chances of qualifying for MCA eligibility in the future. USAID will continue to support the development of health and education management information systems critical to GOM reporting on MCA selection indicators. As requested, USAID may provide assistance to the GOM's on-going anti-corruption efforts and to improving fiscal policy, both important to its MCA candidacy.
Malawi's President Mutharika has signaled a commitment to accelerating market-led private sector growth and to increasing public sector investments in education and health. The USAID program complements these important initiatives. USAID is fostering additional trade linkages among small farmer producer associations, larger commodity-specific industry clusters, and export markets, and will continue to expand the availability of financing for small-scale commercial operators. USAID's democracy and governance program is focusing on expanding access to legal aid for the poor through a network of paralegal services and the provision of innovative community-based alternative dispute resolution approaches. Civic education, including the work of inter-faith groups, continues, with an increased emphasis on building tolerance and reducing potential conflict.
(Excerpted from the 2006 Congressional Budget Justification for Malawi)
Back to Top ^
|
