With a young population, Malawi has made progress in building its human capital in recent years. With greater knowledge, skills, and health, extreme poverty is falling and economic and structural reforms have been undertaken to sustain economic growth.
Malawi’s economic growth is expected to increase in the medium term. However, with the economy largely dependent on rain-fed agriculture, it is vulnerable to external shocks – particularly weather-related shocks. The business environment in Malawi needs to become stronger by diversifying its economy and building resilience.
Despite progress, Malawi continues to face a number of challenges, with high levels of poverty and inequality. The country’s current Growth and Development Strategy aims to overcome the challenges it is facing to build a productive, competitive and resilient nation. Running to 2022, it focuses on education, energy, agriculture, health and tourism.
Malawi faces many challenges in the areas of poverty reduction, environmental degradation, low education levels, and low levels of economic activity. However, Malawi has a long-term development strategy - Malawi 2063 - that aims for the transformation into a middle-income country. It focuses on agricultural productivity and commercialisation, industrialisation, and urbanisation as means to achieve these goals.
The Multiannual Indicative Programme (MIP) developed for Malawi includes 3 priority areas for EU support - green and resilient economic transformation, democratic and economic governance, and human development and social inclusion. The priority areas have specific objectives which indicate the kind of actions that will be supported. These include:
Green and resilient economic transformation - boosting productivity, resilience, diversification, value addition, commercialising agriculture and fisheries, enhancing environmental sustainability, and developing economic infrastructure. This area has a budget of €155 million (44% of the total) between 2021 and 2024.
These objectives will lead to Malawi developing a more sustainable food system and a more developed commercial infrastructure. These will be supported by interventions to improve the natural environment and its interactions with agriculture. Developing renewable energy systems will also be supported as will the development of an open and competitive market.
Democratic and economic governance – the objectives here are to advance democracy, human rights, and the rule of law, improve economic governance, and improve the investment climate and business environment. This area has a budget of €60 million (17% of the total) between 2021 and 2024.
Actions here will potentially focus on strengthening democratic processes and oversight and empowering citizens, especially youth, and improving the capacity of media to report independently. Improving economic governance can be supported by better public finance management and ‘greening’ the budgetary process. Actions may also include support for developing an effective private sector in the economy.
Human development and social inclusion – includes initiatives to improve education and the skill base and strengthen social protection. Emphasis will be given to education on the green economy and to improving secondary, vocational, and entrepreneurial training. Support for women and girls will also be a key theme. This area has a budget of €120 million (34% of the total) between 2021 and 2024.
Support measures and Team Europe initiatives
The MIP will include support measures for these programmes and a Technical Cooperation Facility that will focus on strengthening civil society. These will include improving information access, working with social organisations, promoting the participation of youth, and promoting openness in the public sector. This area has a budget of €17 million (5% of the total) between 2021 and 2024.
Three countries and regions are involved in Team Europe initiatives – Germany, Ireland, and Belgium – with an indicative budget of €150 million over the period of the MIP. Two types of action will be supported – green agro-ecological value chain development and environmental protection and nutrition.