WEF_GrowAfrica_AnnualReport2014

2013 in Review
2013 in Review
2.6
Country
Report
Malawi
Re-gearing towards high-value
agricultural exports
2013 IN REVIEW
PROGRESS
Crises combined to slow initially
promising headway
Malawi is an attractive agri-investment destination due
to its relatively abundant means of production, access
to markets, and improving enabling environment.
The country is endowed with a plentiful water supply,
covering over 21% of its land area and giving the
country huge irrigation potential for winter cropping,
which, if efficiently managed, could ensure its transition
to a net food exporter.
The country’s economy remains predominantly agrobased,
with the sector accounting for more than 80%
of export earnings and providing a livelihood for 85%
of the population. Smallholder farmers contribute
around three-quarters of agricultural production, with
cropping systems dominated by a maize-based rainfed
cropping system.
The Government of Malawi (GoM) launched the Green
Belt Initiative in 2012 with a view to using the available
water resources to increase production, productivity,
incomes and food security at both household and
national levels for economic growth and development.
During the same year, the Office of the President and
Cabinet spearheaded significant policy reforms geared
to improving the environment for doing business.
2012 also saw the adoption of Malawi’s National
Export Strategy (NES). Aimed at providing a 2013-
2018 roadmap for developing a productive base for
export competitiveness and economic empowerment,
the NES prioritises clusters including for oilseed,
sugarcane and manufactured products. The strategy is
also central to accomplishing Malawi’s desired move
into the export of high-value goods and services and
to reducing Malawi’s reliance on the export of raw
and semi-raw commodities, which have hitherto left
Malawi’s poor and vulnerable exposed to the impact of
commodity price fluctuations, crop failures, aid shocks
and climate change.
The GoM joined the Grow Africa partnership in mid-
2013 and has worked hard to create an enabling
environment through various policy reforms (including
the removal of export bans on all crops except maize)
and by enacting legislation (such as the Anti-Money
Laundering Act and the Credit Reference Bureau
Act) for increased access to finance, which is being
supported by various donors. Discussions on valuechain
partnerships have been initiated, particularly on
sugarcane.
The GoM has also commenced works on 530 ha (out
of 6,293 ha) of the Chikwawa Green Belt Irrigation
Scheme in Salima district. These include building a lake
pump station, booster pump station, reservoir, pipeline,
site office, workshop, ablution block and pivot areas,
with overall progress at 80%. Under the Scheme, the
GoM has secured lines of credit for $10 million and
$40 million respectively from the Indian government for
irrigation and mechanisation, as well setting up a sugar
processing plant in Salima district.
However, the country has been grappling crises on
several fronts, including a huge devaluation of the
Malawi Kwacha, inflation, a major financial scandal
(“cashgate”), as well as being immersed in election
preparations, which has seen this initial impetus grind
to a near halt. This has been compounded by the
Minister of Trade and Investment, a champion of the
New Alliance partnership, being chosen as running
mate for the incumbent president in the May 2014
elections. These circumstances culminated in a cabinet
reshuffle, a change of focus by the government and its
development partners, and the suspension of aid by
some donor agencies, with the net result that during
late 2013 and early 2014 attention was significantly
diverted from advancing efforts to unlock agricultural
investment in Malawi.
Despite the backdrop of declining public-sector
support, companies showed tremendous leadership in
converting their commitments into actual investments.
They invested in new or existing processing facilities
and reached more smallholders through origination,
capacity building and improved farming methods (e.g.
Malawi Mangoes, Agora, RAB Processors, Universal
Industries, and FUM). Others went further and also
created a joint venture to overcome the problem
of access to finance (BERL, NASFAM, Afri-Nut,
and ExAgris). However, despite companies actively
communicating key challenges to the government,
the lack of public-sector support means that some
companies have either cancelled planned investments
or have reported suboptimal progress.
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Malawi
Malawi
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