Malawi

Politics:

• Analysis

  Malawi politics: Quick View - Biometric voter registration abandoned, for n

  Event

  The Malawi Electoral Commission (MEC) announced on March 25th that it will not use biometric voter registration for the 2014 presidential, legislative and local council elections.

  Analysis

  The announcement comes less than three weeks after the MEC said that it would use a biometric system in order to ensure a credible voter register and limit the possibility of multiple voting and other irregularities, which have affected previous elections. However, the introduction of the new system would have required all voters to register anew and the logistical and financial challenges to complete the process in time for the May 2014 elections forced the MEC to reverse its decision. Biometric voter registration systems are increasingly used across Africa to improve the accuracy of voter rolls, but technical glitches and funding gaps have caused delays in some countries.

  Given the turbulent current political situation in Malawi-characterised by growing public unrest over soaring living costs and a controversial court case against senior opposition figures-ensuring the timely organisation of the polls was deemed more important than addressing some of the deficiencies with the voter register. Concerned about the risk of delays, donors-who would have financed the introduction of the new system-advocated postponing the biometric registration process. The MEC now aims to introduce the biometric system ahead of the 2019 polls.

  The current computerised voter register dates back to 2008 when it was completely revised following concerns over irregularities in the 2004 voter lists. Despite the 2008 overhaul, several anomalies remained and the EU, in its report on the latest elections (held in 2009), recommended an extensive review of the voter lists. Although shortcomings with the register will persist in the next polls, they are unlikely to affect the outcome of the elections and the losers will struggle to cite deficiencies in the voter register as the cause of their defeat. The ruling People's Party will benefit from the advantages of incumbency, but past polls in Malawi have been largely free and fair and the current administration is unlikely to risk upsetting donors by interfering in the election process to blatantly skew the playing field in its favour.

  March 26, 2013

• Background

  Malawi: Constitution and institutions

  A new constitution in 1994

  The new multiparty parliament promulgated a fresh constitution in 1994. The constitution curtails the absolute powers that had previously been vested in the president. Based largely on the US constitution, it enshrines multiparty democracy and an independent judiciary. It features a bill of rights and retains the death penalty, although there have been no executions since the constitution was drafted. The constitution provides for a single legislative body, the National Assembly, consisting of 177 seats elected by a direct vote from constituencies. Before the 1999 elections the number of seats in the National Assembly was increased to 193. Local elections were finally held in November 2000 after a six-year hiatus. The local authorities (mayors, city councils and rural district councils) have the power to levy taxes, spend money at their own discretion and run social services. In general, judges lack resources and are subject to pressure from the legislature. Besides encroaching on judicial independence, the activities of politicians have undermined the population's faith in the parliamentary process. Furthermore, politicians from all parties continue to be embroiled in high-profile corruption scandals.

  February 22, 2008

• Structure

  Malawi: Political structure

  Official name

  Republic of Malawi

  Form of state

  Unitary republic

  Legal system

  Based on English common law; constitution promulgated in May 1995

  National legislature

  National Assembly of 193 seats, elected by direct universal suffrage for a five-year term

  National elections

  May 19th 2009 (presidential and legislative); next elections due by May 2014 (presidential and legislative)

  Head of state

  President, elected by direct universal suffrage for a term of five years; Joyce Banda succeeded Bingu wa Mutharika following his death in April 2012

  National government

  Cabinet, chaired by the president

  Political parties

  The People's Party (PP) is the largest party in the National Assembly with 83 seats; the largest opposition party is now the DPP, followed by the Malawi Congress Party (MCP) and the United Democratic Front (UDF); smaller parties include the People's Progressive Movement, the Congress for National Unity, the People's Transformation Party, the Republican Party, the Alliance for Democracy (Aford), the Malawi Forum for Unity and Development (Mafunde), the National Democratic Alliance (NDA) and the Movement for Genuine Democratic Change (Mgode); independent members of parliament currently form the second-largest bloc in the legislature

  President & commander-in-chief of the armed forces: Joyce Banda

  Vice-president: Khumbo Kachali

  Key ministers

  Agriculture & food security: Peter Mwanza

  Justice & constitutional affairs: Ralph Kasambara

  Defence: Ken Kandodo

  Disability & elderly affairs: Reen Kachere

  Economic planning & development: Goodall Gondwe

  Education, science & technology: Eunice Kazembe

  Energy: John Bande

  Environment & climate change: Catherine Hara

  Finance: Ken Lipenga

  Foreign affairs & international co-operation: Ephraim Chiume

  Gender, children & social welfare: Anita Kalinde

  Health: Catherine Gotani Hara

  Industry & trade: John Bande

  Information & civic education: Moses Kunkuyu

  Internal affairs & public security: Uladi Mussa

  Labour: Eunice Makangala

  Lands, housing & urban development: Henry Phoya

  Local government & rural development: Grace Maseko

  Mining: Ibrahim Matola

  Tourism, wildlife & culture: Rachel Zulu

  Transport & public works: Sidik Mia

  Water development & irrigation: Ritchie Muheya

  Youth, culture & sports: Enoch Chihana

  Central bank governor

  Charles Chuka

  March 21, 2013

• Outlook

  Malawi: Key developments

  Outlook for 2013-17

  • Political bickering will increase in the run-up to the 2014 polls, and this could undermine effective policymaking and weaken political stability.
  • The president, Joyce Banda, will continue with her ambitious reform programme, which carries the prospect of improving macroeconomic stability, but could trigger unrest if the government fails to mitigate the effects of price rises.
  • The IMF's support of the government's reform programme will serve to improve the economic policy outlook. Nevertheless, progress in diversifying the economy will be slow, and it will remain vulnerable to external shocks.
  • Real GDP growth is forecast to rise to 4.1% in 2013 as tobacco production recovers. In 2014-17 growth will quicken to an average of 5.1% as investment levels rise and economic stability improves.
  • Inflation is forecast to rise to 25.6% in 2013 as the kwacha continues to depreciate. From 2014 onwards it will moderate as commodity prices stay fairly stable, currency depreciation slows and domestic productivity rises.
  • As import growth moderates, aid inflows rise and exports pick up gradually, the current account deficit is expected to narrow from an estimated 11.5% of GDP in 2012 to 11.1% of GDP in 2013 and further, to 8.7% of GDP, in 2017.

  Review

  • The Government lost its parliamentary majority after smaller opposition parties and independent members moved over to the opposition benches. This lack of majority will hinder effective policymaking.
  • At least ten people, including senior figures within the former ruling party, were arrested on March 11th for their alleged involvement in a coup plot following the death of the previous president, Bingu wa Mutharika, in 2012.
  • The arrests of the alleged coup plotters sparked protests by supporters of the Democratic Progressive Party (DPP). The DPP will seek to portray the arrests as an attack on democracy, and they could trigger wider popular protests.
  • An IMF mission said the government's economic performance under the programme with the Fund was satisfactory despite minor slippages. The backing from the IMF is important to maintain donors' support.
  • The government was forced to grant a hefty 61% pay rise to the lowest-paid civil servants after labour strikes paralysed the public sector. The increase will boost current spending and exert wage pressures in other sectors.
  • The continued depreciation of the kwacha has intensified the debate over a more managed exchange-rate regime. However, despite growing criticism, the government has been firm in its commitment to keep the float.

  March 21, 2013

Economy:

• Background

  Malawi: Economic background

  Main economic indicators, 2007
  (Economist Intelligence Unit estimates unless otherwise indicated)
  Real GDP growth (%)	5.7
  Consumer price inflation (av; %)	8.0
  Current-account balance (US$ m)	-312.6
  Exchange rate (av; MK:US$)	141.03(a)
  Population (m)	13.9
  External debt (year-end; US$ m)	620.9
  (a) Actual.
  Source: Economist Intelligence Unit, CountryData.

  Download text file (csv format)

  February 22, 2008

• Structure

  Malawi: Economic structure

  Data and charts: Annual trends charts

  
  

  

  March 21, 2013

• Outlook

  Malawi: Country outlook

  Malawi: Country outlook

  FROM THE ECONOMIST INTELLIGENCE UNIT

  POLITICAL STABILITY: Political stability has improved following the assumption of the presidency by the former vice-president, Joyce Banda. Under the previous president, Bingu wa Mutharika, the regime's credibility and urban popularity had plummeted because of worsening fuel and electricity shortages, rising unemployment and a clampdown on political freedoms. Ms Banda has moved swiftly to reverse previous policies and re-establish relations with international donors. Political freedoms have increased, and Ms Banda is seeking to rebuild popular trust in state institutions. Nevertheless, she will face significant challenges. Section 65 of the constitution--which states that any legislator who won a parliamentary seat for one party at a national election must give up that seat if they switch to another party before the next election--could cause a drawn-out legal controversy that risks diverting attention from the new regime's ambitious reform efforts and could trigger an early legislative election. Moreover, several leading figures in the Democratic Progressive Party (DPP), the main opposition party, have recently been arrested for their alleged involvement in a coup plot following the death of Mr Mutharika. The move could backfire if the government fails to depoliticise the legal procedures surrounding the arrests and they are instead widely seen as an attack on the country's democracy.

  ELECTION WATCH: Although not part of the Economist Intelligence Unit's core scenario, there is a possibility that early legislative elections will be called, particularly if the controversy over Section 65 intensifies or Ms Banda fails to mobilise sufficient support in the legislature to pass the 2013/14 budget (which will be debated in May-June). The government no longer has a solid parliamentary majority and could find it increasingly hard to pass legislation as the 2014 polls draw closer and other parties seek to distance themselves from the PP. Recent elections have been largely free and fair, and the risk of major irregularities in the upcoming elections has decreased, as continued donor support will depend on the holding of free and transparent elections. Local government elections, initially scheduled for 2005, have been postponed again, to 2014. Malawi has had no local councillors or mayors since 2005, when their terms expired; these posts look set to remain vacant until 2014.

  INTERNATIONAL RELATIONS: Following the regime change, Malawi's relations with its major international donors, including the US, the EU and the former colonial power, the UK, have improved considerably. This will lead to a significant increase in aid inflows, which will help to sustain the government's reform efforts, although lingering concerns about public finance management could cause some aid disbursements to be delayed. Relations with Tanzania will be strained by the dispute over the countries' border in Lake Malawi. Although the issue will be complicated by ongoing oil exploration activity in the lake, we expect it to be resolved diplomatically. Malawi is expected to stay on good terms with the other countries in Southern Africa. China's economic presence in Malawi is expected to grow, albeit from a very low base.

  POLICY TRENDS: Malawi's currency was devalued in mid-2012, marking a departure from the previous government's refusal to allow a market-determined exchange rate, and a new three-year IMF agreement worth US$157m was approved shortly afterwards. Although it has led to short-term hardships, the liberalisation of the exchange-rate regime was inevitable and has encouraged renewed aid inflows and will strengthen investor sentiment. It will also help to boost industrial production, which suffered as a result of the overvalued currency and the resultant foreign-exchange shortages (which, in turn, caused shortages of fuel and other imported goods). The new IMF programme will, in the short term, focus on mitigating the effects of the kwacha's flotation on prices of food and other essential goods. In the longer term it will support the government's efforts to improve fiscal discipline and public finance management, while seeking to increase the country's resilience to external shocks by diversifying the economy and improving the business climate.

  ECONOMIC GROWTH: Real GDP growth slowed to an estimated 1.6% in 2012, as agricultural performance, particularly in the tobacco sector, was weaker than in the previous year. Although power supply continues to be intermittent and costly economic adjustments will damage productivity, growth will pick up to 4.1% in 2013, supported by the recovery in aid, the expansion of agricultural subsidies and improved investor sentiment as well as an increase in tobacco and uranium production. Increased capital spending by the government will sustain growth in 2014, despite uncertainties over the elections affecting investment levels. Unless major new foreign direct investment (FDI) deals are secured, growth will not reach the levels seen during Mr Mutharika's first term as president, when real GDP growth reached over 10%.

  INFLATION: Inflation accelerated to an average of 21.4% in 2012 as a result of the liberalisation of the exchange-rate regime, which raised the price of the US dollar by 50% and stoked imported inflation. The introduction of an automatic fuel-pricing mechanism, together with the continued depreciation of the currency, will continue to push up prices. Inflation is expected to be moderated by aid-funded subsidies for poor households, falling global food prices and, once the current lean season ends in March, sufficient overall domestic production of the staple food, maize. (Food accounts for more than half of the consumption basket.) Nevertheless, despite falling global commodity prices and improved domestic agricultural production, we expect average inflation to rise to 25.6% in 2013 owing to currency depreciation and the base effects of the relatively low inflation in early 2012. Inflation is expected to moderate thereafter from 14.4% in 2014 to 9.7% in 2015 as the currency depreciates more gradually, productivity continues to increase and a slight rise in international oil prices is offset by falling food prices. Increasing commodity prices and rising domestic demand, together with the continued currency depreciation, will generate upward price pressures towards the end of the outlook period. As a result we forecast that inflation will rise to an average of 10.3% in 2016-17. A major risk to the inflation forecast is the possibility of severe drought, which would reduce maize production (agriculture is largely rain-fed) and boost food prices.

  EXCHANGE RATES: The shift to a floating exchange-rate regime in May 2012, coupled with a weak current-account position and low levels of foreign reserves, caused the kwacha to depreciate from MK167:US$1 in May to MK335:1US$1 by the end of the year. Despite higher aid inflows and tobacco exports, the kwacha is expected to continue to depreciate in 2013, largely because of the base effects of the currency adjustment in mid-2012, but also owing to the large current-account deficit and weak investment inflows, giving an average exchange rate in 2013 of MK421:US$1, down from MK250:US$1 in 2012. From 2014 onwards the currency is expected to continue to weaken, albeit more gradually, and to depreciate by an average of 3.4% per year to MK516:US$1 in 2017, as the current-account deficit remains wide and FDI inflows stay fairly weak.

  EXTERNAL SECTOR: Exports are forecast to rise in 2013 as tobacco production recovers following a sharp decline in 2012 and prices remain buoyant. The increase will also be supported by growth in uranium exports as production is optimised at the Kayelekera mine in northern Malawi. Export growth will be robust in 2014-17, underpinned by favourable tobacco prices, strengthening uranium prices and a pick-up in economic activity. Imports are expected to increase in 2013, reflecting a boost to food and fuel imports by measures to cover essential imports in the wake of the currency adjustment. In 2014 imports will rise slightly owing to election-related spending, although a weaker currency will constrain demand. Thereafter imports will continue to pick up on the back of increased economic activity and slightly higher global commodity prices. Driven by developments on the trade and transfer accounts, the current-account deficit is forecast to narrow in nominal terms, from an estimated US$513m in 2012 to US$375m in 2013. However, as a result of the currency depreciation, the effect on the current-account deficit in real terms will be limited. In relative terms, we expect the deficit to narrow from an estimated 11.5% of GDP in 2012 to 11.1% in 2013. As import growth moderates, aid inflows remain elevated and exports pick up, the deficit will narrow to 10.7% in 2014 and contract further to 8.7% of GDP by 2017.

  March 25, 2013

• Forecast

  Malawi: 5-year forecast summary

  Outlook for 2013-17: Forecast summary

  Forecast summary
  (% unless otherwise indicated)
  	2012a	2013b	2014b	2015b	2016b	2017b
  Real GDP growth	1.6	4.1	4.3	5.1	5.4	5.5
  Gross industrial growth	1.4	2.4	4.5	4.4	4.6	4.8
  Gross agricultural production growth	-0.2	5.9	5.8	6.1	6.3	6.4
  Consumer price inflation (av)	21.4c	25.6	14.4	9.7	10.1	10.4
  Consumer price inflation (end-period)	34.6c	17.6	13.4	9.5	10.2	10.5
  Lending rate (av)	31.3	29.5	24.3	22.9	22.5	21.5
  Government balance (% of GDP)	-6.9	-3.6	-3.5	-1.8	-1.4	-1.3
  Exports of goods fob (US$ m)	1,044	1,206	1,331	1,465	1,599	1,763
  Imports of goods fob (US$ m)	-1,713	-1,748	-1,831	-1,918	-2,037	-2,192
  Current-account balance (US$ m)	-512.9	-375.3	-385.6	-362.6	-398.3	-430.6
  Current-account balance (% of GDP)	-11.5	-11.1	-10.7	-9.1	-9.0	-8.7
  External debt (year-end; US$ bn)	1.4	1.6	1.8	1.9	2.0	2.1
  Exchange rate MK:US$ (av)	249.50c	421.13	465.41	483.69	501.45	516.47
  Exchange rate MK:US$ (end-period)	335.13c	454.77	474.31	491.73	509.78	522.17
  Exchange rate MK:¥100 (av)	311.80c	454.05	492.49	502.54	514.31	535.20
  Exchange rate MK:€ (av)	320.75c	560.11	610.84	614.29	631.83	651.41
  a The Economist Intelligence Unit estimates. b The Economist Intelligence Unit forecasts. c Actual.

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  March 21, 2013

View detailed map

Country Briefing

Land area

118,484 sq km, with five inland lakes accounting for 24,208 sq km

Population

14.27m (2012; World Gazetteer estimate)

Main towns

Population in '000, (2012; World Gazetteer estimates)

Lilongwe (capital): 782

Blantyre: 728

Mzuzu: 149

Zomba: 96

Climate

Tropical, cooler in highlands

Weather in Lilongwe (altitude 1,000 metres)

Hottest month, November, 17-29°C (average daily minimum and maximum); coldest month, July, 7-23°C; driest months, June and July, 1 mm average rainfall; wettest month, February, 218 mm average rainfall

Languages

Chichewa (national language), English (official language); Chichewa is increasingly understood throughout the country, but Chitumbuka is the lingua franca in Northern region

Measures

Metric system

Currency

Malawi kwacha (MK) = 100 tambala

Time

2 hours ahead of GMT

Public holidays

January 1st, January 15th (John Chilembwe Day), March 3rd (Martyrs' Day), Good Friday, Easter Monday, May 6th (Labour Day), June 14th (Freedom Day), July 6th (Republic Day), October 14th (Mothers' Day), December 25th, 26th (Christmas)

March 14, 2012