Malawi can build a robust private sector, create jobs, and recover more quickly from the Covid-19 pandemic by introducing targeted reforms and attracting investment in key sectors, according to a report from IFC and the World Bank published on Monday, July 19, 2021.
The World Bank Group report, the Malawi Country Private Sector Diagnostic (CPSD), examines opportunities and constraints in four sectors of energy, digital infrastructure and services, transport and logistics, and agribusiness. It outlines reforms that could increase private investment, contribute to growth, and support job creation.
"The reforms would help to strengthen fiscal fundamentals, increase access to reliable power, improve markets, and promote commercial agriculture," reads the report in part, noting that Covid-19 has highlighted the importance of digital connectivity and that expanding digital inclusion could help more Malawians earn an income and develop skills for the growing digital economy both during--and after--the pandemic.
Amena Arif, International Finance Corporation (IFC) Country Manager for Malawi, says the country is on a growth trajectory, and investment in the four key sectors outlined in the CPSD will especially empower women and young people in the country who are entrepreneurs. Supporting these entrepreneurs, by expanding digital connectivity and increasing digital literacy, could positively impact the economy, she adds.
IFC--a member of the World Bank Group--is the largest global development institution focused on the private sector in emerging markets. Using capital, expertise, and influence, IFC creates markets and opportunities in over 100 countries. In fiscal year 2020, IFC invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity.
According to Hugh Riddell, World Bank Country Manager for Malawi, there is significant private investment potential in Malawi to boost economic growth and that they are ready to work with partners to seize these opportunities and create new markets.
The World Bank Group report calls on the Malawi government to act decisively to mitigate the adverse effects of the COVID-19 pandemic on health, human capital, and the economy by introducing policy reforms in the four sectors.
The four sectors were selected from an analysis of recent performance--including trends in trade, investment, and productivity--and a modelling of the country's current capabilities and economic fitness, such as the potential of each sector to act as a job multiplier.
IFC has produced CPSDs in 25 countries, including the CPSD published on Wednesday for Malawi, with more than 30 ongoing in other countries. The CPSDs are jointly conducted by IFC and the World Bank. They are designed to provide in-depth economic analyses that identify opportunities for the private sector to combat poverty and create opportunity.
The Country Private Sector Diagnostics aim to identify sectors where private sector solutions can create or expand markets and make substantial contributions to development impact.
"Each CPSD includes an assessment of the state of the private sector, identification of near-term opportunities for private sector engagement, and recommendations of reforms and policy actions to mobilize private investment and drive solutions to key development challenges," reads a press release issued by IFC Malawi.
Speaking in Parliament recently, Malawi's opposition leader Kondwani Nankhumwa noted that President Lazarus Chakwera's government has yet to develop a short to medium term economic policy outlining how it would recover and grow the economy.
"Yes, we are all bound to the 2063 Vision, but the government has failed to articulate its short to medium term economic plan to move the country towards that Vision," he told Parliament at the end of the 2021/22 Budget Session.