The International Monetary Fund (IMF) is urging Malawi and other countries in sub-Saharan Africa to change how they grow their economies. Instead of relying mainly on government spending, the IMF says countries should allow the private sector--businesses and investors--to take the lead.
According to the IMF's latest Regional Economic Outlook report, the current system, where governments drive growth through borrowing and spending, is no longer working well. Economic growth in the region is still too slow, and people's incomes are not catching up with those in more developed or emerging economies.
The IMF points out several problems behind this slow growth. These include low productivity, weak governance, and limited investment from private businesses. It also warns that governments are running out of room to keep spending because public debt has risen sharply--Malawi's debt is now around K24 trillion. At the same time, borrowing has become more expensive and foreign aid is declining.
The report suggests that if countries improve governance, fix business regulations, and strengthen their external trade systems, they could increase economic output by up to 20 percent within five to ten years.
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However, experts in Malawi say making this shift will not be easy.
Economist Mavuto Bamusi explains that many State-owned enterprises (SoEs)--companies owned by the government--are not performing well. He says political interference has made these institutions inefficient, turning them into places where resources are misused instead of helping the economy grow.
Bamusi adds that the government often has to bail out these struggling companies, which puts more pressure on already limited public funds. This reduces money available for important development projects.
He suggests three main solutions: remove political influence from these companies, invest in modern infrastructure, and ensure they are managed by qualified professionals.
Another concern is lack of transparency. Willy Kambwandira, head of the Centre for Social Accountability and Transparency, says discussions between the IMF and the government are not open to the public. This makes it difficult for people to track progress or hold leaders accountable.
He also points out that inconsistent policies and weak enforcement of rules have created uncertainty for businesses. As a result, investors are hesitant to invest in productive sectors.
This concern is supported by Malawi Confederation of Chambers of Commerce and Industry CEO Daisy Kambalame, who says many investors are now putting their money into government securities instead of businesses. These investments are seen as safer and offer more predictable returns.
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Because of this, many companies are operating below their full capacity, meaning they are producing less than they could. This reflects lower investment and weaker economic activity.
Meanwhile, Misheck Esau of Nico Capital Limited says inefficiencies in State-owned companies, especially in sectors like energy and infrastructure, are discouraging private investment. He stresses that investors need confidence that resources are being managed properly.
Overall, the message is clear: while Malawi and other countries talk about private sector-led growth, the conditions needed to support it--such as strong governance, efficient institutions, and clear, consistent policies--are still weak. Until these issues are addressed, real economic transformation will remain difficult to achieve.
