Over the last two decades Malawi has improved its global competitiveness indicators, but needs to and can do more

By Duncan Mlanjira

Over the last two decades Malawi has improved its global competitiveness indicators, but it needs to and can do more, said Vice-Chancellor at United States International University-Africa, Paul Tiyambe Zeleza in his key note address at the opening of inaugural National Development Conference at Bingu International Convention Centre in Lilongwe on Thursday.

The conference, whose theme is ‘Beyond Political Freedom to Inclusive Wealth Creation and Self-reliance’, was opened by President Lazarus Chakwera.

Zeleza said according to the World Bank’s Ease of Doing Business, which covers 12 areas of business regulation, Malawi improved its ranking from 132 out of 183 countries in 2010 to 109 out of 190 countries in 2020, in which Malawi ranked 12th in Africa in 2020.

“In the World Economic Forum’s Global Competitiveness Index, a four-pronged framework that looks at the enabling environment, markets, human capital, and the innovation ecosystem, Malawi ranked 119 out of 132 countries in 2009 and 128 out of 141 countries in 2019.

“Access to finance poses significant challenges to the private sector especially for small and medium enterprises, that are often the backbone of any economy.

“The banking sector is relatively small, and borrowing is constrained by high interest rates, stringent collateral requirements, and complex application procedures.”

In addition, Zeleza said, levels of financial inclusion and literacy could be greatly improved and that the introduction of the financial cash transfer program and mobile money has done much to advance both.

“Corruption is another financial bottleneck, a huge and horrendous tax against development. The accumulation of corruption gates — cashgate in 2013, maizegate in 2018, cementgate and other egregious corruption scandals in 2020 — is staggering in its mendacity and robbery of the county’s development and future by corrupt officials that needs to be uncompromisingly uprooted. 

“Malawi’s infrastructure deficits are daunting. Access to clean water and energy remains low, at 10%, and frequent electricity outages are costly for manufacturing firms that report losing 5.1% in annual sales, and 40.9% of the firms have been forced to have generators as backup.”

He added that the country’s generating capacity needs massive expansion to close the growing gap between demand and supply.

“Equally critical is investment in transport and its resilience to contain the high costs of domestic and international trade that undermine private sector development and poverty reduction.

“Digital technologies and services are indispensable for 21st century economies, an area in which Malawi lags awfully behind. According to the ICT Development Index by the International Telecommunications Union, in 2017 Malawi ranked 167 out of 176 countries.

“There are significant opportunities to overcome the infrastructure deficits in terms of strengthening the country’s transport systems through regional integration, developing renewable energy sources, and improving the regulatory environment.

“Developing a digitally-enabled economy requires enhancing digital infrastructure, connectivity, affordability, availability, literacy, and innovation.

“The services sector has grown rapidly, accounting for 29% of the labor force in 2013 up from 12% in 1998. It is dominated by the informal sector which is characterized by low productivity, labor underutilization, and dismal incomes.

“The challenge is how to improve these conditions and facilitate transition from informality to formality,” he said.