An underdeveloped country as a case study-Malawi
Introduction
Malawi is one of the poorest and least developed and thus depends on donor support and financial assistance from international financial institutions, for instance, IMF. The country is made up people from different ethnicities ranging from the Bantu groups to a smaller number of Europeans and Asians. Malawi’s economy is anchored on the agricultural sector for the reason that products from agricultural activities account of a larger percentage of the total revenues. Many people in the country make a living from the agricultural sector which employs directly and indirectly many Malawians. Economic growth of Malawi is estimated to have reduced to three percent as a result of the slowdown in agriculture sector growth due to drought induced by the El Niño weather phenomenon. The country is growing by an average of around four percent as diversification and industrialization are expected to manifest gradually in the next few years (Country Reports – Malawi, 2016). Fiscal discipline and improved investor sentiment toward the country are also seen to be supporting sustainable growth in Malawi. The country also faces challenges, includes environmental problems, growing problem of HIV/AIDS among other challenges. This essay analyzes the social and economic snapshots of Malawi, its relationships with organizations like IMF and World Bank, social problems and political challenges that are faced by the country.
Malawi is a landlocked country with limited natural resources and thus it depends on neighboring countries like Zambia for some products so as to meet the needs of her people. The country export agricultural products which help to generate revenue. The agricultural sector in the country employs a large percentage of Malawians and supports either directly or indirectly more than eight percent of the citizens of the country. The countries dependency on agricultural products, for instance, tobacco, sugar and tea exports for a bulk of its foreign exchange makes it to be vulnerable to the world market fluctuating prices. For the past few years Malawians have been encouraged to diversify in other sectors apart from agriculture. Citizens of the country have started to embrace the exploitation of minerals which was not the case before, for example, in the recent past the country started to export Uranium to other countries thus boosting its income which is heavily dependent on the exportation of agricultural products.
Malawian economy is driven by agriculture because a large percentage of its revenues come from the export of agricultural products; the dependency of the country on agriculture makes it to be vulnerable shocks such as adverse weather conditions and fluctuations in prices of commodities in the world market (Mucavele, 2013). The country has poor road infrastructure which hinders economic development (Country Reports – Malawi, 2014). The social amenities of the country are not up to the standards that are required and these places the lives of many Malawians at risk. The country faced serious economic challenges in the early 2000s as a result of the reluctance of other countries to help the country because it had not put up mechanisms to ensure that its economy stabilizes. Various international organizations pressurized the government of Malawi at that time to put in place measures which were aimed at stabilizing the economy, for instance, devaluing its currency. The country gave in to the demands from IMF and other bodies after wise consultation and devalued its currency thus putting it in a good position to trade with other partners. The country now trades with most of its neighbors through regional bodies but it is placed at a disadvantage because its landlocked and thus cannot export and import goods directly from overseas. The economic reforms undertaken by the new administration after the death of president Mutharika five years ago have started to yield fruits, for example, the economy of the country has been improving for the last four years that the new administration has been in power.
For the past five years the economy of the country has been gradually improving as a result of the initiatives that international organization like IMF have put in the country. IMF started a program in the country known as poverty reduction and growth facility which has seen the country take major economic strides in the last two years. In the last five years, the country has made progress; the agricultural economy of the country has weathered the global climate in a good way. The Gross Domestic Product growth of Malawi down in 2012 following a contraction in the agricultural and manufacturing sectors, brought on by drought and a foreign exchange shortage resulted in many challenges to Malawi (Malawi: 2016 Country Review, 2016). There were chronic food shortages in the country which led to the loss of lives and disruption of daily activities of the country like closure of some schools.
The country devalued their currency after being pressurized by the international monetary fund thus causing fuel prices to increase (Mwabutwa, Viegi and Bittencourt, 2016). Four years ago, the country was suffering from the deficiency of foreign currency, an acute shortage of fuel and very low income from the major exports from the country. Four years ago it was clear that the economy of the country was driven to the brink of collapse after foreign was limited due to the humanitarian record of the president of the country. In 2012, the president of Malawi died and a new administration quickly took steps to improve the economy by devaluing their currency. The new administration of president Band adopted a flexible exchange rate and removed restrictions on foreign exchange transactions which had led to the growth of a parallel market in foreign exchange. The new administration also adjusted the prices some products in the market, for instance petroleum products and adopted an automatic adjustment mechanism. This was aimed at ensuring that life was affordable to most Malawians who had experienced serious challenges as a result of the previous economic strife. The same year IMF approved a loan to the country that was aimed at reviving the economy of the country that was at the brink of collapsing.
The economy of the country has slightly improved in the past few years as a result of the doubling of the earnings that are gotten from agricultural exports like Tobacco. The IMF report reveals that the rate of inflation in Malawi had been declining in the recent years but remained high in May 2014. The GDP growth is estimated to be up by 4.5 % in 2017 as a result of measures that have been put in place by various institutions in the country (International Monetary Fund, Malawi, 2016). The population and GDP per capita have continued to increase as a result of the efforts that have been put in place by the new administration. The country’s industrial and trade reform program including rationalization of the tax system, liberalization of the foreign exchange regime, and elimination of trade and industrial licenses on several items and businesses has produced written guidelines intended to increase government use of transparent and effective policies to foster competition. The prices of basic commodities that are needed by most Malawians have reduced thus making life to be affordable. The country has taken drastic steps to ensure that no labor, environment, health and safety or other laws distort or impede investment in the country; this move is attracting investors from foreign countries who come with foreign currency to boost the economy of the country. It is only five years ago when the country was suffering from the deficiency of foreign currency which forced it to take drastic steps to improve the economy. Corruption has been delaying the implementation of programs which are aimed at during the economy of the country forward so that Malawi can compete on a level ground with its neighbors like Zambia. Decision making in Malawi has also been affected in major public institutions because it is not based on merit as required by the law. Most contracts are awarded to people who bribe and thus they carry out shoddy projects at the expense of the tax payers who work hard to ensure that their country gets better than it was before. While market prices for goods are generally not controlled, prices of certain other goods are controlled by the market forces.
| 2011 | 2012 | 2013 | 2014 | 2015 | |
| Population(Million) | 16.166 | 16.632 | 17.111 | 17.604 | 18.111 |
| Population growth (%) | 2.876 | 2.883 | 2.880 | 2.881 | 2.880 |
| GDP Per Capita(LCU1000s | 54,488.00 | 63,512.03 | 82,706.06 | 102,773.27 | 175,973.44 |
The country has also been faced with major political challenges as a result of the ideological differences of people who reside in the country and feel that the government has not done enough to ameliorate problems which face them. Before the death of president Mutharika in 2011 people took to the streets because they felt that the government was not doing enough to save the economy of the country. Livings become hard for most Malawians because of the dynamics in the world economy which led to poor performance of the country as compared to others. Citizens of Malawi and other human rights groups wanted a total overhaul of president Mutharikas administration. In 2012 violent protest erupted in the country as a result of economic strife that was caused by various factors within and outside the country. The president attempted to quell dissatisfaction from the public and criticism from his opponents by forming a new government. By March 2012, though, it was clear that the move that was taken by the president had not restored public confidence move had not squashed and it certainly had not silenced the critics. The government decided to enact a crackdown on against anti-government voices that were seen as a threat to the regime (Malawi 2015 Country Review, 2015. Human rights groups drew attention to this trend by noting the surge of arrests and threats against journalists and activists, which had increased so acutely that many critics of the government in various fields had been forced to go into hiding. The arrest of opposition leaders and those who were thought to be against the government was criticized by the international community as a step that was aimed at silencing the opposition. The country was threatened with sanctions if it did not allow dissent opinion on the issues of governance. After the death of president Mutharika in 2012, Banda took over and initiated major political reforms which restored the confidence of the public in the leadership of the country. The protests that were being experienced in the country have since reduced because the confidence of the public in the new administration has been renewed. International bodies and donor have resumed in providing relief food to the country and other support. In early 2015, the country was faced with drought which led to hunger in most parts of the country. International donors salvaged the situation by providing basic necessities to most Malawians who were in dire need of assistance.
Since 2011 the country has been dealing with violent protests, firstly, before the death of President Mutharika, the protesters were demanding for his resignation because they felt that he had failed to save the country. The protesters felt that the president had failed as a leader of a government which was unable to provide basic necessities to its citizens. The protests continued for a long time until the government decides to crackdown of those dissidents who were thought to be fanning the protests. The crackdown and arrest of those who were seen to be antigovernment drew mixed reactions from different groups across the world especially human rights groups that condemned the step that the government of Malawi had taken. In 2012, the economy of the country almost collapsed as a result of international donors refusing to assist the country as a result of the human rights records of the president.
The country had strained relationships with international bodies like IMF and World Bank long time ago but the problem has been resolved. First, the late president Mutharika was reluctant in devaluing the currency of the country arguing that the move will make the people of his country to be poor. He devalued the currency just once but refused to further devalue it as he was advised. After the death of the president, his vice president took over and initiate major economic reforms that improve the economy of the country. First, the new president devalued the currency of the country as advised by IMF and other international bodies. This move led to increased investment in the country and solved the problem of limited foreign currency that had faced the country before the devaluation of its currency. Many international bodies have approved loans to the country as a result of the major changes that have been witnessed in the country in the past few years since the new president was elected. Donors and bodies that offer humanitarians assistance have also a good relationship with the country because they stepped up and assisted the country when it was affected by drought last year. International donors help to save more than three million Malawians who could have died as a result of the hunger that faced the country. International bodies also provide people in Malawi with agricultural inputs to help boost their agriculture because that is their main source of income.
HIV prevalence in Malawi is the eighth highest in the world, with an estimated eleven percent of adults currently infected with the disease. In recent years, HIV prevalence has remained stable in Malawi and other countries in Africa that were greatly affected by the disease, thanks to increased access to anti-retroviral treatment (ART) and behavior change in the country (Trinitapoli, 2015). The behavior change has been a result of the programs that the government has initiated that are aimed at informing the citizens the dangers of the disease and how it can be prevented. In the last five years the country continues to be faced by numerous social problems which include the HIV/AIDS epidemic which continues to take the lives of hardworking Malawians. The disease has had a major impact on population growth thus affecting the economy of the country, for instance, a Malawi health and demographic survey report in 2010 revealed that eleven percent of adults between the ages of 15-49 were infected by the disease. The report further revealed that the larger percentages of those who are affected are women because of their vulnerability. The Government of Malawi reported that eighty percent of new HIV infections occurred among partners in stable heterosexual relationships, and it identified discordance as the second most important driver of the HIV pandemic in the country (Wella, 2014). The Malawian report established that those with higher educational qualifications in Malawi were the ones who were at greater risk of contracting HIV and yet they were the ones who were more knowledgeable about HIV. This beats logical because those who are educated are informed about how the disease is transmitted and prevented. Although policy makers and practitioners in Malawi are aware that health education and essential learning from HIV information is an indispensable component of the fight against the HIV pandemic, their focus seems to be more on getting information to the people and not the information-related dynamics or learning habits that drive behavior change (Lancaster, Powers, Lungu, Mmodzi, Hosseinipour, Chadwick and Miller, 2016). The prevalence of HIV/ AIDS in the country has affected its productive citizens who are supposed to work have and spur economic development. The government is forced to use resources in the fight against the disease that can spread further if it is not checked. Resources that could be used in other developmental activities are used in fighting HIV/AIDS.
Illiteracy is also another social problem that faces the country, the level of illiteracy is very high in the country as a result of many factors. The government is putting in place measures to ensure that young Malawians can access formal education which will help in reducing the illiteracy levels in the country. The illiteracy levels have made the country to lag behind in many things because its people find it hard to comprehend some basic things. Most Malawians just believe that agriculture is the only activity that can generate income for them. They have refused to embrace other activities that can boost their agriculture and increase the income that they get. Very few Malawians have started to embrace mining as another activity that can generate income.
The country has also been faced with other challenges which have affected its economy in the last few years. Drought and floods during the first part of 2015 placed millions of Malawians at risk and resulted to weak economic activities thus affecting the economic growth of the country. Donors and other international bodies had to step in and provide relief food.
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