Country Profile: MALAWI

Southern Africa

Monday, 23 November 2009 00:00

This country profile was published in November 2009 in our annual 'Africa in 2010' issue. The next edition, 'Africa in 2011' will be on sale in November 2010.

One of the big political questions for Malawi has now been partly answered in the peaceful elections of May 2009. The question was whether President Bingu wa Mutharika could survive endless disputes with a powerful parliamentary opposition without inflicting permanent damage to the democratic constitution of the country. The decisive result of the May election, which greatly reduced the representation of the opposition parties, helped strengthen  Mutharika, but the survival prospects of Malawi’s  democracy are less certain. 

Malawi The President and his Democratic Progressive Party (DPP) now reign supreme, with the DPP holding 114 of 193 seats. Of the 193 newly-elected MPs, 145 are new to parliament, offering a legislative clean slate to the government. The constitution is no longer threatened by noisy opposition benches or by the President acting extra-judicially to circumvent them. A semi-bridled presidency has become a potentially unbridled one. The two main opposition parties, the Malawi Congress Party and the United Democratic Front, have seen their support dwindle in the face of the power of incumbency; the political prospects of their leaders, John Tembo and Bakili Muluzi, have also withered. 

Without the opposition parties as convenient scapegoats to blame for all its woes, Malawi’s more fundamental contradictions are coming into the open. The country has always been a favourite with multilateral, bilateral and private donors because its poverty is everywhere on display, and its urgent need for better hospitals, schools, prisons and AIDS orphanages only too obvious. It is an ideal environment for the international aid industry: peaceful, needy and grateful. 

While people are close to starvation in the Shire Valley and the World Food Programme has launched an appeal for $5.2m to feed half a million Malawians between now and the end of 2010, the government boasts four successive years of large maize surpluses and a strategic grain reserve at an all-time high. Its top politicians spend lavishly on themselves. These contradictions between officially-proclaimed economic success and Malawi’s obvious and continuing underlying poverty and dependency may have to be confronted during President Mutharika’s second term.  

Malawi’s investment climate is negatively  affected by a head-on clash of interests between, on the one hand, the international buyers of Malawi’s staple exports (notably tobacco and cotton) and, on the other, a government that is determined to enforce minimum prices for the millions of growers who are dependent upon them for their livelihoods. Several senior executives of the US-owned companies Alliance One and Limbe Leaf, the main buyers of burley tobacco on Malawi’s huge auction floors, were deported from the country in 2009. International cotton-buyers, in the shape of Cargill Cotton, have pre-empted their own expulsions by withdrawing from the markets altogether. However understandable Malawi’s frustration with low commodity prices may be, this is a very serious development for the country’s prospects. 

Malawi is 60% dependent on tobacco exports for its non-aid foreign earnings and in recent years great hopes have been invested in cotton exports. Mutharika has attacked the “neocolonialist” tobacco buyers in a very public way, and this has also raised tensions in this normally easy-going country.  Malawi’s economic outlook is threatened by its fiscal vulnerability and pressure on its international reserves, especially as its tobacco earnings fall. For the time being, the growth forecasts are still very positive at 5.9% in 2009 and 4.6% in 2010. Inflation has also fallen to below 8%