This country profile was published in November 2008 in our annual 'Africa in 2009' issue. The next edition, 'Africa in 2010' will be on sale 23 November 2009.

Click on the drop-down menu above to see Malawi's Top Companies and Top Banks.

As Malawi enters an election year in 2009, the contrast between its dysfunctional politics and its newly-booming economic performance provides an unfamiliar edge to debates about the country's future. The banks and the giant holding companies (which are the relics of former President Hastings Banda's parastatal monopolies) have been making record profits and been buoyed by the benevolent policies of finance minister Goodall Gondwe. It has proved difficult to keep inflation below the official target of 8%, but real economic growth is projected by the IMF at 8.7% in 2008, dropping to 6% in 2009.

Earnings from tobacco auctions were expected to reach $461m, more than double than the $185m earned in 2007. Following neighbouring Zimbabwe's economic collapse, US buyers like Alliance One and Universal Corporation have been paying unexpectedly high prices to growers of burley tobacco, of which there are 2m in Malawi. At the same time, a third consecutive good maize harvest has filled not only the small barns of Malawi's peasant farmers but also the huge strategic reserve silos around Lilongwe and Mangochi. As a result, President Bingu wa Mutharika now cuts a dash in Southern Africa as a maize donor to Zimbabwe and Swaziland, and as the architect of his country's self-declared 'green revolution'. Multilateral and bilateral donors continue to pour money into the country even as its government boldly, if prematurely, announces its self-sufficiency.

Even with the country's latest export project, Paladin's Kayelekera uranium mine, coming onstream next year with anticipated export earnings of $200m a year, Malawi's treasury will be hard-pressed to afford the massive agricultural subsidies necessary to sustain the recent success that has been boosted by good rains and fortuitous market developments. Unlike President Bingu or Professor Jeffrey Sachs, Western donors have been wary of endorsing the fertiliser subsidy, but the same donors have presented few other viable long-term development options. Faced with the choice of pushing for capital-intensive initiatives like large-scale irrigation schemes, crop diversification, industrial processing facilities or intensive infrastructure improvements, some of the donors have begun to look more benignly on the fertiliser subsidy. Others warn that it risks destabilising the macroeconomic environment.

Malawi's relative economic optimism is not mirrored on the parliamentary scene where the opposition parties attempt, with brave words but declining confidence, to exercise restraint on the all-powerful presidency. The leaders of the Malawi Congress Party (MCP) and United Democratic Front (UDF), John Tembo and former President Bakili Muluzi, resent being bullied and insulted by Bingu but, despite their combined majority in parliament, their hand is weak and they have tended to surrender the initiative. The president has successfully painted their persistent opposition to his government's policies as unpatriotic and self-interested.

After May 2009 parliamentary and presidential elections, it seems likely that the three-way balance between Bingu, backed by his recently created Democratic Progressive Party (DPP), and the other two parties will continue, with the DPP hanging onto Bingu's coat-tails to become a minority government party once again. Despite the party loyalties behind the MCP and UDF - which between them should win the majority of seats - Bingu has won a popular following for his tough political rhetoric and seems well-placed to remain dominant among the country's three big political leaders.