REFORMS AND POLICY RESPONSE IN MALAWI: AN ANALYTICAL ESSAY

 

Mining industrial site

 

                                         By Kondwani Nyondo

                                                       .........

According to Todaro and Smith,(2015) reforms  can be defined as  deliberate changes to laws, institutions, or economic structures aimed at improving efficiency, equity, and governance. Policy responses are the measures governments adopt to address economic and social challenges through fiscal, monetary, or regulatory actions Dye(2017). The OECD (2002) further observes that reforms strengthen governance frameworks to enhance social and economic outcomes. 

 Against this theoretical background, the Annual Economic Report 2024 provides a useful case for examining Malawi’s reform agenda. This essay therefore discusses Malawi’s key policy responses, including its participation in the IMF-supported Extended Credit Facility (ECF), revenue mobilisation and tax reforms, diversification through agriculture and mining, and accountability in climate and energy reforms. 

The first task this essay has is to explain the benefits and risks of Malawi being under the IMF-Supported Extended Credit Facility (ECF). While the benefits have been highlighted in the Annual Economic Report (2024), including improved fuel availability, strengthened foreign reserves, and eased imports, the risks are equally critical. One notable risk arises from the dogmatism model of development, where development strategies are imposed in a rigid manner without proper adaptation to the unique socio-economic realities of recipient countries Todaro & Smith, (2015). In Malawi’s case, the IMF’s structural adjustment and austerity prescriptions can be seen as dogmatic, requiring fiscal tightening, subsidy removals, and currency devaluations even when these measures deepen poverty and inequality rather than fostering growth. 

In parallel, the false paradigm model also sheds light on the risks associated with the IMF’s ECF. This model argues that external experts and international financial institutions often provide policy prescriptions based on Western experiences that do not align with the structural conditions of African economies (Todaro & Smith, 2015). Malawi has historically been a recipient of such one-size-fits-all policies, the question therefore is why Malawi is failing to develop? 

Dambisa Moyo (2009) supports this argument, noting that despite billions of dollars in aid flowing into Africa over several decades, countries like Malawi have failed to achieve meaningful development. According to Moyo, aid-driven interventions often create dependency, undermine accountability, and lock countries into cycles of debt and underdevelopment. This underscores the risk that Malawi, under the IMF’s ECF framework, may remain entrapped in externally dictated reforms that perpetuate dependency rather than promoting structural transformation. 

The second task this essay has is to examine the government’s push for revenue mobilisation and tax reforms. As Mankiw (2021) explains, effective taxation requires a broad base, high compliance, and strong administrative capacity. Yet Malawi faces major obstacles in this regard. The economy is dominated by a large informal sector that escapes taxation, and compliance levels are generally low. Moreover, the Malawi Revenue Authority struggles with weak administrative systems, making it difficult to enforce tax obligations effectively (Government of Malawi, 2024). These challenges explain why, despite reform efforts, broadening the tax base remains one of Malawi’s most pressing fiscal difficulties. 

The third task this essay has is to explain how reforms in agriculture and mining can diversify Malawi’s economy and reduce dependence on imports. According to the Annual Economic Report (2024), agriculture remains the backbone of the economy, contributing 27.9 percent of GDP. However, much of this sector continues to rely on subsistence and low-input farming methods, limiting productivity. One major reform being pursued is mechanisation, which aims to replace reliance on the handheld hoe with tractors, planters, and irrigation systems. Mechanisation not only improves efficiency and output but also reduces the drudgery of labour, making agriculture more attractive and commercially viable (FAO, 2018). 

The importance of these reforms can also be understood through classical development theories. The Harrod–Domar model stresses the role of capital formation in driving economic growth. In the context of Malawi, mechanisation represents a crucial form of capital deepening that can raise agricultural productivity and generate surplus for export. Similarly, Rostow’s stages of growth model identifies the “take-off” stage, where increased investment in technology and infrastructure catalyses structural transformation (Rostow, 1960). Mechanisation of agriculture is precisely the kind of reform that can move Malawi from a subsistence-based economy to a more diversified, industrialising one. 

In addition, mining reforms are central to diversification. While Malawi is endowed with significant mineral resources, including rare earths and uranium, the sector remains largely artisanal and informal (Annual Economic Report, 2024). Experiences from resource-rich countries such as Botswana demonstrate that mining, if well managed, can fuel industrial growth and national development (Acemoglu, Johnson & Robinson, 2003). For Malawi, reforms must therefore focus on formalisation, investment in exploration, and strengthening governance in extractive industries. 

Thus, agriculture and mining reforms including mechanization in the former and formalization in the latter—represent essential strategies for reducing import dependence and broadening Malawi’s economic base. 

Lastlt, this essay has was tasked to discuss how journalists can track progress and accountability in climate and energy reforms, including solar irrigation and Electricity-based Agricultural Mechanisation (EbAM). Accountability can be promoted through several methods. Journalists can monitor official government and NGO reports, conduct field visits to assess project outcomes, and interview beneficiaries to understand lived realities. They can also use transparency tools such as budget statements and digital reporting systems to scrutinise spending. Importantly, they must measure concrete outcomes—for example, the number of hectares irrigated or renewable energy capacity added to the grid (OECD, 2002). Through such approaches, journalism ensures that climate and energy reforms are not just policy statements but tangible interventions that benefit communities. 

In conclusion, this essay has demonstrated that Malawi’s reform agenda, as outlined in the Annual Economic Report 2024, is both ambitious and challenging. The IMF-ECF has brought stability but risks austerity and dependency. Tax reforms remain constrained by informality and weak administration (Mankiw, 2021). Agriculture remains the backbone of the economy, contributing 27.9 percent of GDP, while mining presents untapped potential but also risks of resource dependence (Government of Malawi, 2024; Auty, 1993; Ross, 1999). Climate and energy reforms illustrate the importance of accountability, with journalists playing a crucial role in ensuring effective implementation. The success of these reforms will depend on whether Malawi can strengthen institutions, diversify its economy, and pursue policies that balance external support with domestic resilience.  

References

Auty, R. M. (1993) Sustaining Development in Mineral Economies: The Resource Curse Thesis. London: Routledge.

Domar, E. (1946) ‘Capital Expansion, Rate of Growth, and Employment’, Econometrica, 14(2), pp. 137–147.

Dye, T. R. (2017) Understanding Public Policy. 15th edn. Boston: Pearson.

Government of Malawi (2024) Annual Economic Report 2024. Lilongwe: Ministry of Finance and Economic Affairs.

Harrod, R. F. (1939) ‘An Essay in Dynamic Theory’, Economic Journal, 49(193), pp. 14–33.

Mankiw, N. G. (2021) Principles of Economics. 10th edn. Boston: Cengage Learning.

Moyo, D. (2009) Dead Aid: Why Aid is Not Working and How There is a Better Way for Africa. New York: Farrar, Straus and Giroux.

OECD (2002) Glossary of Key Terms in Evaluation and Results-Based Management. Paris: OECD Publishing.

Ross, M. L. (1999) ‘The Political Economy of the Resource Curse’, World Politics, 51(2), pp. 297–322.

Rostow, W. W. (1960) The Stages of Economic Growth: A Non-Communist Manifesto. Cambridge: Cambridge University Press.

Todaro, M. P. and Smith, S. C. (2015) Economic Development. 12th edn. Boston: Pearson.