Travel Reference
In-Depth Information
Economy & Diplomacy
Malawi is one of the world's poorest and least developed countries. Its economy depends
on agriculture, which accounts for some 35% of GDP and 90% of export revenues.
Tobacco is the main cash crop, accounting for over 70% of exports. Also important are
tea, sugar and coffee. And while agriculture is the main economic driver, mining and con-
struction are increasingly important to the nation's economy.
After Mutharika set the rate of Malawi's currency, the kwacha
,
at an unrealistically
high level on the international markets, and banned foreign exchange, international invest-
ment and liquidity quickly evaporated (the latter falling in 2009 by 23%). This in turn
hamstrung Malawi's ability to pay for imported goods like fuel, which ground the country
to a halt on every level. Economic growth in 2011 slowed to 5.8% from 6.7% in 2010 due
to reduced donor inflows, and vital shortages of foreign exchange and fuel. Riots broke
out in July 2011 over decreasing living standards and by 2012 British and US funding had
been suspended following the leader's increasingly despotic outbursts.
Enter Joyce Banda, who, when she came to power after Mutharika's death in early
2012, set about repairing the bridges burnt by her predecessor, inviting the British High
Commisioner back and forging a new friendship with Hillary Clinton. Banda has high-
lighted the need for Malawi's economy to be self sufficient from funding in the near fu-
ture, and the International Monetary Fund (IMF) has pledged a donation of US$157 milli-
on in 2012 to help her achieve this end. Confidence has been further bolstered by the new
president reaching out to neighbouring African countries like Nigeria, who will import
Malawi's rice and give seasoned advice on the extraction of Malawi's oil reserves.
Banda quickly began addressing the fuel crisis, striking a deal with PTA Bank to bor-
row funds to boost fuel supply, which is expected to normalise sometime in 2013, setting
Malawi's farms and factories back on track.
Further brave steps by Banda have included devaluing the kwacha by 40%, promising
to repeal Malawi's ban on homosexuality, taking an immediate 30% personal pay cut, and
attempting to sell the US$8.4m presidential jet, instead travelling internationally by com-
mercial carrier. As one of only two female African leaders, Banda has the world's atten-
tion, and while she has it she is doing what she can to effect massive internal change.
