Malawi Faces Economic Crisis After Floods

By Mike J. Kangwele

Economists have warned government against an impending financial crash as a result of the incessant floods which have significantly destroyed cash crops such as Tobacco and Tea in almost all the

flood-hit districts across Malawi.

Malawi's economy is heavily reliant on agriculture and donor aid. More than one-third of the country's monetary value (GDP) and 90% of export revenues is agrarian based.

According to the United Nations (UN) Resident Coordinator in Malawi, Mia Seppo, "the number of people affected by damage to crops is estimated to be at 638,000".

The country's economy has also been dependent on substantial economic aid particularly from Western development partners such as the World Bank, the International Monetary Fund (IMF), European Union (EU), Britain, USA, Norway and German among other countries. These donors were injecting direct budgetary support of about 40 percent of Malawi's national budget.

As such, without the flood disaster, Malawi was already reeling in the dire financial need following the suspension of the international aid from the Western development partners in 2013 because of the cashgate scandal.

This has prompted economists to raise the alarm bell upon observing that the country has been operating without a disaster management policy which could have helped mitigate the impact of the current flood disaster in the face of absence of aid to fuel the national economy.

In an exclusive interview with Malawi24, South Africa based economist, Betchani Mbuya, bemoaned government's lacklustre in setting up long-lasting economic bailout plan for natural disasters; with preference given to provision of relief materials.

"Providing relief items to people during disasters is a welcome development. But limiting our entire crisis management plan to the provision of temporary relief is significantly retrogressive as it is only intended to garner public's political sympathy for politicians."

Mbuya said it is worrisome that there is no mention of plans that government is putting in place to prevent the country from an economic quagmire considering that cash crops have been destroyed at a time that Malawi is not assured of donors reversing their decision.

Mbuya reiterated previous calls by other financial experts on government to "embark on a thorny sacrificial errand which will see the economy not being over dependent on agriculture and donors alone".

"Malawi is an example of very poor countries in the world which usually rely on agriculture only to support a certain percentage of its economy. But floods seem to ignore that fact as they have swept away the same cash crops leaving people in dilemma," he said.

The devastating floods that swept across over half of the country have as well indicted that donors are not willing to work with the Malawi government as they have flatly refused to work with the government in their relief efforts, opting instead to work with NGOs.

source:malawi24