World Bank Grants Malawi $150m for Economic Recovery

July 17, 2012 /

The World Bank’s Board of Executive Directors has approved US$150 million to Malawi to support the government with its current reform program to stabilize the fragile economy.

The aid is expected to help accelerate the resumption of growth, support a quick rebound in the agricultural sector, and cushion the costs of the economic transition.

The Malawi Government is implementing critical macro-economic and structural reforms under new leadership of Mrs. Joyce Banda following the untimely death of the former President last April. The economy remains fragile given Malawi’s weak reserve position, and the urgent need to restore fiscal sustainability.

Some of the key economic reforms that have been implemented since May 2012 include liberalizing Malawi’s exchange rate regime and significant fuel and power price adjustments to better cover costs of these essential commodities.

The World Bank will support Malawi through a Rapid Response Program (RRP) that consists of a Rapid Response Development Policy Grant which is a budget support operation worth $50 million; and additional financing for two on-going projects. The projects, which will get $50 million each, are the Irrigation, Rural Livelihoods and Agricultural Development (IRLAD), and the Third Malawi Social Action Fund (MASAF III).

“The RRP was prepared within a very short time frame because of the urgent support that Malawi needs. This support is very critical to help maintain the momentum for the bold reforms that Malawi is taking and inject resources needed to mitigate economic transition costs,” said Sandra Bloemenkamp, Malawi’s Country Manager for the World Bank. “The resources will also help quickly scale up social protection programs and agriculture investments for small farmers to mitigate the effects of the adjustments in the economy on the poor,” she added.

The budget support operation for the Financial Year 2012-2013 will focus on efforts to restore macroeconomic stability, improve functioning of the petroleum market and incentives to exporters, including smallholder tobacco farmers. It will also improve economic management of the farm input subsidy program and strengthen social protection interventions and the resilience of the most vulnerable groups to shocks. The Task Team Leader (TTL) for the budget support operation is Ms. Appolenia Mbowe.

Both MASAF and IRLAD will provide mitigation measures for the vulnerable people in rural and urban areas, and smallholder farmers. The Additional Financing (AF) for MASAF will help scale up the social safety net program through labor intensive public works. It will have nationwide coverage. The number of additional beneficiaries will be 586,000 households or 2.9 million people. The expanded Public Works Program is expected to be implemented in the next twelve months. The MASAF AF is expected to close in June 2014. The TTL for MASAF is Ms. Ida Manjolo.

The IRLAD AF will scale up its social safety net function and support productive rural livelihoods in irrigation, as well as prepare for further investments that strengthen resilience in agriculture. The project will reach an additional 230,000 households (about 1.25 million people) and scale up to all districts in the country. The additional financing will support the project until closure in December 2014.The TTL for IRLAD is Mr. Pieter Waalewijn.

The Malawi portfolio has 13 projects in the following sectors: agriculture, finance and private sector development, human development, environment, infrastructure, and, energy and mining.


1 Comment for “World Bank Grants Malawi $150m for Economic Recovery”

  1. The World Bank seems to have overlooked the total lack of wheeled transport on Malawi’s subsistence farms, as a major impediment to agricultural productivity.

    The only appropriate and affordable form of wheeled trahsport for this very poor population is some form of lightweight handcart.

    The primary source (as well as users and exporters) of the essential handcart wheels is China. Yet the wheels are not imported into Malawi, despite their enormous market potential.

    Despite positive assessments of handcart use by the Malawi Ministry of Agriculture in 1998, by the World Bank funded Malawi Rural Travel and Transport Programme in 2003, by Bunda College of Agriculture in 2009, no agency has acted to ensure that handcart wheel axle sets are commercially available in Malawi.

    In essence this condemns Malawian farmers, mostly women, to transport all of their farm inputs and harvested crops into and out of their fields on their heads. This burden is in addition to their daily loads of water and firewood to their homesteads, and their headloading of marketable crops to the marketplace.

    If the World Bank thinks that Malawi’s economic (i.e. agricultural) development can be accomplished by reliance on headloading, it is sorely mistaken. Yet it has made no attempt to assess and implement the only viable transport technology that is both appropriate and affordable to the vast majority of Malawians.

    It is time to reassess this failure and to act to make handcart wheel-axle sets commercially available, so that affordable, lightweight and rugged handcarts can be manufactured in Malawi, and purchased by Malawian farm families, empowering them and enhancing not only their agricultural productivity, but also their quality of life.

    World Bank representatives to and in Malawi do not carry their luggage on their arm, nor on their heads. For some four decades they have employed wheeled luggage to transport their luggage. It it time for them to apply that same basic technology — two wheels on a common axis/axle — the handcart, to the needs of Malawian farmers!

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