The Economic Activity of Malawi

The Republic of Malawi is said to be one of the least developed countries in the world. Or several years, before 2000, its economy was dependent on economic assistance from door countries and largely from the World Bank and International Monetary Fund. Because of corruption issues taking place in the country, the IMF stopped assistance to the country in 2000, followed by a similar action by some international donors. It was only in 2006 when the country qualified for relief assistance under the Heavily Indebted PoorCountries(HIPC) program, and 2007 when the United States made Malawi eligible to receive financial support and assistance under the Millennium Challenge Corporation (MCC) initiative. In addition to these new positive developments, the country signed a 3-year Poverty Reduction and Growth Facility with the IMF, prompting donor countries to resume giving aid to the country.

In 2009, however, investments from other countries fell as a result of the country’s failure to pay for its imports and to address internal problems such as unreliable power, poor telecommunications infrastructure, high cost of services, and water shortage in many parts of the country.

With an economy that is heavily based on agriculture, the country hopes to maintain tobacco as its most important agricultural product and export crop on top of tea, sugarcane, and coffee which account for more than 90% of the country’s export revenues. The government has launched a program to improve agricultural production by giving farmers fertilizer subsidies aimed at energizing farm lands and increase crop harvests throughout the country.