Impact of political instability on business and economy in Mali

Malawi’s economy has been significantly weakened by frequent exogenous shocks and macro-fiscal imbalances. The country’s growth is projected to increase in 2023 to 1.6% as electricity supply improves, compared to 0.9% in 2022. However, severe and persistent shortages of foreign exchange continue to subdue growth. The country is expected to secure a staff-level agreement with the IMF and return to an Extended Credit Facility program, which will support macroeconomic reforms. However, such growth remains insufficient to substantially mitigate the prevailing high levels of poverty. The government launched the Malawi 2063 Vision that aims to transform Malawi into a wealthy, self-reliant, industrialized upper-middle-income country, through a focus on agriculture commercialization, industrialization, and urbanization. The first 10-year implementation plan anchors the World Bank’s Country Partnership Framework (CPF).
Malawi’s political context has been relatively stable since the end of one-party rule in 1993. However, the country’s economy remains vulnerable to exogenous shocks, particularly those related to climate change. Recurrent climate shocks pose a considerable risk for exacerbating food supply shortages in Malawi. Coupled with persistent inflation, rising domestic prices, and an anticipated decline in per capita income, the percentage of individuals subsisting on less than $1.90 per day is expected to increase. The country’s high levels of poverty and vulnerability to external shocks highlight the need for continued macroeconomic reforms and investment in sectors such as agriculture, which can help build resilience and promote sustainable economic growth.
Malawi’s economy faces significant challenges, including inadequate infrastructure, poor labor markets, and unavailability of proper functioning capital markets. The country’s dependence on rain-fed agriculture makes it particularly vulnerable to the impacts of climate change. The government has implemented policies to attract foreign investments through bilateral cooperation, and the country is open to foreign direct investment. However, starting and running one’s own business, being self-employed, is not a salient issue, even though entrepreneurship is about perceiving opportunities and undertaking new combinations of resources. The government needs to establish a robust international presence on the global stage via media, networks, and enhanced and effective diplomacy to promote itself as an attractive investment destination. Additionally, reforms within the country, proper functioning of institutions, and promoting a more business-friendly environment are essential to attract FDI.

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