New Economic Analysis Calls for Solutions to Address Macro and Gender Imbalances to Unlock Malawi’s Full Inclusive Growth Potential

LILONGWE, December 20, 2021 - Closing the wide gender gaps in economic opportunities could lift more people out of poverty and unlock Malawi's full inclusive growth potential, the latest World Bank Malawi Economic Monitor (MEM) shows.

The 14^th edition of the MEM, Addressing Macro and Gender Imbalances, highlights how Malawi's economic growth for 2022 is projected to pick up to 3%. However, this growth is vulnerable to shocks emanating from macroeconomic imbalances. Public debt is high and the budgeted fiscal deficit of an annualized 9.1% of GDP is the highest in recent years, while imbalances in the foreign exchange market may lead to further constraints on the private sector. External risks could further undermine the economic recovery in Malawi, due to high volatility in energy prices, additional waves of COVID-19 infections -- including from new variants, and the risk of transport disruptions.

The government must therefore act decisively to address mounting macroeconomic challenges especially on the accumulation of domestic and external debt. This calls for hard decisions in the upcoming FY2022/23 budget, including on the Affordable Input Program (AIP) and containment of expenditure on wages and goods and services, improving public financial management systems to make optimal use of limited resources, as well as strengthening oversight of state-owned enterprises.

The MEM also highlights the importance of reducing gender gaps, which persist across several economic dimensions. Female wage workers earn 64 cents for every dollar earned by men; and women-run firms' sales are below those of male entrepreneurs. Despite the agriculture sector employing around 59% and 44% of women and men, large gender productivity gaps persist. Plots managed by men produce 25% higher yields than plots managed by women. The gap in agricultural productivity is driven by a series of factors including women having unequal use of land inputs, lower access to farm labor, inferior access to improved agricultural inputs and technology, and lower participation in the cash crop/export crop value chains. In Malawi, estimates suggest that closing the gender gap in agricultural productivity could lift more than 238,000 people out of poverty and increase the country's total GDP by 2.1%.

"As the country pursues an inclusive and resilient economic recovery and seeks to break its pattern of low growth, it must aim at breaking down the existing gender barriers. This entails increasing access to business opportunities and the key inputs required to increase women's productivity in the agriculture and other sectors, as well as to boost women's human capital accumulation,"said Hugh Riddell, World Bank Country Manager for Malawi.

According to the MEM, investing in improving women's economic opportunities requires a wide range of approaches to address the core areas affecting women's ability to participate and perform well in the labor market. They include boosting the market prospects of adolescent youth, strengthening women's management of financial resources, and promoting the agenda to eliminate child marriage. They also include enhancing access to reproductive health services to reduce fertility, ending gender-based violence, offering women access to more productive labor and inputs to boost their agricultural capacity, and providing socio-emotional and professional training aimed at bettering women's business and life skills.