Malawi Economic Structure

 Malawi’s economic structure is constituted of a large, but underproductive, agricultural sector and an underdeveloped industrial sector. According to the UN Human Development Index, the country is one of the least developed nations in the world. The poor state of the economy can be largely attributed to the history of apartheid and political instability that the nation has witnessed.[br]

 Malawi’s economic structure is constituted of a large, but underproductive, agricultural sector and an underdeveloped industrial sector. According to the UN Human Development Index, the country is one of the least developed nations in the world. The poor state of the economy can be largely attributed to the history of apartheid and political instability that the nation has witnessed.[br]

Malawi Economic Structure: GDP Composition

Malawi’s economic structure is highly dependent on agricultural production. The agricultural sector offers employment to approximately 90% of the total labor force. The remaining 10% of the work force is shared between the industrial and service sectors. Based on the annual national production, the agricultural sector contributes more than 35% of the country’s GDP (according to the 2009 estimates of the CIA World Factbook). The underdeveloped industry sector accounts for only 19.9% of the GDP. After 1990s, the service sector has assumed a bigger share of the national production. It accounts for almost 44% of the GDP.

 

A low GDP growth rate is largely attributed to a disorganized agricultural sector. Due to traditional methods of farming, the annual production is very low. Since 2000s, the agricultural output has severely dipped due to unfavorable climatic conditions. This has had a negative impact on the overall GDP growth and total export volume.

Malawi Economic Structure: Business Climate

Malawi’s economy is primarily dependent on international support. Due to a lack of infrastructural facilities, the country has minimal private or foreign investment. However, many foreign companies hold trade and distribution rights in the Malawi oil sector. The country has huge scope for investment in strategic sectors, such as transport, communication, health and education.

 

In 1999, Malawi joined hands with neighboring countries to develop the Mtwara developmental corridor. This projects aims to boost trade across the borders by establishing a transport link between neighboring nations.

 

Malawi’s economy depends heavily on financial support from international donors. Major donors include the International Monetary Fund (IMF), the World Bank, the US, Germany, Canada, Japan and the Netherlands. However, due to rampant corruption and political mismanagement, a large portion of the international funds is misused at the administrative level.[br]

 

Under the agreement with the IMF, the Malawian government is amending laws to encourage private and foreign investment in all major sectors. The country is also taking proactive measures to curb corruption so as to continue seeking international support.