Malawi finds economic success

Gretchen Wilson May 29, 2009

Malawi finds economic success

Gretchen Wilson May 29, 2009

KAI RYSSDAL: Even the the vast majority of us who’ve never been to Africa know its reputation: The world’s poorest continent, starving children, civil wars. But a new study finds that Africans living in the United States say American news and popular culture doesn’t show the Africa they know. The part with with stable governments and new technology and economic growth. Gretchen Wilson has more now on one country that’s shaking off its old reputation.

Gretchen Wilson: Malawi is a country a little smaller than Pennsylvania tucked in the center of southern Africa. It’s made headlines recently for celebrity news more than anything else.

CBS NEWS ANCHOR: The Material Girl is at it again. A court official in the African nation of Malawi says Madonna will apply to adopt another orphan.

Malawi is poor; the UN’s Human Development Index ranks it near the bottom in terms of literacy, life expectancy, and GDP. But behind the grim statistics is an economic success story. Ebrahim Fakir is with the EISA, an organization that promotes democracy in Africa.

Ebrahim Fakir: The last three years has seen phenomenal economic growth of close to 7 percent for about two years and 9 percent in the last year.

Of course, this is growth from a low base. But the Economist Intelligence Unit calls Malawi the second-fastest growing economy in the world. Many international donors and economists credit the tight fiscal management of President Bingu wa Mutharika. He was recently re-elected for a second term.

In the election hall, supporters danced and waved his party’s blue flags when he was again declared the winner. In his inauguration speech, Mutharika, a former World Bank economist, pledged to stamp out graft and fraud.

Bingu wa Mutharika: I shall continue to fight corruption because it is evil. Corruption in whatever form or shape is an enemy to growth and prosperity, because it robs the poor and denies their legitimate right to development.

This stance against corruption has made him something of a darling of the West. He’s also managed to bring down inflation from 30 percent into the single digits. Stephen Gelb is head of the Edge Institute, an economic policy think-tank in Johannesburg.

Stephen Gelb: He has followed what you might call orthodox economic policies, and tried to improve the fiscal position of the country, and also I think been quite effective at reducing the debt, which has freed up money for things like health and education.

But he’s also bucked the system to help Malawi’s small-scale farmers. He pressured U.S. tobacco buyers to offer more money for the country’s biggest cash crop. And he backed projects to improve irrigation and to distribute subsidized fertilizer. Lloyd Kuveya is with SALC, a human rights group in Johannesburg.

Lloyd Kuveya: Malawi is now a net exporter of food. It’s just amazing. Malawi is experiencing growth and development and a lot of optimism.

But some warn not to get too carried away.

Ross Herbert: Malawi has benefited from some good policy and some meteorological good luck.

Ross Herbert is with the South African Institute of International Affairs. He agrees the gains are great, for an impoverished country prone to drought.

HERBERT: But you have to bear in mind just how fragile economic growth is in a place like Malawi. Just to give you an example, Malawi is probably the poorest country in southern Africa and if the rains don’t come you could easily have a 10-15 percent fall in GDP. And the next year you could have an equal size leap when the rains are good.

That volatility’s one reason why international donations still account for 80 percent of Malawi’s development budget. But the economy is diversifying away from its agricultural roots. The president just opened the country’s first uranium mine. He says the mineral will replace tobacco as Malawi’s top foreign currency earner.

I’m Gretchen Wilson for Marketplace.

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