OFFICIAL USE ONLY IDA/SecM2006-0644 December 20, 2006 For meeting of Board: Tuesday, January 16, 2007 FROM: Vice President and Corporate Secretary Malawi - Poverty Reduction Strategy Paper (Malawi Growth and Development Strategy) and Joint IDA­IMF Staff Advisory Note 1. Attached is the Second Poverty Reduction Strategy, the Malawi Growth and Development Strategy (MGDS) and a Joint IDA-IMF Staff Advisory Note (JSAN) for the Republic of Malawi. The IMF is currently scheduled to discuss this document on January 15, 2007. 2. The MGDS was prepared by the Government of Malawi in consultation with various stakeholders. It is Malawi's overarching policy strategy for reducing poverty in the next five years, covering the period 2006/07 ­ 2009/10. The strategy emphasizes growth as a basis for poverty reduction and has attempted to introduce greater orientation towards results. 3. The JSAN provides selected advice to the Government of Malawi on the MGDS and contains staffs' views on priority issues that would help make the MGDS a more operational and viable development framework. Staffs main recommendations are that priorities need to be further defined within the context of resource constraints and that the strategy will need to be clearly linked to the budget. Policy reforms to emanate from the strategy will need to be evidence based and infrastructure expenditure choices made after due consideration of alternative options. In order to ensure that the authorities are able to properly assess progress towards the end period targets, there will be need to have annual targets that can be realistically monitored. 4. Questions regarding these documents should be addressed to Mr. Nucifora (ext. 85794) or Mr. Nthara (Lilongwe: 5394+3224). Distribution: Executive Directors and Alternates President Bank Group Senior Management Vice Presidents, Bank, IFC and MIGA Directors and Department Heads, Bank, IFC and MIGA Secretary, IMF This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. Documentof TheWorldBank FOROFFICIAL USEONLY ReportNo. 38093 MW REPUBLICOF MALAWI JOINT IDA-IMF STAFFADVISORY NOTE ONTHE POVERTY REDUCTIONSTRATEGYPAPER (GROWTHAND DEVELOPMENT STRATEGY - MGDS) DECEMBER 15,2006 Department: AFTPl CountryManagementUnit: AFC02 Region: Africa This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not otherwise be disclosed without World Bankauthonzation. FOR OFFICIAL USE ONLY INTERNATIONALDEVELOPMENT ASSOCIATION AND INTERNATIONALMONETARYFUND REPUBLIC OF MALAWI Joint IDA-IMF StaffAdvisory Note onthe PovertyReductionStrategy Paper (GrowthandDevelopment Strategy - MGDS) Preparedby the staffs o f the International Development Association andthe International Monetary Fund Approved by Hartwig Schafer (IDA) andRobert Corker and Matthew Fisher (IMF) December 15,2006 TABLE OF CONTENTS I.OVERVIEW................. ................................................................. 2 11. CHARACTERISTICSOF THE MGDS................................................2 A.Ownership and Participation.. ..........,,.....,,,, ,,...,,.,,........,.,... .. ..... ......2 B.Poverty Diagnosis.. ..................... ,, , ,,, ,, C.Macroeconomic Framework..........,..., .,, ,..,, .., ..,, ..,,,..,,,,.,......,,... .........3 . . .....,,,,...,...,,....,..,... ...,,.......3 ,, 111. IMPLEMENTATION, MONITORING AND EVALUATION ..................4 IV. POLICY PRIORITIES AND STRATEGIES......... ............................. 6 A.Sustainable Economic Growth., ,,,, , . .....,,.,,,,,,..,...,.,,..,............... .........,..6 B.SocialProtectionand Disaster Management.. ................... ....... .. C. Social Development.. ....................,................................ . ...................8 .........7 . D.InfrastructureDevelopment...................................... ... . ..... ... ..........-9 E. GoodGovernance..... ........................................................... ...........9 V. CONCLUSIONSAND ISSUESFORDISCUSSION.... .......................... 10 This document has a restricted distribution and may be used by recipients only in the performance o f their official duties. Its contents may not be otherwise disclosed without World Bank authorization. I.OVERVIEW 1. The GovernmentofMalawihas launchedits second povertyreduction strategy, knownas the MalawiGrowthandDevelopment Strategy (MGDS) for the period2006 to 2011.' The strategy's overall objective is to reduce poverty through economic growth and i s organized around five thematic areas as follows: (i) sustainable economic growth; (ii) protection and disaster risk management; (iii) social social development; (iv) infrastructure development; and (v) good governance. From these thematic areas, the strategy has isolated six key focus areas that are seen as central to achieving the strategy's overall objective o f reducing poverty through economic growth. These focus areas are agriculture and food secunty; infrastructure development; energy generation and supply; imgation and water development; integrated rural development; and prevention and management o f nutntion disorders, HIV andAIDS. 2. The MGDS differs from its predecessor,the MalawiPoverty Reduction Strategy (MPRS)insome respects. Inparticular, comparedto the MPRS, participation from stakeholders inthe preparation o f the MGDS took place at a later stage. Also, the MGDS puts stronger emphasis on the role o f economic growth in povertyreduction, andhas improved on the results framework. 3. This JSAN focuses onways to make the MGDS a more operationaland viable developmentframework. Section I1discusses ownership andparticipation, povertydiagnosis, and the macroeconomic framework. Section I11discusses implementation, monitomg and evaluation. Section IV outlines staffs advice on key policy prionties and strategies. The concluding section highlightsissues for Board discussion. 11. CHARACTERISTICS OF THE MGDS A. Ownershipand Participation 4. In staffs' view, the government's ownershipof the MGDS has been stronger than for the MPRS. The previous strategy was perceivedinsome quarters more as a donor requirement to access debt reliefthan as a development strategy dnvenby domestic process.2The current government, which took office inMay2004, views the MGDS as its pnmary vehicle for dnvingits structural reform agenda to enhance growth and reduce poverty Donor participation has been limitedto providing technical assistance and commenting on the document. 5. The government made carefuluse of stakeholder participationin preparing the MGDS. Inputwas sought from civil society organizations, pnvate sector, parliamentanans, local government officials, donors, and line ministnes. The government wanted to make meaningfuluse o f the consultation process. Instead o f 'The first was the MalawiPovertyReductionStrategy(MPRS) whichcoveredthe penod2002-2005. This assessment isprovidedin the CommonwealthSecretariatReportto the CommonwealthFinance MinistersMeeting, on "MonitoringIF1andDonor Supportfor PovertyReductionStrategies: Malawi", 12-14 September,2006. 2 involving stakeholders inall aspects o f the process, their involvement was restncted mainly to participating inworkshops on key issues and to commenting on document drafts. The actual draftingwas done by a core team o f government officials. Unfortunatelythis created the perception that the role o f other stakeholders inthe process was penpheral. There is therefore need for a communication strategy that would mitigate such a perception and ensure that ownership o f the strategy is broadly shared. B. Poverty Diagnosis 6. The MGDSmakesreferenceto the findings of the Povertyand VulnerabilityAssessment (PVA)with regardto Malawi's povertyprofdebutit does not show how thesefindingsactuallyinfluencedsome of the strategiesand policyactionschosen. The PVA finds that more than 52 percent o fthe population lives below the poverty line and 22 percent inextreme poverty, such that they cannot afford to meet even their recommendeddaily food needs. It also finds that there i s no statistically significant difference between these figures and those in 1998, when 54.1 percent o f the population was poor and 23.6 percent were extremely poor. Distribution o f income remains one o fthe worst inthe world, with a Gini Coefficient o f 0.38. While the nature o fpoverty inMalawi has not changed significantly since the last survey was undertaken in 1997/98, the PVA that provided new insights into some o f the causes and dynamics o f poverty, and the relationship between nsk mitigation (social protection) and economic growthe3However it i s not apparent whether and how the MGDS has drawn on these findings. C. MacroeconomicFramework 7 The MGDSis basedon a sound macroeconomicframework inline with the economicprogramsupportedbythe PRGFarrangement. It envisages inflation falling to single digits, output growth averaging 6 percent, and domestic debt decliningto 10percent o f GDP 8. The staffs supportthe macroeconomicpolicypriorities outlinedinthe MGDS.The macroeconomic framework outlinedmthe MGDSwill needto be penodically updated to reflect the government's evolving economic program. In particular, the framework will needto be revised to incorporate the outcome o f Malawi reachingthe completionpoint under the Heavily Indebted Poor Countnes (HIPC) Initiative. Staffs welcome Malawi's continued commitment to reducing domestic debt as a means o f creating fiscal space for other fiscal pnonties and redirecting financialresources towards pnvate sector growth. Staffs support the objective o f reducing domestic debt to below 10percent o f GDP over the medium- term, but also envisage scope for further reduction. Staffs welcome the commitment to a monetary policy framework anchored by money growth and geared towards pnce stabilization. Staffs also welcome the government's commitment to a market- determined exchange rate and advise that the accumulation o f external reserves should be seen as a key medium-tern policy objective. The PVA highlightsthe role o f risk mitigation (social protection) as a prerequisite for economic growth. 9 The output growth assumptionsunderlyingthe MGDSwarrant some justification.The MGDS assumesthat growthwill average 6 percent over the medium-term, which i s hghcompared both to Malawi's past performance and to anticipated growth inthe region. Instaffs' view, this growth i s feasible because Malawi's poor performance over the past decade provides some scope for catching up.However, this growthis not assured: it also depends on the government's continued commitment to sound macroeconomic management and the implementation o f pro-growthmeasures identified inthe MGDS. 10. Meetingthe objectivesof the MGDS will requirea substantialincreasein externalfinancingto supplementMalawi's low domestic savings.This includes a substantial scaling-up o f donor support to finance public expenditures as well as pnvate financial inflows to finance pnvate investment. Staffs suggest further recognition o f the macroeconomic challenges posedby increased external financing and the need to strengthen economic management and institutions to address these challenges. Inparticular, the government would need to be attentive to the impact on Malawi's overall external competitiveness - including inflation, wages and exchange rates, and how this could impinge on pnvate sector growth and external trade. To date, donors have not committed to scaling-up aid flows. Malawi benefited significantlyon reaching the completion point under the HIPC Initiative and accessing debt reliefunder the MultilateralDebt Relief Initiative. However, the impact on net flows has been modest on account o f offsettingreductions m gross flows. Untiladditional resources matenalize, the government will need to carefully manage unrealistic public expectations o f what the budget can deliver. 11. The MGDScould havebenefitedfrom a discussionofthe risksto macroeconomicperformancethat could undermineits implementation.Malawi remains vulnerable to a number o fexogenous shocks to growth, including inclement weather conditions and a detenoration inthe terms o f trade. Implementation o f the MGDS could strain Malawi's limited administrative capacity and nsk diverting attention from core macroeconomic pnonties. Uncertainand volatile aid flows are potentially disruptive and will needto be carefully managed. 111.IMPLEMENTATION, MONITORINGAND EVALUATION 12. Effectiveimplementationof the MGDSrequires a clear prioritizationof expenditureswithin a realistic resourceenvelopeconsistentwith the government's macroeconomicframework. Staffs congratulate the government on their efforts to cost the strategy However, the cost estimates are difficult to relate to overall budgetary needs since they exclude statutory expenditures and personal emoluments as well as budgetary programs that have little connection to the MGDS, such as defense spending. Furthermore, the cost estimates o f the strategy have not been confronted with the resource envelope envisaged under the government's macroeconomic program; this i s necessary to complete the process o fpriontization o f expenditure allocations. There i s therefore needto develop comprehensive cost estimates o f the MGDS, indicatinghow these relate to the overall budget. Inaddition, the government needs to formulate a realistic projectiono f the resources likely to become available, and outline a pnoritization o f expenditures. Ont h s basis, the government could formulate a baseline scenano o fpnonty budgetary expenditures, 4 including those for the MGDS that could be accommodatedwithin t h s resource envelope. Alternative scenanos could also be developed should additional resources become available. 13. The annualbudgetis the keyinstrumentfor implementingthe MGDS andeffective implementationwill needadequatelinkagesto the budgetprocess. Weaknesses in these areas undermined implementation o f the MPRS and remaina concern for implementing the MGDS. Line ministnesneedto be clear on how they translate actions under the MGDS into activities mcluded intheir annual budgets. Similarly, the budget process needs to adequately assess whether line ministnesare budgetingfor the priority activities outlinedinthe strategy Furthermore, the government will need to make a concertedeffort to improve the presentationo f the budget and its external communications to enable Parliament and civil society to scrutinize the budget through the lens o f the MGDS. 14. There is also needto strengthensome of the resultschains that linkgoals, outcomes,constraints,andstrategies. The government has made efforts to ensure that the MGDS i s more results-onented than the MPRS. The MGDS identifies long- term goals, medium-term outcomes, and constraints to achieving these outcomes. It then outlines the strategies and key actions that will contribute towards aclueving the defined outcomes. However, the quality o f the results chains vanes between the thematic areas. Monitomg systems are fairly strong insome areas, such as health, and are supported by statistical systems that can provide data at different stages. However, the results chains will needto be strengthened inother areas as part o f the planned refinement o f the masterplan for monitonng and evaluation. Further, there will be needto develop mdicators that can be realistically usedto inform the annual output-based budget and help assess progress towards medium-termoutcomes on an annual basis. 15. Annualprogressreviews (APRs) are animportanttool for ensuringthat implementationofthe MGDSremainsontrack andfor makingrevisions.To be useful, APRs should indicate progress inmeeting the medium-termoutcomes and what changes needto be made inimplementation. The APRs also needto o'ffer an opportunity for improvingthe onginal document and ifnecessary, revising it to meet changing circumstances. The timing o f these reviews therefore needs to be properly synchronizedwith the budget process so that recommendations can be fed into the budget. 16. There is needfor further analysisof how the MGDScontributesto achievingthe MillenniumDevelopmentGoals (MDGs).The MGDS outlines how its targets translate the MDGs within a localized context and how its goals are linked to the eight MDGs. However, insome cases, it is not clear what strategies and actions will help achieve a particular MDG. 5 IV.POLICY PRIORITIESAND STRATEGIES 17 Staffs support the emphasis on economic growth as the basis for sustained poverty reduction although further growth diagnostics need to be undertakento fill existing knowledge gaps. The MGDS emphasizes the needfor Malawi to register sustained pnvate sector and export-led growth in order to make a noticeable dent on poverty Inthis regard, it has identified sectors with significant unexploited potential-such as tounsm, mining, and cotton-and aims to expand activity inthese sectors. However, further work is needed to ascertain the scope for expansion in these sectors and the constraints they face! Inthe near term, the strategy will likely need to remain focused on expanding activity in agnculture-based sectors. 18. Despite the emphasis on growth, staffs nevertheless recommend a careful balance between expenditures on economic sectors and social sectors. The pnmary focus o f the MGDS i s on measures to spur productive activities ineconomic sectors. However, social spendingto reduce poverty ought to be seen as an end in itself. For growthto be sustained, it will also needto be shared, requinng the improvedprovision o f social services and the provision o f social protectionprograms for the most vulnerable. Moreover, incountnes like Malawi where shortage o f skilled manpower is a real constraint to growth, spending on social sectors would also support growth. 19 In order to bring about private sector-led growth the government's own activities will need to be supportive of the private sector as well as responsive to evolving private sector needs. Staffs welcome the focus on supporting private sector-led growth in key sectors by addressing specific constraints to pnvate sector activity-especially as these have beenidentifiedthrough extensive consultations with the pnvate ~ector.~However, staffs caution that the scope o fgovernment action at the sectoral level be limitedand geared towards supporting the pnvate sector rather than crowding it out. At the same time, as economic circumstances and opportunities change, the government should be responsive to the changing needs o f the pnvate sector. A. Sustainable economic growth 20. There i s need to stimulate more private sector led innovations inthe tourism sector for it to contribute significantly to growth. The strategy identifies tounsm as one o f the sectors with highgrowthpotential and expects its contributionto GDP growth to increase significantly inthe next five years. Although this expectation may be a bit optimistic, staffs support the needto address key constraints to tounsm growth includinghightransportation costs, poor coordination o f promotionactivities, and low quality o f products. Staffs also agree with the MGDS on the need to diversify the menu o ftounsm products offered. Currently, Malawi's tounsm industryis only focused on the provision o f accommodation and sight seeing services. More The need for a more detailed economic analysis ofthe potential contribution of the tourism sector to the Malaw economy is discussed inthe 2004 MalawiDiagnostic Trade Integration Study (DTIS). 'Sectors o f growth potential were identified through consultations with the pnvate sector in 2004. This process led to the production of the Malawi Economic Growth Strategy (MEGS) in 2004. However, the identification of these sectors was not underpinned by ngorous analyses of their potential contributions to Malawi's GDP 6 generally, staffs believe that there is need for pnvate sector innovationifthe tounsm sector is to contribute significantly to growth. 21, Malawi's success inbringing about export-led growth will depend on the extent to which attention is paid to removing supply-side constraintsto trade. The MGDS highlightsthe needfor Malawi to pursue an export ledgrowth strategy Given Malawi's small domestic market, increases inproductionwill needto be onented towards the export market. Staffs concur with the needto reduce transportation costs for Malawi to be more competitive on the international market, but advise the government to look at removingother bindingsupply-side constraints as well. At the same, the pnvate sector will itself need to make efforts to take advantage o f opportunities. For example, studies have found that despite having preferential access to some foreign markets, Malawian producers are unable to take advantage o f such opportunities because o f failure to meet certain quality standards. Butinthe same vein, staffs also wishto highlightthe erosion ofpreferentialaccess to the European Union (EU) sugar market due to the reductioninguaranteed minimum pnces. Malawian firms will therefore needto become more competitive. 22. Spurring agricultural production will needto make greater use of market incentives.The strategy appropnately focuses on the needto expand agncultural output and productivity by improving imgation and increasing the use o f farm inputs. However, stronger profitability is also cntical for expanding output and investment in this sector. The sector, especiallytobacco, hasbeenbeset with lowproducer pnces and, as these are globally determined, government interventions to raise pnces have not been effective and are unlikelyto be so inthe future. Measures will therefore need to focus on removing infrastructure constraints within Malawi, such as reducing transportation and marketingcosts and increasing access to credit. With regard to inputs, there is needfor reformingthe fertilizer pnce subsidyprogramso that it is more effective and efficient intargeting the poor. 23. The expansion ofirrigationto solve the food security problem needsto be complementedby market-basedweather insuranceinitiatives. Inlight o frecent expenence, staffs support the pnonty given to buildingfood secunty This i s the foremost pnonty for households living at subsistence levels and detracts them from participation inother economic activities. Consequently, addressing these concerns has significant potential for contributing to economic growth. Staffs also concur with the recognitionthat a major factor behindMalawi's food-secunty problems is its over-dependence on rain-fed agnculture. Inthis regard, staffs encourage the government to also explore how market-based weather insurance initiatives currently beingimplementedon a pilot basis canbe scaled upiffound successful. B. SocialProtection andDisaster Management 24. A key challengeto the implementation of socialprotection programs that are properly coordinatedand rationalized is the capacity of the national social protection unit (SPU). The strategy correctly identifies the lack o fprogram coordination and inadequate knowledge o fwho are the poor, where they are located, and how best to target them, as some o f the key constraints to having an efficient social protection program. The government's decision to develop a new social protection framework will help remove some o f these constraints and ensure a more coordinated, effective, and efficient approach to social protection inMalawi and will 7 go a long way towards removing some o f these constraints. The capacity o fthe SPU, charged with supporting this process, i s weak because o funderstaffing. Staffs suggest that its profile as the key unitresponsible for supporting social protectionbe raised if it is to be effective 25. Staffs concur with the need to build stronger disaster management * systems. Among the key strategies outlined are the development and strengtheningof institutions responsible for disaster and nsk management and strengthening coordination o f such institutions. Inthis respect, there i s need for an institutional audit which can inform the necessary reforms to be undertaken. C. Social Development 26. Staffs advise that more sustainable solutions be considered for retaining key frontline staff in the health sector. The MGDS appropnately identifies increasing and retaining the number o fwell qualified healthpersonnel as one o f the key measures for improving health outcomes. As a solution, the strategy indicates that salary top-ups to health sector workers will be provided inthe medium-term. Staffs understandthat DFIDi s already financingthese salary top-ups through an emergency human resource programwhich will rununtil2010. However, retainingstaff inrural areas will also needto address general living conditions as well as low salanes. 27 There i s need to devise more specific actions inorder to significantly reduce the high maternal mortality rate inMalawi. At 984 deaths per 100,000 live births, Malawihas one o fthe highest maternal mortalityrates inthe world. The MGDS aims at reducing these rates by 50 percent inthe next six years. However, it i s silent on the specific actions that will be undertakento achieve this outcome. 28. Improved education programs about feeding practices will be crucial to tackling the problem of malnutrition inMalawi. Malawi is currently one o fthe countnes worst affected by malnutntionproblems. The recent PVA concludes that malnutntion is notjust a food insecunty problembecause it i s found to be prevalent in low income as well as highincome households. Staffs therefore advise the government to improve and scale up educationprograms about feeding practices, diet, de-worming and sanitation, especially for infants andunder-5 children, who are the most vulnerable. Such strategies will needto be underpinnedby more detailed analytical work on bamers and facilitators to infant and child feeding. 29 Improving the quality and relevance of education in Malawiwill require integrating vocational training and entrepreneurship into the formal education system and implementing change management reforms in order to improve the sector's absorptive capacity. While access remains a problem at vanous education levels in Malawi, it i s generally agreed that o f even greater concern i s the quality and the relevance ofthe education system to meetingthe country's development needs. In this regard, staffs concur with the emphasis on improvingthe learning environment as well as improving the quality o f teachers. Similarly, staffs concur that htherto, the cumculum has not beenproperly onented to meeting the needs o f the pnvate sector. Further, the education systemhas largely focused on training students for white collar jobs. Vocational training and entrepreneurship have not beenintegrated into the formal system. But an even greater problem is that the ministry o f education remains plagued with problems o f institutional capacity Systems do not seem to be workmg, 8 and information management is still a great challenge. Inorder to be effective and efficient, there i s therefore a needfor change management reforms inthe sector. D. InfrastructureDevelopment 30. Infrastructuredevelopmentwill needto be carefully prioritized, subjectedto cost-benefit analyses, and carefully consider alternativeoptions. The key infrastructure pnonties identifiedbythe MGDS are improving the conditions of rural roads, external transport links, the reliability o f energy and water, and information, communication and technology development. Given that a key feature o f infrastructure development i s its highcost, staffs advise that projects be properly pnontized and subjectedto ngorous cost-benefit analyses. For example, the govemment should explore whether rehabilitating existingtransportation comdors would be more cost-effective than undertalung the Shire-Zambezi waterway, which is potentiallyvery costly and likely to have a crowding-out effect on pnvate mvestments inroadandrailway transport. Further, staffs advise government to pursuebasket fundingby donors for financing large investments. 31. Some ofMalawi's infrastructureproblemswill needto be addressedat a regionallevel.The MGDS identifies finalizing the interconnection agreement with Mozambique as key to improvingthe reliability o f Malawi's energy supply Staffs believe that Malawi could benefit even more through participation inthe regional power pool. E. GoodGovernance 32. The measures outlinedinthe MGDS to improve governanceoughtto be supplementedby a more structuredprogramfor corruptionpreventionand improvingthe effectivenessof Parliament.Staffs concur with the identificationof good governance as a key cross-cutting theme anchonng the implementation o f the strategy Amongst some o f the key sub-themesare improved public policy formulation, fiscal management, public sector management, decentralization and the fight against corruption. With regardto the fight against corruption, the strategy appropnately identifies the needto strengthen the capacity o f the Anti-Corruption Bureau (ACB) to prosecute offenders. However, staffs believe that the recently completedbaseline study on the prevalence o f corruption invarious sectors forms a good basis for the ACB to embark on a more structured program o f helpingprevent corruption inthe sectors where corruption has been identified as rampant. Outside corruption issues, there i s also needto strengthenParliament's effectiveness as an oversight institution. The MGDS i s currently silent on this aspect o f governance. 33. Goodgovernancecanalso be further strengthenedifgreater useis made of technicalanalysis inpublic policy formulation. The MGDS appropnately identifies effective public policy formulation as a key governance sub-theme, but focuses only on the need for stakeholder involvement in decision-malung processes. However, Malawi's public policy formulationprocess could be strengthened further through the promotion o f evidence-based policy malung. Some policies with far reaching consequences have hitherto beenmade without pnor technical analysis. Similarly, studies have beenundertakenand recommendationsmade for policy changes but these have largely beenignored. As a starting point, there i s need for 9 diagnostic work to better understand the underlyingconstraints to evidence-based policy malung inMalawi. 34. An efficient and properlyfunctioning public financialmanagement systemis another key elementof good governanceas ithelps ensure that public resources are allocated to pnonty areas and spent for their intendedpurposes. Inthis regard, staffs concur with the strategies identified for improving financial management. These include enforcement o f the public finance, audit and procurement acts, and the improvement o f the Integrated Financialand Management Information System (IFMIS) which was rolled out in2005. However, there will be needto develop a more detailed, and pnontized list o f actions that need to be undertakento implement these strategies. 35. Dueto their complexity,the challengesfacing public sector reformand progressindecentralizationwill needto be addressedina concertedmanner. Malawi has beenattempting to implement public sector reforms for a long time but with little success. As the strategy recognizes, the delivery o fpublic services is currently inefficient. Staffs concur with the proposed strategies, which hinge on streamlining the civil service, improving conditions o f service, and implementing performance management systems. Improving the performance o f the public service becomes an even more daunting task in the wake o f decentralization. Staffs concur with the observationthat, currently, there are weak linkages between decentralization and other public policy reforms. Inthe past, donor support has been uncoordinated and piecemeal. Staffs therefore advise that government should mobilize donors to provide assistance in a more coordinated manner than has been the case to date. 36. The MGDScorrectly assignscivil service wage policy an importantrole in public sector reform,but couldbe more explicit about the direction this policy might take. To ensure coherent policy, it will be important to bringthe entire government payroll under the government's pay policy strategy Following several years o f large wage increases, staffs view the civil service wage rate structure inMalawi as broadly appropnate compared to the pnvate sector inMalawi and civil service compensation inother countnes. However, staffs recognize that important adjustments mayneedto be made to the wage rates at specific grades to ensure adequate incentives inthe social sectors and that compensationat the lowest employee grades i s sufficient to cover the cost o f living. Moreover, greater differentials could be introducedwithin each grade, according to experience and skills. V. CONCLUSIONSAND ISSUES FORDISCUSSION 37 Staffs consider that the MGDS broadlyprovidesa comprehensive frameworkfor growth and povertyreductioninMalawi.A keystrength is its emphasis on growth as a basis for poverty reduction. However, staffs are concerned that it underplays the role o f social expenditures and social protection in supporting growth. Ownership o f the strategy has improved, especially on the part o f government but there is also needfor a communication strategy on the role o fvanous stakeholders inthe process to ensure that ownership is broadlyshared. Attempts have also been made to make the strategy more results-onented, although the results chains inmany o f the thematic areas needto be strengthened. 10 38. Successfulimplementationof the strategy will depend on a number of considerationsbeingtaken on board. Prionties will needto be further defined within the context o f resource constraints. Further, the strategy needs to be more clearly linked to the budget and a systemneeds to be put inplace to ensure that the budget i s indeed an instrument for its implementation. Policy reforms to emanate from the strategy will need to be evidence based and infrastructure expenditure choices made after due consideration o f alternative options. Inorder to ensure that the authonties are able to properly assess progress towards the end penod targets, annual targets will have to be definedto monitor progress. 39 Do the Directorsconcur withthe staffs' advice that implementation of the MGDSwouldbestrengthenedthrough: (i)more balancedemphasis onthe roleof a economic and social sectors ineconomic growth; (ii) a better sense o f pnonties given vanous resource envelope scenanos; (iii) stronger linkages o f the MGDSto the budget; and(iv) strengthened annualprogress review exercises that seek to monitor realistically set annual targets? 11 DR BINGU WA MUTHARIKA HIS EXCELLENCY THE STATE PRESIDENTOF THE REPUBLIC OF MALAWI "The overall objective of the Malawi Growth and Development Strategy is to reducepoverty through sustained economic growth and infrastructure development.'' Malawi GrowthandDevelopmentStrategy PresidentialStatement The Malawi Growth and Development Strategy (MGDS) is the overarching operational medium-termstrategy for Malawi designed to attain the nation's Vision 2020, The main thrust of the MGDS is to create wealth through sustainable economic growth and infrastructuredevelopment as a means of achieving poverty reduction. This is expected to transformthe country from being a predominantly importing and consuming economy to a predominantly manufacturingand exporting economy The MGDS represents a policy shift from social consumption to sustainable economic growth and infrastructure development. To ascertain immediate economic benefits for the people of Malawi arising from this strategic shift, the MGDS will in the next five years place emphasis on six key priority areas of agriculture and food security; irrigation and water development; transport infrastructure development; energy generation and supply; integrated rural development; and prevention and management of nutrition disorders, and HIV/AIDS. These six key priority areas are also expected to accelerate the attainment of the Millennium Development Goals (MDGs) in the areas of health, education, gender, environment, and governance. The integrated rural development in particular will among other things entail the establishment of rural growth centres. This is expected to rejuvenatethe rural economiesand transformthem into potential engines for economic growth that translateto increased redistributionof wealth countrywide. The MGDS builds on the Malawi Economic Growth Strategy (MEGS) that emphasized the need to create a conducive environment for private sector investment to stimulate production of goods and services hence creating employmentopportunities.The MGDS also incorporates lessons learnt from the implementation of the Malawi Poverty Reduction Strategy These have informed the choice of MGDS interventions,the six key priority areas, and the other importantMDGs relatedsocialfocus areas. Government will spearhead the implementation of the MGDS. However, the strategy calls for active participationof all stakeholders in the implementationprocess. Political- will, change of mindset, and cooperation among the stakeholders will be paramountfor the successful implementation of the strategy. While Government will ensure the creation of an enabling environment for private sector participation, all Malawians are urged to aggressively take up the challenge to invest and spearhead industrial development to create wealth and employment. It is my sincere hope that the cooperation that prevailed during the development of the MGDS will continue in its implementationin order to make Malawi a better nationfor our people. May God bless our country, Malawi. Malawi GrowthandDevelopmentStrategy FOREWORD The Malawi Growth and Development Strategy (MGDS) represents a detailed articulation by the Government of Malawi of the strategy it intends to follow in achieving the goal set for us by His Excellency the State President, Dr Bingu Wa Mutharika of transforming Malawi from relative poverty into being a middle income industrial nation. It also represents an essential tool for the Government to assist in turning his vision into reality. The philosophy that underlies the MGDS is one of permanent poverty reduction through sustainable economic growth and infrastructure development. The key to translating that philosophy into a strategy that will deliver success is effective prioritization in the allocation of effort and resources, The MGDS identifies six key priority areas, which taken together will define the direction of Government economic policies over the coming five years. Progress in these priority areas will be critical in bringing about greater economic wellbeing for the people of Malawi. The MGDS also identifies five thematic areas in which progress must be made if our overall strategy is to be successful. These thematic components of the MGDS are sustainable economic growth, social protection, social development, infrastructure development, and improved governance. The importance of all these areas is fully reflected in the Strategy, which maintains a focus on accelerated and sustainable growth, while also butlining steps to ensure social development, good governance and environmental sustainability. Progress in all of these areas will increase prosperity, reduce poverty and assist in the achievement of the Millennium Development Goals. Beyond identifying key themes the strategy establishes priorities within the overall MGDS envelope. This prioritization reflects widespread consultations with stakeholders in the development process. While fully reflecting the contributions of cooperating partners the process of developing the MGDS and establishing the prioritization it contains has been led by Malawians based on our understanding of the issues we face. As such this is a document developed from within the nation for the purpose of achieving of the nation's aspirations. Implementation of the MGDS will take place through the Government Budget, in line with the Medium Term Expenditure Framework. Implementingthe ambitious agenda outlined by the MGDS over the next 5 years, within the resource envelope that is available to us, represents a major and challenging task. Success can only be achieved if there is fully cooperation amongst all the various stakeholders with a part to play in implementing the strategy. Government will spearhead the implementation process, but stakeholders will have to compliment its efforts by aligning and harmonizing their own programmes and activities to bring these into line with the priorities the MGDS sets out. This will be a challenge for those stakeholders themselves, but I am confident that the same goodwill that has contributed to development of the strategy will assist in ensuring its effective implementation. Lastly, Iwould like to thank His Excellency the State President, Dr Bingu Wa Mutharika, for his vision, direction and commitment to transform this country for a better future. AdLJ +--- - `c-.--r-`- -I-- ~ Goodall E. Gondwe, MP MINISTER OF FINANCE 1v Malawi Growthand Development Strategy ACKNOWLEDGEMENTS His Excellency the State President, Dr Bingu Wa Mutharika, and the Government of Malawi would like to accord special thanks to all those who worked tirelessly and contributed to the development of the Malawi Growth and Development Strategy. The process of developing this strategy involved all key stakeholders in Malawi. These include the three arms of Government: the Executive, Parliament, and Judiciary; and also involved the Private sector, Civil Society Organisations, Donors and Co-operating partners and the general public. Special acknowledgements are also extended to the Steering Committee and the Technical Working Group that worked for over a year to develop this strategy V Malawi Growth and Development Strategy ACRONYMS ACB Anti-Corruption Bureau ADMARC Agncultural Development and Marketing Corporation AIDS Acquired ImmuneDeficiency Syndrome ART Anti-retroviral therapy ARV Anti-retroviral CAMA Consumer Assoclation of Malawi CBO Community BasedOrganizations CDSS Community Day Secondary School CISANET Civil Society Agnculture Network C M Collaborative Management COMESA Common Market for Easternand SouthernAfnca DA Distnct Assembly DEC Distance Education Centres DEMIS District Education ManagementInformationSystem DfID Department for International Development DHS Demographic and Health Survey DISTMIS Department of Information, Systems and Technology Management Systems DPDMA Department of Poverty andDisasterManagement Affairs ESCOM Electncity Supply Corporation of Malawi EU EuropeanUnion FA0 Foodand Agricultural Organization FBO FaithBasedOrganizations FDI Foreign Direct Investment FNSIS Food and NutntionSecunty Information System GDP Gross Domestic Product GTZ German Technical Co-operation GWAN Government Wide Area Network HIPC HighlyIndebtedPoor Country HIV Human Immunodeficiency Virus ICT Information, Communication andTechnology IHS IntegratedHousehold Survey IMF International Monetary Fund IMR Infant Mortality Rate IQ IntelligentQuotient I S 0 International Standards Organization I T InformationTechnology ITN Insecticide BedTreatedNet IWRM IntegratedWater ResourceManagement JICA Japanese International Cooperation Agency Km Kilometres LA Local Assembly M&E Monitonng and Evaluation MACRA Malawi Communication Regulatory Authority MARDEF MalawiRural Development Fund MAREP MalawiRural Electnfication Programme MASTA MalawiAward for Scientific and Technological Achlevement MBC MalawiBroadcasting Corporation vi Malawi Growth andDevelopment Strategy MBS MalawiBureauof Standards MCCCI MalawiConfederation of Chambers of Commerce and Industry MDGs MillenniumDevelopment Goals MDHS MalawiDemographic and Health Survey MEGS MalawiEconomic Growth Strategy MEJN MalawiEconomic JusticeNetwork MEPD MinistryofEconomicPlanning andDevelopment MFI Micro Finance Institutions MGDS MalawiGrowth and Development Strategy MIPA MalawiInvestment PromotionAgency MIRTDC MalawiIndustrialResearchand Technology Development Centre MIS Management Information System MITS Most InnovativeTechnology Stand MK MalawiKwacha MLGRD MinistryofLocalGovernment andRuralDevelopment MLHS MinistryofLands, HousmgandSurveys MMNRE MinistryofMining, NaturalResourceandEnergy MMR MaternalMortality Rate MOA Ministry of Agnculture MOF MinistryofFinance MOH Ministry of Health MOTPW MinistryofTransport andPublicWorks MP Member of Parliament MPRS Malawi Poverty Reduction Strategy MTEF MediumTerm Expenditure Framework MTPSD Ministry of Trade and Pnvate Sector Development M W Megawatts NABW National Association of BusinessWomen NAC National AIDS Commission NAG National Action Group NASFAM National Smallholder FarmersAssociation of Malawi NDF NorthernDark Firedtobacco NEEP National Economic Empowerment Policy NFRA National Food Reserve Agency NGO Non-Governmental Organizations NRA National RoadsAuthonty NRC National ResearchCouncil NRM Natural ResourceManagement NSO National Statistical Office OPC Office of the Presidentand Cabinet ovc Orphansand other Vulnerable Children PA ProtectedArea PAC Problem Animal Control PEM Protein Energy Malnutntion PFMA Public Finance andManagementAct PLHA PeopleLivingwith HIV and AIDS PMCT Preventive Mother to Child Transmission PPA Public ProcurementAct PPP Public Pnvate Partnerships PRGF Poverty Reduction andGrowth Facility PS Pnncipal Secretary vii Malawi Growth and Development Strategy PSIP Public Sector Investment Programme P V A Poverty Vulnerability Assessment PWP Public Works Programme RE3M Reserve Bank o f Malawi SADC Southern Afncan Development Community SAPP Southern Afncan Power Pool SGR Strategic Grain Reserve SME Small and Medium Enterpnses SMP StaffMonitoredProgramme SNX SpecialNeeds Education SOCAM Society for Charted Accountants o f Malawi SSAJ Safety, Secunty and Access to Justice SSM Small Scale Miners SWAP Sector Wide Approach TA TraditionalAuthonty TB Tuberculosis TEVET Technical, Entrepreneunal, Vocational Education and Trainlng TWG Technical Worlung Group UNDP UnitedNations Development Programme UNFPA UnitedNations Population FundAgency UNICEF UnitedNations Children's Fund US$ UnitedStates Dollar USAID UnitedStatesAgency for InternationalDevelopment VCT Voluntary Counselling and Testing VIP Ventilated Improved Pit Latnne WB World Bank WFP World Food Programme WHO World Health Organization TABLE OF CONTENTS viii MalawiGrowthandDevelopment Strategy EXECUTIVE SUMMARY..................................................................................................................... xi1 THEMALAWIGROWTHAND DEVELOPMENTSTRATEGY ........................................................................ xi1 MALAWIECONOMICGROWTHSTRATEGY ............................................................................................ XIII MALAWIPOVERTYREDUCTIONSTRATEGY IMPLEMENTATION.................................................. REVIEW XIII MGDSRESOURCEENVELOPE AND BUDGETFRAMEWORK .................................................................. XIV KEYPRIORITYAREASOF THE MGDS................................................................................................. XIV MALAWIGROWTHAND DEVELOPMENTSTRATEGY FRAMEWORK .......................................................... XIX MGDS IMPLEMENTATION.MONITORING EVALUATION AND ................ ........................................... MV INTRODUCTION.................................................................................................................. 1.1OVERVIEW ...................................................................................................................................... 1 1.2MAINASSUMPTIONS OF THE MGDS ................................................................................................ 2 1.30UTLINE2 BACKGROUND...................................................................................................................................... 3 2.2 MALAWIPOVERTYREDUCTIONSTRATEGY ...................................................................................... 3 2.4 MALAWIECONOMICGROWTHSTRATEGY ........................................................................................ 4 2.5 MILLENNIUMDEVELOPMENTGOALS................................................................................................ 4 2.6 MALAWIGROWTHAND DEVELOPMENTSTRATEGYFORMULATIONPROCESS .................................... 6 2.7 MALAWIGROWTHAND DEVELOPMENTSTRATEGYFRAMEWORK ...................................................... 7 2.8 POVERTY. SOCIAL PROFILESAND VULNERABILITY ........................................................................... 7 MACROECONOMICFRAMEWORK.................................................................................................. 10 3.1MACROECONOMICDEVELOPMENTS ............................................................................................... 10 3.2MEDIUMTERMMACROECONOMICPROSPECTS.............................................................................. 10 3.2.1 Economic Growth........................................................................................................ 10 3.2.2 Monetary Policy Objective ........................................................................................... 11 3.2.3 Fiscal Policy Objective................................................................................................. 11 3.3 MGDSBudget Framework .............................................................................................. 11 KEY PRIORITYAREAS OF THE MGDS............................................................................................ 12 4.1: OVERVIEW ......................................................................................................................... 12 4.2KEYPRIORITYAREAS................................................................................................................... 14 4.2.1 Agriculture and Food Security ..................................................................................... 14 4.2,2 Irrigation and Water Development............................................................................... 19 4.2.3 Transport Infrastructure Development ........................................................................ 20 4.2.4 Energy Generation and Supply ................................................................................... 22 4.2.5 Integrated Rural Development..................................................................................... 23 4.2.6 Prevention and Managementof Nutrition Disorders. HIV and AIDS ......................... 25 1x MalawiGrowthandDevelopmentStrategy MGDS THEMES................................................................................................................................... 30 5.1THEMEONE:SUSTAINABLEECONOMICGROWTH.......................................................................... 31 5.1.1 Sub Theme One: Maximizingcontribution to economic growth through potential growth sectors .............................................................................................................. 32 5.1.2 Sub Theme Two: Enabling Environment For Private Sector Development............35 5.1.3 Sub Theme Three: Export Led Growth ....................................................................... 36 5.1.4 Sub Theme Four: Conservationof the natural resource base.................................. 37 5.1.5 Sub Theme Five: Economic Empowerment............................................................... 39 5.1.6 SUBTHEMESIX: LANDANDHOUSING ................................................................................. 41 5.2THEME TWO:-SOCIALPROTECTIONAND DISASTER RISKMANAGEMENT ...................43 5.2.1 Sub Theme One: ProtectingThe Vulnerable.............................................................. 44 5.2.2: Sub Theme Two: Improving Disaster Risk Management..................................... 45 5.3THEME THREE: SOCIAL DEVELOPMENT............................................................................. 47 5.3.1 Sub Theme One: Health and Population.................................................................. 48 5.3.2 Sub Theme Two: Education ........................................................................................ 50 5.3.3 Sub Theme Three: Gender........................................................................................ 51 5.4THEME FOUR: INFRASTRUCTUREDEVELOPMENT........................................................... 53 5.4.1 Sub-Theme One: Air and Rail Transport................................................................... 54 5.4.2SUB-THEMETWO: INFORMATION,COMMUNICATIONANDTECHNOLOGIES ................................... 55 5.5THEME FIVE: IMPROVEDGOVERNANCE............................................................................. 59 5.5.1 Sub Theme One: Macroeconomic Growth.......................................................... 5.5.2 Sub Theme Two: Public Policy Formulation, Fiscal Management, Public Sector Management and Corruption....................................................................................... 62 5.5.3 Sub Theme Three: Decentralization.......................................................................... 64 5.5.4 Sub Theme Four: Developing a Strong Justice System and Rule of Law ................65 5.5.5 Sub Theme Five: Security ........................................................................................... 66 5.5.6 Sub Theme Six: Corporate Governance..................................................................... 67 IMPLEMENTATION,............................................................................................................................ 70 6.1 Implementation Modalities of the MGDS........................................................................ 70 6.2 Prioritization and Costing of MGDS activities................................................................. 71 6.3 Roles of key stakeholders in the implementationof the MGDS.................................... 72 6.4 Monitoring and Evaluation............................................................................................... 73 6.5 Needs Assessment.......................................................................................................... 74 ANNEXES .......................................................................................................................................... 78 ANNEX 1:SUMMARYOPERATIONAL MATRIX............................................................................ 79 ANNEX 1.1.KEY PRIORITY AREAS SUMMARY OPERATIONAL MATRIX.......................... 79 X Malawi GrowthandDevelopmentStrategy ANNEX 1.2:SUMMARY OPERATIONAL MATRIX BY THEMES............................................ 87 ANNEX2: MGDS DETAILED MATRICES................................................................................... 106 ANNEX 2.1: MGDS DETAILED MATRICES BY KEY PRIORITY AREAS ............................ 106 ANNEX31MGDS ACTIVITY COSTINGAND PRIORITIZATION ............................................... 185 ANNEX 3.1: DETAILED PRIORITIZATION AND COSTING BY KEY PRIORITY AREA......185 ANNEX 3.2: PRIORITIZATIONAND COSTING BY THEME ................................................. 197 ANNEX4: MGDS NEEDSASSESSMENT SUMMARY............................................................... 236 ANNEX 4.1: KEY PRIORITYAREAS HUMAN RESOURCE REQUIREMENTS ..................236 ANNEX 4.2: KEY PRIORITYAREAS CAPITAL REQUIREMENTS....................................... 238 ANNEX4.3: OTHER FOCUSAREAS HUMAN RESOURCE REQUIREMENTS .................241 ANNEX 4.4: OTHER FOCUS AREAS CAPITAL REQUIREMENTS...................................... 248 XI Malawi Growth and Development Strategy Executive Summary The MalawiGrowth and Development Strategy The Malawi Growth and Development Strategy (MGDS) is the overarching strategy for Malawi for the next five years, from 2006/07 to 2010/2011 fiscal years. The purpose o f the MGDS i s to serve as a single reference document for policy makers in Government; the Pnvate Sector; Civil Society Organizations; Donors and Cooperating Partners and the general public on socio-economic growth and development prionties for Malawi. The ovemding philosophy o f the MGDS is poverty reduction through sustainable economic growth and infrastructure development. The MGDS identifies six key prionty areas which define the direction the country intends to take in the next five years to achieve economic growth and wealth creation which are cntical for immediate unprovement in the economic well-being o f Malawians. These are agriculture and food secunty; imgation and water development; transport infrastructure development; energy generation and supply; integrated rural development; prevention andmanagement o f nutntion disorders, HIV and AIDS. These six key prionty areas will accelerate the attainment o f the Millennium Development Goals (MDGs), thereby recognizing the importance o f sectors o f health, education, gender, environment and governance. Inthis regard, the MGDS maintains a balance between the economic and social sectors o f the economy In the medium- term, this is expected to bnngabout prospenty, reduce poverty and achieve the MDGs inorder to make life better for all Malawians. In order to support the six key pnonty areas, the development framework of the MGDS i s built around five broad thematic areas namely sustainable economic growth; social protection; social development; infrastructure development; and improved governance. The activities in the themes have been systematically pnontized and realistically costed talung into account the limited resource envelope. The MGDS builds on the Malawi Economic Growth Strategy (MEGS) that emphasizes the need to create a conducive environment for pnvate sector investment to stimulate economic growth. As such it recognizes the important role o f the pnvate sector in promoting economic growth. It also incorporates lessons from the implementation o f the Malawi Poverty Reduction Strategy (MPRS). Hence, the MGDS recognizes the need to invest in social development through education, health, good governance and the needto protect the most vulnerable. The process o f developing the MGDS has been participatory involving all key stakeholders including Government, Parliament, Private Sector, Civil Society, Donors, Co-operating Partners and the General Public. More importantly the preparation of the MGDS has been country led and owned, therefore, malung it a document for the nation. xii Malawi Growth and Development Strategy Malawi Economic Growth Strategy The Malawi Economic Growth Strategy (MEGS) was inspired from ajoint realisation by Government and the pnvate sector that the economy had been registenng negative growth and that remedial measures had to be put in place to reverse the trend. This was in recognition o f the fact that the MPRS could not adequately stimulate sustainable economic growth. There was therefore need for rapid broad-based growth to expand the sectoral sources o f growth. This would deepen and sustam the gains from agnculture, achieve food secunty and make the economy less susceptible to external shocks like weather, changes in terms of trade, political developments in the region, and fluctuations 111external aid flows. The MEGS focused on strategies and actions that did not require substantial additional spending by Government and instead could be acheved through refocusing o f existing resources by developing a more conducive set o f policies that would stimulate pnvate sector mvestment and trade. It was envisaged, in the medium term, that Government would create the enabling environment through policy reforms with financial and technical support from donors. In this regard, the MGDS could not re- invent the wheel but rather consolidate the economic growth policies and strategies from the MEGS and lessons from the MPRS to inform the new policy direction articulated int h s document. Malawi Poverty Reduction Strategy Implementation Review Poverty has not changed significantly for the past seven years. According to the Integrated Household Survey 2004/05, the current status o f poverty shows that 52.4 percent o f the population lives below the poverty line', i.e. about 6.3 million Malawians are poor, with the poorest people in the Southern Region, and rural areas beingpoorer than urban areas (where poverty rates are at 25%). The poor still have poor socio-economic indicators with food secunty being a continuing threat to better life. Female headed households are worse off and income inequality persists in Malawi with the nchest 10 percent o f the population having a median per capita income that is eight times higher (MK50,373 per person per annum) than the median per capita income o f the poorest 10%(K6,370 per person per annum). Approximately 30% o f the poor moved out o f poverty dunng the penod, while 30% o f the non-poor moved into poverty This suggests that there is continued economic vulnerability in Malawi. On the economic front, the main macroeconomic indicators remained unsatisfactory with the increase o f domestic debt stock as a major setback. Lack o f fiscal discipline has in the past contributed to unsustainable mcrease in the domestic debt. The combination o f high interest rates and large stock o f short-term domestic debt exacerbated pressure in the operation o f the budget as most resources went into debt servicing. The MGDS incorporates lessons learnt from this review while talung into consideration the current political, economic and social developments in the country It has also been aligned with existing key sectoral strategies and policies from both ' The data from the IHSZ is not directly comparable to the past poverty levels. A change in survey instruments and methodology, required an effort to compute the poverty rates for the previous MS using the current methodology. In this exercise, poverty estimates from MSL were estimated using regression models to impute expenditure per capita based on comparablymeasuredhouseholdcharactenstics. The IHSl povertyrateswere calculatedat 54% ... xi11 Malawi Growth and Development Strategy pnvate and public stakeholder institutions. Government will spearhead the implementation o f the MGDS. However, all stakeholders have varying responsibilities in the mplementation process to ensure the attainment o f the set goals. MGDSResourceEnvelopeandBudgetFramework The successful implementation of the MGDS will depend on the resource envelope that will be revised from time to tune. The total revenue and grants i s currently programmed to average 38.5 percent o f GDP for the next five years. Tax revenue i s expected to remain at about 21 percent o f the GDP inthe medium term. The total government expenditure is expected to average about 39 percent o f the GDP in the current MGDS macroeconomic framework. However, capital expenditure still remains low but it i s the intention o f Government to increase it dunng the penod of the MGDS. Inthe previous strategies, resource allocations were tilted towards general administration and social services. The emphasis o f the MGDS i s to balance between economic and social sectors. The overall fiscal balance i s expected to average 1.0 percent o f the GDP The MGDS budget framework is supposed to create an enabling environment for pnvate sector development and improve economic infrastructure such as roadnetworks, energy, water systems and telecommunication. Inaddition, Government will implement a number of structural reforms to strengthen public expenditure management, tax system and administration, parastatal reform, civil service reform, decentralization, and good governance. Key Priority Areas of the MGDS The MGDS contains six key pnonty areas identified as necessary to achieve its overall objective. Implementation o f these key pnonty areas i s expected to enable Malawi to achieve immediate economic growth and wealth creation which are cntical for immediate improvement in the economic well-being o f Malawians. As outlined above, the key pnority areas are apculture and food secunty; imgation and water development; transport infrastructure development; energy generation and supply; integrated rural development; and prevention and management o f nutrition disorders, HIV and AIDS. The key pnority area on agrrculture and food secunty has been chosen from theme one on sustainable economic growth. Transport infrastructure development; energy generation and supply; and imgation and water development; have been taken from theme four on infrastructure development. This emphasizes Government's commitment to achieving immediate economic benefits that would translate into the socio-economic well-bemg o f Malawians in the medium-term. The key pnonty area on integrated rural development compnses elements o f all the five themes o f the MGDS. The choice of this key pnonty area reflects Governments commitment to improving lives o f the rural poor through infrastructure development and economic empowerment. Lastly, the key prionty area on the prevention and management o f nutntion disorders, HIV and AIDS has been isolated from theme three on social development emphasizing Government's commitment to acheving the MDGs. The x1v Malawi Growth and Development Strategy six key pnonty areas are therefore within the five thematic areas and are summanzed below. 1. Agriculture and Food Security Agnculture is the single most important sector o f the economy as it employs about 80 per cent o f the workforce, and contributes over 80 per cent o f foreign exchange earnings. Above all it also contributes significantly to national and household food secunty However, agnculture in Malawi i s charactenzed by low and stagnant yields, over dependence on rain-fed farming which increases vulnerability to weather related shocks, low level o f irngation development, and low uptake o f improved farm inputs among others. Consequently, Malawi continues to suffer from chronic food insecunty with many o f the problems being structural and economic in nature. The goal is therefore to increase agnculture's contribution to economic growth, by not only increasing production for food secunty, but also for agro-processing and manufactunng for both domestic and export markets. Agricultural Productivity: It i s expected that value adding and smallholder productivity will be increased while onenting smallholders to greater commercialization and international competitiveness. The strategy also envisages increased livestock production to meet domestic demand. Key strategies include: contract farming, strengthening linkages o f farmers to markets, creating a balance between domestic and export onented markets and provide effective extension services. Agro-processing: The medium term expected outcomes for ago-processing are focused on tea, tobacco, sugar,cotton and wheat. 0 Tea: Tea production will be increased, especially clonal tea vaneties that are competitive at the world market. Focus will be on increasing estate and smallholder profitability and re-investment by uprooting the old vaneties and replacing them with the new clonal tea vaneties. Tea processing will also be promoted to increase value added and the pnvate sector will take a leading role. 0 Tobacco: Malawi will maintaina positiono f market leader inburleytobacco, ensure quality and add value to tobacco through processing and manufactunng. Malawi will also increase production o f flue cured and Northern Dark Fired tobaccos by rationalization o f fees, creating a more efficient and fair system between farmers and auction floors, strengthening contract farming, and explonng additional markets for tobacco, including tobacco products. Common strategies for smallholder farmers include establishing cooperatives, providing farmers with inputs and better extension services, and irngation. 0 Sugar: In the medium term, sugar production will increase by 23 percent. The industry also expects to continue to move up the value chain. The main strategy is to promote out-grower schemes inthe sugar industry 0 Integrated Cotton Industry: The medium term outcome for the sector is increased production o f garments made from locally woven cotton cloth as opposed to imported synthetic fabncs. Key strategies include focusing efforts xv Malawi Growth and Development Strategy on identifying and negotiating trade opportunities at the global level. Due to the highly competitive nature o f the industry, it will look for opportunities where it has a comparative advantage and not attempt to replicate all steps in the value chain. 0 Wheat: There is need to increase wheat production in the country Since 1991/92 season, annual wheat production has remained below 2000 metnc tonnes which i s far short o f the estimated consumption o f 60,000 metnc tonnes. The medium term expected outcome i s mcreased production o f wheat from the current hectarage o f 2000 to 30,000 hectares. The key strategies include encouraging production o f unproved varieties o f wheat, irrigation, processing and marketing. Food Security Food will be available for all Malawians in sufficient quantities and qualities at affordable pnces. Key strategies will include mproving agncultural productivity and increase the variety o f food available at household, community and national levels; implementing policies to improve the functioning o f the maize markets; improving the ability to import and distribute food through better domestic and regional connectivity; providing means for Malawian's to gain income and put in place effective social protection programs with improved targeting and implement a nutntion strategy while improving coordination andmanagement o f food aid. 2. Irrigationand Water Development Imgation and water development is key to Malawi due to its direct linkages with agnculture and energy Imgation will contribute towards reduction o f the over dependence on rain-fed agnculture while proper conservation o f water will also contribute towards the generation o f electncity Key strategies include construction and promotion o f small and medium scale imgation schemes to enhance food and cash crop production. 3. TransportInfrastructureDevelopment Better domestic and regional connectivity entails improving the current state o f transport infrastructure. However, the state o f Malawi's transport infrastructure i s charactenzed by poor roadnetwork, poor and limited access to ports, limitedair links, inadequate freight and rail capacity The inadequacy o f the transportation infrastructure results in high costs o f production, where transportation represents 55 percent of costs, compared to 17 percent in other less developed countnes. With the new policy direction, it is expected that improved transportation will contribute to reduced lead times on export, decreased cost o f domestic truckmg, lower costs o f cross-border and transit trade with neighbounng countries, lower cost to reach domestic, regional and international markets (supply and distribution) and improved mobility and connectivity o f rural producingcommunities to markets. 0 Roads: In the medium term, efforts will be on improving mobility and accessibility o f the population to key road comdors within Malawi and out of Malawi while facilitating the improved mobility and accessibility o f rural communities to goods and services at low cost. xvi Malawi Growth and Development Strategy 0 Water transport: The key medium term outcome for water transport is improved inland shipping network that i s active in local and international shipping, trade and tomsm ina safe manner while protecting the environment. Efforts will be directed towards plans to navigate the Shire so that the country could have direct access by water to the ports along the Indian Ocean through the Shire-Zambezi Waterway 4. Energy Generationand Supply Energy is a crucial inputinto any industnalprocessing and serves as the life-blood for any economy Malawi is relatively well endowed with a wide vanety o f energy resources but a full potential o f the energy sub-sector remains far from beingrealized owing to a number o f structural, operational and institutional challenges. The provision o f energy in Malawi i s inadequate, unreliable and inaccessible to all who needit largely on account o f lack o fcompetition mthe sector, non-functioning power plants and inability to generate sufficient amounts o f energy The objective o f the MGDS i s to reduce the number and duration o f blackouts, increase access to reliable, affordable electncity inrural areas and other targeted areas, improve coordination and the balance between the needs for energy and those o f other highgrowth sectors such as tounsm and mining. 5. IntegratedRuralDevelopment The MGDS recognizes that broadbased economic growth and development cannot be achieved if rural areas with potential for growth are sidelined. In this context, Government will stnve to promote the growth o f rural growth centers. The objective i s to re-distribute wealth to all citizens while also mitigating the negative consequences o f rural-urban migration. The long-term goal i s to develop rural growth centers to contribute effectively to economic growth through the creation o f employment opportunities thereby enhance the redistribution o f wealth to all citizens and reduce rural-urban migration. In the medium-term it i s expected that developed rural growth centers will create employment that will enhance incomes for rural communities and in-turnreduce rural-urban migration trends. Emphasis will be placed on infrastructure development such as roads and communications, energy supply, agro-processing and manufactunng. This i s envisaged to promote pnvate sector investmentthat will create employment and improve incomes o f the ruralpeople. 6: PreventionandManagementof NutritionDisorders,HIV and AIDS. HIV and AIDS: The MGDS incorporates strategies of the NationalAction Framework on AIDS and the UNAIDS three-ones pnnciples - one agreed action framework, one national AIDS coordinating authonty, and one agreed country level monitonng and evaluation system. It seeks to not only halt and reverse the spread o f HIV and AIDS, but also to decrease the negative impact o f the epidemic on people living with AIDS and reduce the economic and social consequencesfor those who care for people living with HIV and AIDS. Malawi like many other Sub-Saharan Afncan countnes has been severely affected by HIV and AIDS. Its impact remains devastating and the country's efforts are inadequate given the pace o f the spread o f HIV and AIDS. Poverty and HIV and AIDS are reciprocally influenced. The national adult HIV prevalence in the reproductive age group o f 15-49 years has slightly declined from 14.4percent in2003 xvii Malawi Growth and Development Strategy to 14.0 percent in 2005. The country still faces a number o f challenges in containing the spread and impact o f HIV and AIDS on development. Key constraints in containing the HIV and AIDS scourge are: hunger and poverty which make individuals more vulnerable to infection; inadequate supply o f Anti-retrovirals (ARVs) and access to nutntious diets. The long-term goal is to prevent further spread o f HIV and AIDS and mitigate its impact on the socio-economic and psychosocial status o f the general population and high nsk groups. It is expected that in the medium-term there will be behaviour change o f people particularly the high nsk groups, increased number o f people accessing voluntary counselling and testing (VCT), improved health status or extended life o f the infected people through increased uptake o f ARVs and nutntion therapy Nutrition: Inthe mediumterm, efforts will focus on ensunngeffective utilization o f quality food and the biological utilization of nutnents in the body; reduced levels o f malnutntion among all Malawians; reduced incidences and cases o f dietary related non-communicable diseases and micro-nutnent disorders; and increased productivity and availability o f food crops. Key strategies include enhancing coordination o f nutntion programmes, building capacity for nutntionists and dieticians, and community nutritionworkers. Interaction of Nutrition, HIV and AIDS: The HIV and AIDS pandemic has compounded the dual burden o f malnutntion and disease. It increases the body's need for micronutrients, calones and protein while smultaneously decreasing the body's ability to work. This means that as more nutntious food i s needed withm a household, less labour i s available with which to produce or obtain it. Ths leads to less nutntious food for everyone else inthe household and inadequate diet for the person living with HIV and AIDS. The long-term goal is to improve the nutntional status and support services for people living with and affected by HIV and AIDS. Inthe medium-tern, It is expected that there will be increased knowledge o f the interaction between nutntion and HIV and AIDS; improved and diversified dietary practices for people living with HIV and AIDS; and increased provision of HIV and AIDS-related nutntion interventions. Other Focus Areas ofthe MGDS Inaddition to the six key pnonty areas described above, the MGDS also focuses on areas o f health, education, gender, environment, governance and protection o f the vulnerable among others. The MGDS recognizes that a healthy and educated population i s necessary if Malawi i s to achieve sustainable development. In this regard, the MGDS also seeks to acheve and sustainMillenniumDevelopment Goals (MDGs). Areas o f focus include the provision o f the essential health package, and development o f health infrastructure. Ineducation, emphasis is on providing adequate learning and teaching matenals, rehabilitation and construction o f modem schools at all levels. The MGDS also focuses on good governance as it is a prerequisite for achieving sustainable economic growth and development. Furthermore, the MGDS recognizes that equal participation ineconomic activities and sustainable management o f the environment are cntical for the development o f the country It is also a fact that while most may benefit from economic growth and development, some may be left out due to their inability to actively participate in the development xviii Malawi Growth and Development Strategy process. Government has put up plans to provide social protection to these marginalized groups o f people. These include the elderly, women, people with disabilities and children. Social protection programmes will be developed in line with human capital needs to transform these groups to access social basic needs. Malawi GrowthandDevelopmentStrategyFramework The five broad themes are: sustainable economic growth; social protection; social development; infrastructure development and unproving governance. The rest o f the focus areas are within these themes as outlinedbelow. Theme One: SustainableEconomicGrowth The achievement o f sustainable economic growth is necessary ifthe vision o f creating wealth and employment, transforming the country from a predominantly consumption-based economy to a predominantly production-based economy, and turning it into a middle-income economy is to be achieved. To this end, Malawi will seek to increase domestic and foreign pnvate investment inproductive sectors. It will also seek to promote exports by addressing supply-side constraints, to diversify the economy and ensure that this growth i s shared among all Malawians. The strategy for sustainable economic growth requires action on multiple fronts. In order to generate immediate economic benefits for the people, Government will inthe short to medium term pnontise agricultural productivity o f key crops such as maize, tobacco, tea, sugar and cotton to improve the food secunty situation and ago-processing for export. As such issues of agnculture and food secunty have been isolated as a key pnonty area as outlinedabove. The rest o f the other focus areas are as below. Sub-ThemeOne: Maximizing the contribution to economic growth through the potentialsectors of growth Highgrowth sectors will be positioned to realize economic growth inthe longer term (by talung away constraints to growth) and increase employment inthe mediumterm. 0 Tourism: Malawi will be established as a pnncipal and leading eco-tounsm destination in Afnca and domestic tounsm will be increased. Strategies to be pursued include: increasing capacity to service additional tounsts in international competitive accommodations; improving transportation links to tounsm destinations; increasing attractiveness o f national parks for tounsm and eco-tounsm and improving tounsm marketing regionally and internationally 0 Mining: Inthe medium term, production will be increased and efforts geared towards value adding by all miners. The main strategies for mining include: developing a functioning mstitutional setting to promote mining, ensunng compliance by small, medium and large scale mmers with environmental and safety standards; supporting small scale miners by integrating them in the minerals market and increasing their value added; and increasing investment bypnvate sector companies inmediumand large scale mining. 0 Manufacturing: The medium term outcome is to lay the foundation for rnanufactunng to take off. Key strategies include: mproving the quality of products and productivity o f both labour and capital; enhancing skills through better integration o f science and technology into vocational trainmg; xix Malawi Growth and Development Strategy improving standard certification capacity; developing additional incentives for investment including redefining the roles and responsibilities of support institutions. Sub-ThemeTwo: Enablingenvironmentfor privatesector led growth The pnvate sector is a recognized engme of growth. It is expected that inthe medium term, there will be: an increase in the number o f firms that are producing goods that are competitive inregional and international markets, interms o f both product quality and pnce; and that the number o f Malawian firms which are contributing to exports will increase as will the supply o f goods for the domestic market. The key strategies include: addressing the infrastructure constraints; ensunng sustained macro-economic growth; improving vocational training through the current educational system; and updating equipment to meet international certification standards; implementing tax reforms as defined by the tax review; and improving coordination for domestic and international investors to resolve problems IIIaccessing information. Sub Theme Three: ExportLedGrowth Malawi continues to be a member o f both SADC and COMESA. The national export strategy will include promoting production o f goods and services where Malawi has comparative advantage to take advantage o f the existing regional markets. Key strategies include: reducing the cost o f reaching external markets by focusing on linkages to Mozambiquethrough the Shire Zambezi waterway, reduced restnctions on air transport; reducing lead times on export and mprove efficiency o f customs operations, improve marketability o f export products through improved certification, trade network and information for export. Sub Theme Four: Conservingthe NaturalResourceBase This strategy recognizes that sustainable use o f natural resources contributes to many of the goals inthe MGDS. This includes fishenes, forestry, and the environment. (a) Fisheries: Malawi will ensure sustained fish availability for food as well as income generation. Key strategies include: increasing and sustaining the productivity o f small and large scale fishenes for both domestic and export markets; enforcing legislation to ensure sustainable production o f fish; promoting the use o f modem techniques o f fishing; capacity building through community training; and development o f small scale fish farming and deep-water fishing. (b) Forestry: The country will ensure sustainable use and management o f forestry resources. Key strategies include: improving productivity and value added by the industnal forestry sector; increasing reforestation efforts for key areas; improving enforcement o f regulations for forestry management; initiation o f reforestation and environmental rehabilitation programmes inpnonty areas; and introducing incentives for pnvate sector participation. c) EnvironmentalProtection: Efforts for environmental protection will focus on improving compliance with environment and natural resource management laws. Key strategies include: improving enforcement o f environmental policies, legislation and cooperation in environmental, natural resource management and development; raising awareness o f issues of protecting the environment; and incorporating xx Malawi Growth and Development Strategy environmental concerns in school cumcula and establishment o f an environmental management information system. (d) Wildlife: The overall goal is to conserve and manage protected areas and wildlife. In the medium term, the sub-sector i s expected to conserve, manage and develop wildlife resources to effectively contribute towards sustainable development o f biodiversity and the tounsm industry inMalawi. Sub Theme Five: EconomicEmpowerment The productivity o f rural communities and businesses will increase to enhance employment and income especially by increasing number o f women and youths who actively participate in economic activities. Key strategies include: targeting infrastructure development to ensure that rural communities are linked to markets; developing rural cooperatives to lower transaction costs and helping communities with collective bargaining; strengthening the policy environment for micro-finance, including improved coordination o f donor programs; offenng vocational and other training for small businesses; and targeting women's participation in economic growth activities. Sub Theme Six: LandandHousing The MGDS recognizes the importance o f land as a basic factor o f productionas well as the sole source of livelihood for the majonty o f Malawians. However, inadequate access to land by majonty o f Malawians has been identified as one o f the cntical factors contributing to poverty in the country The goal in the long term is to ensure tenure secunty and equitable access to land for the attainment o f broad-based social and economic development through optimum and ecologically balanced use o f land and land- based resources. It is expected that in the medium term there will be an efficient use o f land and land based resources and equitable access to land by all productive Malawians and other investors. Among the key activities, there will be need to promote and facilitate opportunities for lowenng land transaction costs and enhance the operation o f effective land markets, and support the pnvatisationo f some land services in an effort to encourage the development o f pnvate sector participation inlandsector activities. Theme Two: Social Protection & Disaster RiskManagement Protecting the most vulnerable will require action on four fronts namely. 0 Canng for the most vulnerable with limited factors o f production (malnounshed under-five children, school-going children, orphans, pregnant and lactating mothers, and destitute families); 0 Preventingthe vulnerable from slippinginto poverty due to economic shocks; 0 Increasing the assets o f the poor to enable them to engage in economic development activities; and 0 Preventing disasters where possible and mitigating the negative impact of disasters on the vulnerable. Sub Theme One: Protectingthe vulnerable Protection o f the vulnerable is designed to ensure that the most vulnerable people with limited factors o f production are sufficiently cushioned through programmes to improve health and nutntional status o f under-five children, school-age children, xx1 Malawi Growth and Development Strategy orphans, pregnant and lactating mothers and destitute families. The strategy will also focus on improving planning and integration o f knowledge on the needs o f the chronically poor; provision o f opportunities for the poor farmers and rural communities to graduate from poverty by facilitating their integration in mainstream agncultural productivity and enabling them to accumulate wealth. Sub Theme Two: ImprovingDisaster RiskManagement The main aim is to reduce the socio-economic mpact o f disasters as well as build a strong disaster management mechanism. The key strategy i s enhancmg disaster management, planning, and response. Among others, efforts will be made to promote the integration o f disaster nsk management into sustainable development planning and programming at all levels. Theme Three: Social Development The MGDS recognizes that human development i s important if the country i s to achieve its economic growth and development agenda. In addition, Malawi seeks to achieve and sustain MDGs which are also long-term targets and aspirations for the people o f t h s country As such, building a healthy, educated and gender sensitive population i s a pnonty for Malawi. The strategy recognizes the interrelated nature of issues such as health, HIV and AIDS, nutntion, education, and gender hence the need to deal with these ina coherent and balanced manner. The overall goal is, therefore, to develop human capital for full participation in the socio-economic and political development o f the country The prevalence o f HIV and AIDS in Malawi i s very alarming. The country ranks as the 9th country in the world affected by the HIV and AIDS pandemic. The epidemic continues to grow as displayed by high annual infection rates at close to 100,000, especially among youths; high HIV and AIDS morbidity and mortality rates; increasing mother-to-child transmission; increasing number o f destitute orphans at 70,000 being added annually; child headed households currently accounting for 15.0 percent; and increased absenteeism and manpower attntion. This situation i s made worse with high rates o f malnutntion resulting in increased nutntion disorders. It i s for these reasons that Government has made the prevention and management o f nutntion disorders, HIV and AIDS a key pnonty area for the next five years. Therefore, the sub themes on HIV and AIDS and nutntion are discussed under key pnonty areas above and m more detail inchapter 4. Sub Theme One: Healthand Population:Improving health requires a multifaceted approach with a combination o f preventive, educational and clinical measures. Key strategies include: increasing and retaining the number o f well qualified health personnel; increasing availability and supply o f drugs and preventing theft o f drugs and equipment; improving health facilities and equipment; and improving financial management, monitonng and supervision o fhealth care services. Sub Theme Two: Education: Inthe education sector, emphasis will be on equipping students, especially at pnmary school level with basic knowledge and skills to enable them function as competent and productive citizens; to provide academic basis for gainful employment in the informal, pnvate and public sectors; and to produce high quality professionals with relevant knowledge. Key strategies include the provision of xxii Malawi Growth and Development Strategy teaching and learning matenals, training o f teachers, and construction o f appropnate classrooms. Sub Theme Three: Gender: The overall pnonty goal is to mainstream gender inthe national development process to enhance participation o f women and men, girls and boys for sustainable and equitable development. Key strategies include undertalung affirmative measures to nclude women in decision-malung positions; and promotion o f advocacy for gender equality Theme Four:InfrastructureDevelopment Infrastructure i s cntical to achieving the growth and social objectives o f t h s country The MGDS i s focused on five main areas o f infrastructure, namely. transport; energy; water and sanitation; information and communication technologies; and science and technology research. All these are seen as prerequisites for the achevement o f economic growth and development. However, Government has pnontized transport infrastructure in roads and the Shire-Zambezi Waterway for the next five years. Particular emphasis i s being placed on reducing transportation costs by connecting production areas to both domestic and export markets. Energy generation and supply, irngation and water development have also been identified as pnonty areas within the infrastructure theme. It i s a national consensus that unless Malawi improves its energy generation and supply, particularly electncity, the MGDS will remain a mere dream. Equally so i s the realization that the country needs to shift towards irngation development in order to reduce over-dependence on rain-fed agnculture that has left this country vulnerable to weather shocks. In light o f this, Government has also isolated energy generation and supply, and irngation and water development as key pnonty areas o f the MGDS. The other focus areas within infrastructure development are as follows; Sub Theme One: Air andRailTransportation (a) Air Transport: Air transport is the most efficient and effective means of transportation in the world. However, Malawi faces a number o f constrants such as airfreight costs which are higher than neighbounng countnes, and landing nghts restnctions and fees are prohibitive hence uncompetitive. While Malawi is stnving to become a productive exporting economy the status o f international airport facilities are in poor condition. In light o f this, the focus o f the medium term will be to ensure that the international airports conform to international standards through the provision o f the relevant services and facilities. The goal inthe long term i s to reduce the cost o f air transportation while ensuring international competitiveness. (b) Rail Transport: Rail transport still remains the cheapest form o f transport in Malawi. However, its usage is limited but has potential for growth especially for moving both domestic and international cargo. The long-term goal is to have an efficient, affordable and effective rail network that eases pressure from the road network and provides an alternative means o f transport both to people and transportation o f goods. It is expected that inthe mediumterm, the rail sub-sector will be a well-managed, viable and sustainable system that promotes accessibility as well as affordable and reliable movement of goods andpeople. xxiii Malawi Growth and Development Strategy Sub Theme Two: Information,CommunicationandTechnology(ICT) Telecommunications:The longterm goal is to have a well developed, affordable and efficient telecommunications system accessible to those who need it. The expected medium term outcomes will be an effective, affordable and efficient telecommunications system. Key strategies include: developing a system that i s conducive to business operations; and enacting appropnate legislation that promotes interest o fnew entrants. InformationTechnology: Inthe medium term, the country shall have developed ICT infrastructure and improved e-governance. Broadcasting by radio and television will be the main focus for disseminating information to the public. Sub ThemeThree: Research,ScienceandTechnology The goal is to attain sustainable socio-economic development through the development and application o f science and technology in order to improve industnal productivity and quality o f goods and services. Theme Five: ImprovingGovernance Good governance requires action on seven fronts as follows: 0 Achieving and sustainingmacroeconomic growth, 0 Strengthening public policy formulation and implementation in a transparent and responsive manner, 0 Improving service delivery and accountability at the local level through decentralization, 0 Developinga strongjustice systemand rule o f law, 0 Ensunngpersonal secunty, 0 Establishngan institutional setting for good corporate governance, and 0 Promotion o f human nghts. Sub Theme One: MacroeconomicGrowth The goal i s to sustain economic growth, reduce dependency on foreign aid and generate investor confidence. In the medium term it i s expected that Malawi shall achieve a stable environment with low inflation, lower interest rates, stable and non- volatile exchange rates, sustainable domestic and external debt. Sub Theme Two: PublicPolicyFormulation,Fiscal Management,Public Sector Management,and Corruption: In Malawi, the public sector has in the past been charactensed by poor management that has generated inefficiencies in the delivery o f public goods and services. Government and its development partners are already addressing some o f the challenges with interventions such as wage policy reforms, civil service reforms, capacity constraints and eradicating corruption. XXlV Malawi Growth and Development Strategy Sub Theme Three: Decentralization: In the medium term it is expected that local assemblies will be in full control of community planning at distnct level, ensure effective accountability and good governance, vibrant monitonng and evaluation system, clear and strengthened linkages o f vanous policy reforms, and reduced conflicts o f roles among vanous stakeholders at the distnct level. Sub Theme Four: Developing a strong justice system and rule of law: It is expected that Malawi shall have a more responsive and effective judicial authonty with sustained administration o fjustice, increased public confidence in the judicial system and improved ability o f pnvate sector to obtain equitable and falr settlement o f disputes inreasonable time and at reasonable cost. Sub Theme Five: Security: In the medium term, emphasis is to prevent and reduce crime levels. Key strategies include: improving the responsiveness o f police to communities secunty needs by reducing the police-population ratio through recruitment and training o f more officers; promoting effective prosecution and punishment; effective cnme detection, investigation and prevention through the provision of adequate technical and financial support to the police; strengthening partnership for nsk management between pnvate sector and the police for protection o f business property; and enhancing community integration and participation in cnme prevention, and detection through civic education. Sub Theme Six: Corporate Governance: The implementation o f the code o f best practices on corporate governance in the medium term is expected to enhance pnvate sector performance through reduced corruption and fraud and improve investor perceptions o f Malawi as an attractive investment destination. This i s expected to translate into increased levels o f domestic and foreign direct investment. Key strategies include: populansing the need and role o f the Institute o f Directors to play a leading role in facilitatmg the adoption o f good corporate governance code o f best practices; mobilization o f pnvate sector support for this initiative which will facilitate the sustainable operations ofthe new institutionandits operations. Sub Theme Seven: Human Rights Human nghts are an integral part o f the overall national development agenda. However, awareness o f human rights i s a concern among many people in Malawi. MGDS recognizes that empowenng the most vulnerable groups that form the larger part o f the population can effectively contribute to social, economic and political development o f the country In this regard the MGDS will therefore also focus on public awareness of human nghts and acknowledgement o f human nghts responsibilities. MGDSImplementation,Monitoringand Evaluation The MGDS implementation will involve all stakeholders including; the Executive, Parliament, Judiciary, civil society organisations, pnvate sector and the general public. It is expected that donors and co-operating partners will align their support and activities to the MGDS. The main tool for implementing the MGDS will be the annual national budget through medium term expenditure framework. The Public Sector Investment Programme (PSIP) will be aligned towards the medium term outcomes xxv Malawi Growth and Development Strategy and strategies in the MGDS. Budget submissions that either include activities outside the MGDS or exclude activities inside MGDS will be rejected. The monitonng of MGDS will be in accordance with the monitonng and evaluation master plan developed by Government in collaboration with the donor community The stakeholders will align indicators in accordance with the MGDS themes and sub themes. The Government will also strengthen monitonng and evaluation capacity at the Distncts and Town Assemblies level and enforce regular maintenance of infrastructure. XXVl Malawi Growth and Development Strategy Chapter 1 INTRODUCTION 1.1 Overview The Malawi Growth and Development Strategy (MGDS) is the overarching strategy for Malawi for the next five years from 2006/2007 to 2010/2011 fiscal years. It i s the overarching operational medium-term strategy for Malawi designed to attain the nation's Vision 2020. The main thrust o f the MGDS i s to create wealth through sustainable economic growth and infrastructure development as a means o f achieving poverty reduction. Itpresents a policy framework that articulates issues related to both economic growth and social development. The policy mix o f the MGDS i s aimed at achieving the medium-term development objectives o f sustainable economic growth and infrastructure development. The purpose o f the MGDS i s to serve as a single reference document for policy makers in Government, the Pnvate Sector, Civil Society, Donors and Co-operating Partners on the country's socio-economic development pnonties. To ascertain immediate economic benefits for the people o f Malawi, the MGDS will inthe next five years place emphasis on six key pnonty areas of agnculture and food secunty; imgation and water development; transport infrastructure development; energy generation and supply; integrated rural development; and prevention and management of nutntion disorders, HIV and AIDS. These six key pnonty areas are also expected to accelerate the attainment o f the Millennium Development Goals (MDGs) in the areas o f health, education, gender, environment, and governance. These six key priority areas have been selected from the broad MGDS framework o f five thematic areas namely; sustainable economic growth; social protection; social development; infrastructure development and lmproving governance. The MGDS recognizes that issues o f HIV and AIDS, science and technology, gender, empowerment and environment are cross cutting hence have been streamlined within the six thematic areas. The MGDS is a product o f a highly consultative and participatory process that identified specific strategies and focus actions that will be pursued and mplemented inthe medium-term inorder to attain the aspiration of the nationas articulated inthe Vision 2020. The MGDS builds on the Malawi Economic Growth Strategy (MEGS) that emphasized the need to create a conducive environment for pnvate sector investment to stimulate economic growth. The MGDS also incorporates lessons learnt from the implementation o f the Malawi Poverty Reduction Strategy (MPRS). The MGDS has also been aligned with existmg key sectoral strategies and policies from both pnvate and public stakeholder institutions. Government will spearhead the implementation o f the MGDS. However, all stakeholders have varying responsibilities in the implementation process to ensure the attainment o f the set goals. 1 Malawi Growth and Development Strategy 1.2 MainAssumptionsofthe MGDS The main assumptions o fthe MGDS are as follows; 0 Malawi achieves a sustalnable macroeconomic growth within a stable political and economic environment. 0 Malawi attains a minimum annual growth rate o f 6.0 percent o f Gross Domestic Product (GDP) inorder to meaningfully reduce poverty 0 Malawi qualifies for debt relief under the Highly Indebted Poor Countnes (HIPC) and Multilateral Donor Debt Relief Initiative (MDDFU). 0 Pnvate sector invests and actively participates insocio-economic development activities. 0 Public and private sector investment in infrastructure as a pre-requisite for the creation o f an enabling environment i s realized and institutionalised. 0 There are adequate resources and capacity to provide educational needs at all levels, delivery o f essential health package, prevention and mitigation o f the socio-economic impacts o f HIV and AIDS. 0 Good governance is entrenched and institutionalised to avoid wastage o f scarce financial and other resources that would have otherwise contributed to the achievement o f sustamable economic growth and development. 0 Effective social protection programmes are designed to mitigate negative side effects o f growth and development. 0 There is political will and change o f mindset to enforce the implementation o f the national strategy over its penod. 1.3 Outline The MGDS is organized as follows: Chapter 1 informs the introduction, which presents an overview and main assumptions. Chapter 2 i s the background and provides the purpose, objectives and rationale o f the MGDS. Chapter 3 summanzes macroeconomic environment within which the MGDS will be implemented and chapter 4 presents the key focus areas o f the MGDS. Chapter 5 outlines the strategic framework of the MGDS and outlines in detail the five thematic areas. Finally, chapter 6 presents the Implementation, monitonng and evaluation framework o f the MGDS. 2 Malawi Growth and Development Strategy Chapter 2 BACKGROUND The MGDS is not a stand-alone policy document. It has been denved on the basis of the current long-term policy goal o f the country prescribed in the Vision 2020 and past expenences in the mplementation o f medium term development objectives such as the MPRS and MEGS. The MGDS is not an alternative to MPRS or MEGS or the Vision 2020, but rather an implementable medium term strategy that translates the goals and objectives that emerged from a nation-wide consultation process and are reflected in Vision 2020. It intends to build a broad political consensus on the direction for economic growth and wealth creation. 2.1 Malawi Vision 2020 Inthe late 199Os, Malawi developed the Vision 2020, which was launched in 2000. This policy framework sets out a long-term development perspective for Malawi. It emphasizes long term strategic thilung, shared vision and visionary leadership, participation by the population, strategic management and national learning. The Vision 2020 states that "by the year 2020 Malawi as a God feanng nation, will be secure, democratically mature, environmentally sustainable, self-reliant with equal opportunities for and active participation by all, having social services, vibrant cultural and religious values and a technologically dnven middle-mcome economy" The fundamentals o f the MGDS are based on the shared Vision 2020 and commitment o f Malawians to mprove their economic welfare. 2.2 Malawi Poverty Reduction Strategy InMay 2002, the Government launchedthe MPRS which presented a first attempt to translate long-term strategy o f Malawi Vision 2020 into medium term focused action plans. The MPRS became the overarchmg medium term strategy o f the Government for reducing poverty in the country The goal o f the MPRS was to acheve "sustainable poverty reduction through empowerment o f the poor." The MPRS was built around four strategic pillars namely. sustainable pro-poor growth; human capital development; improving the quality o f life o f the most vulnerable; and governance. In addition, it had four key cross cutting issues namely. HIV and AIDS, gender, environment, science and technology The implementation penod for the MPRS was for apenod o f three years and it came to an end inthe fiscal year 2004105. In the second half of 2005, the MPRS was reviewed to draw lessons from its implementation. These lessons are summanzed inthe report "Comprehensive Review o f the MPRS 2005" and its findings informed the strategic direction o f the MGDS. The notable achevement o f the MPRS was the decline in poverty levels from 54.1 percent to 52.4 percent. Also important was the fact that Ministnes and Departments tried to implement their activities in line with the MPRS framework. However, there were some short falls that hampered the implementation process. These included failure by Ministnes and Departments to translate the activities into the budget and 3 Malawi Growth and Development Strategy MTEF, slow implementation o f the devolution process, and that funding was not based on pillars. 2.4 Malawi EconomicGrowth Strategy Under the first pillar o f the MPRS, sustainable pro-poor growth, stakeholders noted that the strategies and actions were insufficient to achieve sustained annual economic growth o f at least 6 percent. Further, the 2002/03 MPRS review revealed that housing and land policy issues among others were not well articulated to contribute effectively to broad based growth. While it identified certain sectors in terms o f their growth potential, it neither focused on eliminating obstacles to growth on an economy-wide basis, nor did it sufficiently articulate the role o f the pnvate sector. Therefore, in July 2004, the Government o f Malawi developedthe MEGS inclose collaboration with the pnvate sector. The MEGS was not designed as an alternative to the MPRS, but rather as a complement to strengthen pillar one through investments that would directly impact on economic growth. The MEGS was indeed a joint realisation by Government and the private sector that the Malawi economy had been registenng negative growth and that something hadto be done in order to reverse the trend. Hence, the rationale for growth and diversification for Malawi was compelling because rapid broad-based growth was necessary to reduce poverty Rapid broad-based growth was intended to expand the sectoral sources o f growth, deepen and sustainthe gains to be made from agnculture, and make the economy less susceptible to external shocks like weather, changes in terms of trade, political developments in the region, and fluctuations in external aid flows. The MEGS identified and pnontised key potential sectors that could generate growth in addition to the core agncultural sectors of tobacco, sugar and tea. These included toumm, mining, manufactunng with particular emphasis to agro-processing, cotton, textiles and garments. The MEGS also emphasized the need for the creation of favourable environment for pnvate sector participation as it envisaged that the pnvate sector was the engine o f growth inthe modern liberalisedand globalised world. The MEGS focused on strategies and actions that did not require substantial additional spending by Government and insteadcould be acheved through refocusing o f existing resources and by developing a more conducive set o f policies that would stimulate pnvate sector investment and trade in the m e d i a t e future. It was envisaged, inthe medium term, that donor organisations would have a key role to play in creating a conducive environment for economic growth by supporting policy reforms and providing resources to support Government dunng the transitional penod. 2.5 MillenniumDevelopmentGoals Malawi as a nation remains committed to acheving the Millennium Development Goals (MDGs).The MGDS, beingan over-arching strategic policy document for the next five years has been developed with strong linkages to achieve the MDGs. The emphasis to promote economic growth and development does not in anyway 4 Malawi Growth and Development Strategy substitute the need for providing social services which are particularly important to achieving the MDGs but rather it i s envisaged that the benefits o f economic growth will generate sustainable means for the provision o f basic human needs to enable Malawi achieve the MDGs. The MGDS has attempted to translate the MDGs for Malawi in a localized context. All MDGs are therefore addressed inthe strategy within the targets and strategies in that localized context. These MDGs are important to Malawi as they reflect improvements in the wealth and welfare of the people o f Malawi. The MGDS recognizes the importance o f the MDGs hence its strategies have been aligned to the MDGs outcomes as follows: Poverty: The goal o f the MGDS is to decrease poverty by 8.0 percent through a combination o f economic growth, economic empowerment and food secunty so that Malawians are less vulnerable to economic shocks; and take measures to protect those who temporarily fall into poverty through measures that increase assets for the poor. The strategy seeks to control fluctuations in poverty due to economic shocks to ensure that those who graduate from poverty stay above the poverty line and those above it do not fall into poverty Hunger: The MGDS seeks to directly decrease the proportion o f the population who suffer from hunger and to improve their nutntional status. Cycles o f hunger are a factor in people moving into poverty Food secunty i s therefore one o f the key pnonties; Education: The MGDS seeks to increase enrolment to 95 percent and reduce the drop out rate to 5 percent by 2012. At the pnmary school level it i s expected that there will be substantial reduction inabsenteeism, repetition and dropout rates and high quality and relevant education. At the secondary and tertiary levels it is expected that there will be increased access and improved quality and relevant education for both sexes and people with special needs. Gender: The MGDS addresses gender by integrating targeted programs for women to enable women be part o f economic growth such as targeted programs for business development and micro-finance. The strategy for gender directly targets mainstreaming gender into the programs o f Government and disaggregates informationby gender. Child Mortality: The MGDS addresses child mortality through improved access to essential health care services including integrated management o f childhood illness and immunization, for example, oral rehydration therapy and antibiotics for diarrhoeal disease and acute respiratory infections. Inaddition, the strategy seeks to increase access to clean water and sanitation, improve the nutntional status o f children and ensure food secunty; Maternal Mortality: The MGDS recognizes that little progress has been made on maternal mortality It, therefore, seeks to improve the antenatal care and basic emergency obstetnc care. Measures are being taken through the Health Sector Support Program to directly tackle health-related issues for maternal mortality It 5 Malawi Growth and Development Strategy i s recognized that economic empowerment will also enable women to access better care services; HIVandAIDS: The MGDS incorporates the strategies o f the National AIDS Framework and the three ones. It seeks to not only reduce the prevalence and incidence o f HIV and AIDS but also decrease the negative mpact o f HIV and AIDS on people living with AIDS and to reduce the economic and social consequences for those who care for people living with HIV and AIDS; Malaria: The MGDS is tackling malana through improvement o f essential health care services, and realizing efficiency gains. It is expected that malana incidences will decrease while the treatment o fmalanawill improve; Environmental Sustainability: The MGDS recognizes that managing natural resources i s an essential aspect o f environmental sustainability Thus, not only does the strategy directly consider environmental sustainability in forestry resources and fishenes, enforcement and education o f environmental standards, but also it seeks to identifyareas, such as eco-tounsm, which have a positive spill- over effect on economic sustainability; and Access to water: The MGDS seeks to improve access to clean water and sanitation in line with the MDGs. Malawi intends to increase access to water within 500m distance for all people, and thereby ensunng that basic water requirements o f every Malawian are met while the country's natural ecosystem i s enhanced. The new emphasis in the policy direction does not necessarily imply a decrease in investment in the social sectors, but rather it seeks to strike an appropnate balance between investment in economic and social sectors. This would be achieved through reallocation o f expenditure from non-pnonty sectors such as general admmistration to economic services and investment inproductive sectors such as transport, energy and agnculture. In addition, it is recognized that intra social sector investment would be pnontised, stressing efficiency and effectiveness o f social investment. 2.6 Malawi Growth and Development Strategy Formulation Process The Cabinet set up a Steenng Committee to translate the Government's vision for Malawi into an operational strategy for the medium term. The Steenng Committee in turn set up a Technical Workmg Group (TWG) to lead the formulation of Malawi Growth and Development Strategy The consultation process for prepanng MGDS was done intwo phases. The first phase started with internal Government discussions inorder to develop a framework for further consultations. The pnonties andapproach o f the strategy benefited from worhng sessions within Government and available data and evaluations o f the implementation o f the MPRS. A number o f consultative meetings and workshops were held with all stakeholders to seek their input in the strategy The second phase o f the consultations involved the interface between the TWG with the MPRS Review Team. The findings o f the comprehensive review o f the MPRS whose consultations sought feedback from civil society on its mplementation was 6 Malawi Growth and Development Strategy incorporated into this document. In addition, the MGDS incorporated inputs from Integrated Household Survey, Malawi Demographic and Health Survey and the Malawi Poverty Vulnerability Analysis. Further consultations were held with other stakeholders that included Government, Parliament, Judiciary, pnvate sector, civil society, donors and co-operating partners and the general public. 2.7 Malawi Growth and Development Strategy Framework The Strategy is centered on achieving strong and sustainable economic growth in the medium-term. The MEGS has particularly informed the development o f MGDS themes one and four on sustainable economic growth, and infrastructure development inorder to achieve this objective. It is expected that the continued implementation of the MEGS strategies will generate mmediate economic benefits that will translate into the well being of Malawians. The focus on infrastructure development will be key to enable pnvate sector operate effectively and efficiently in the economy The MGDS also emphasizes on building a healthy and educated human resource base, protecting and empowenng the most vulnerable. As such themes two and three on social protection and social development are designed to achieve this objective. The successful implementation of the MGDS will depend on good governance environment within which there i s a sound economic environment, high quality service delivery, effective institutions and rule of law, an efficient and effective public sector, and reduction in corruption. These issues have been comprehensively articulated intheme five on improving governance. For each of the thematic strategy areas, a detailed matnx has been developed and i s presented in Annexes to this document. These matnces show the relationship between the longer term goals for Malawi, the expected medium term outcomes that should result from the pnonty actions and move the country closer to realizing the longer term goals, the constraints to achieving the expected medium term outcomes, and the proposed strategies and actions to address the constraints. The detailed matnces have been translated into a policy matnx which summarizes how the Government, in partnership with all stakeholders will implement the MGDS. The actions in the policy framework are pnonty actions that will feed into the yearly budget. Monitoring o f progress on the actions, outputs, and expected outcomes will enable the strategy to be changed as conditions change dunng implementation while maintaining policy coherence over the penod. 2.8 Poverty, Social Profiles and Vulnerability Poverty has not changed significantly for the past seven years. According to Integrated Household Survey 2004/05, the current status o f poverty shows that 52.4 percent of the population live below the poverty line' This translates into about 6.3 million Malawians who are poor, with the poorest people inthe Southern Region and rural areas poorer than urban where poverty rates are at 25.0 percent. The poor still have poor socio-economic indicators with food secunty a continuing threat to better life, ability to integrate the poor into the economic fabnc, and problems o f The data from the IHS2 is not directly comparable to the past poverty levels. A change in survey instruments and methodology, required an effort to compute the poverty rates for the previous M S using the current methodology. In this exercise, poverty estimates from M S 1 were estimated using regression models to impute expenditure per capita based on comparablymeasuredhouseholdcharactenstics. The IHSl poverty rates were calculated at 54% 7 Malawi Growth and Development Strategy malnutntion. As can be seen from Table 2.1 below, improvements inhealth indicators have been unsatisfactory Female headed households are worse-off and income inequality persists in Malawi withthe nchest 10percent ofthe populationhavlng amedianper capita income that is eight tmes higher (MK50,373 per person per annum) than the median per capita income o f the poorest 10 percent (K6,370 per person per annum). However, the overall poverty figure masks fluctuations in poverty That i s approximately 30 percent o f the poor moved out o f poverty during the penod, while 30 percent o f the non-poor moved into poverty This suggests that there i s continued economic vulnerability in Malawi. In general, communities have expenenced a decline in social and economic growth in the last 10 years. Malawi also has a very young and rapidly growing population, and this i s a key factor explaining Malawi's high and persistent poverty More than half o f the poor in Malawi are children. Malawi's total population in 2005 was estimated at 12.3 million, o f which about 60 percent i s under the age o f 20. Poor households in Malawi are generally larger than non-poor households. When loolung at average household size by income decile, the relationship is evident. Households in the poorest decile are more than twice as large as households inthe nchest decile. Table 2.1 :Trends of selected healthindicators for Malawi Deliveries conductedby trained healthI 56% 58% S m DHS 2005 Inaddition, social indicators have not improved significantly inthe past several years. The MGDS i s to reduce poverty levels o f the country by 8 percent during the implementation periodby creating necessary opportunities for development. The Poverty Vulnerability Assessment for 2006 suggests that the major factors affecting the level o f household poverty are:3 household size, education, access to non-farm employment, access to irrigation, proxmity to markets and trading centers, and access to tarmac roads. Access to larger landholdings and engagement in cash crop productionalso play an important role. Recent trends inhuman development indicators broadly support the fact that there has been little progress in reducing poverty The Human Development Index has stagnated since the mid-1990s. While there have been improvements inthe education and literacy, several health indicators have worsened over the past decade. Among 8 Malawi Growth and Development Strategy others, the number o fphysicians per population has fallen by half, and life expectancy has fallen from 46 years in 1987 to 37 years in 2005, largely due to the HIV and AIDS epidemic. Childhood immunizationhas also decreased from 82 percent in 1992 to 64 percent m 2004. Maternal mortality rates have increased from 620 in 1992 to 960 in 2004, although they are now on a decreasing trend. Child malnutntion has remained virtually unchanged since 1992, and almost half o f childrenunder five years of age inMalawi are stunted, and 22 percent are severely stunted4 PVA Report June 2006 9 Malawi Growth and Development Strategy Chapter 3: MACROECONOMIC FRAMEWORK The prevalence o f a favourable macroeconomic environment will create a precondition for sustainable economic growth and wealth creation. However, in the recent past, the country has expenenced an unfavourable macroeconomic environment mainly due to fiscal indiscipline. This has resulted inhghinflation rates, high interest rates, unstable exchange rates hence poor economic growth. It has also contributed to unsustainable increase in the domestic debt. The combination o f high interest rates and large stock o f short-term domestic debt has exacerbated pressure in the operation ofthe budget as most resources have gone into debt servicing. 3.1 Macroeconomic Developments The economic performance o f Malawi has been dismal between 2001 and 2004. The real Gross Domestic Product (GDP) averaged 1.5 percent per annum. Savings and investment ratios have remained low over the penod largely on account o f low disposable incomes. National savings as a share o f GDP has remained below 3.2 percent while gross investment has beenbelow 11.2 percent. This dispanty shows that investmentshave not been dnven by national savings. 3.2 Medium Term Macroeconomic Prospects The macroeconomic framework for the MGDS is based on the commitment to the Poverty Reduction and Growth Facility (PRGF). Government is, therefore, committed to pursue sound economic policies geared at increasing and sustaining economic growth, reducing inflation rate, maintaining flexible exchange rate and improving foreign reserve position. In addition, increasing employment and improving the trade balance by enhancing the country's export capabilities. The mediumterm macroeconomic objectives are presented inTable 3.2 below Source: IMF 3.2.1 Economic Growth On average the economy i s expected to grow by more than 6.0 percent annually dunng the penod. This is expected to emanate from growth in the apculture, manufactunng, miningas well as the service sectors. Consequently, per capita income is expected to increase from an average o f US$160 per person to an average o f US$450 by the end o f 2011. `'Months Percent of GDP Percentof GDP of imports,calendar year basis 10 Malawi Growth and Development Strategy 3.2.2 Monetary Policy Objective The monetary policy objective i s to achieve low inflation and sustainable low interest rates. Inflation rate is expected to come down to 5.0 percent by the end o f 2011. Broad money i s expected to anchor the monetary programme with foreign exchange sales and open market operations as the main policy instruments in influencing liquidity in the economy The exchange rate policy will still remain market determined. 3.2.3 Fiscal Policy Objective The medium term fiscal policy objective will stnve to maintain fiscal discipline while balancing Government expenditure between productive and social sectors o f the economy It i s expected that the underlyingfiscal deficit will average 0.2 percent for the next five years. This will contribute to the creation o f a favourable macroeconomic environment. The fiscal programme targets a significant repayment o f debt as a means o f reducing the interest burden to around 3.0 percent o f GDP for the next five years. The domestic debt stock i s expected to decrease from 21.5 percent of GDP in 2005 to less than 10 percent o f GDP in2011. This i s expected to give reliefto the Government budget. 3.3 MGDSBudget Framework The successhl implementation o f the MGDS will depend on the budget framework that will be revised annually The total revenue and grants is currently programmed to average 38.5 percent o f GDP over the penod Tax revenue i s expected to remain at about 21.O percent of GDP Source: MEPD Total Government expenditure i s expected to average about 39.0 percent o f GDP The overall fiscal balance is expected to average 1.0 percent o f GDP This budget framework i s expected to stimulate economic growth and development. Total Revenue and Grants 11 Malawi Growth and Development Strategy Chapter 4: KEYPRIORITYAREAS OF THE MGDS 4.1: Overview The MGDS identifies six key pnonty areas that define the direction the country intends to take in the next five years to achieve economic growth andwealth creation. Government will concentrate its efforts on these key pnonty areas in the medium- term inorder to achieve its overall policy objective o f economic growth as a means o f reducing poverty in the country The six key pnonty areas are: agnculture and food security; imgation and water development; transport infrastructure development; energy generation and supply; integrated rural development; and prevention and management o f nutrition disorders, HIV and AIDS. These are summansed in table 4.1. The key pnonty areas o f agnculture and food secunty; transport infrastructure development; energy generation and supply; and irrigation and water development; emphasize Government's commitment to achieving immediate economic benefits that would translate into the socio-economic well-being o f people in the medium-term. The key pnonty area on integrated rural development compnses elements of sustainable economic growth, infrastructure development and governance. This reflects Government's commitment to mproving lives o f the rural poor through economic empowerment and the development o f rural growth centres. The key prionty area on the prevention and management of nutntion disorders, HIV and AIDS emphasizes Government's commitment to achieving its social development objectives. The implementation o f these key pnonty areas will accelerate the attainment o f the MDGs. Table 4.1: Summary of the six key Governn !ntprioritiesin the medium-term Longand mediumtermgoals Agriculture Increase agriculture productivity. Increased value added to agncultural products and Food No food shortages even intimes byruralfarmers and onent smallholder sub- Security o f disasters (e.g. drought and sector to greater commercialization and floods). international competitiveness. Increasedexports o f food Food is available insufficient quantities and staples. qualities and supplied through domestic Increase the contribution o f production or imports; ago-processing to economic All Malawians have at all times physical and growth, move up the value chain economic access to sufficient nutritious food inkeycrops, and increase required to lead a healthy and active life. exportation o f agro-processed Increasedcontribution of agro-processingto GDP products. An active inlandnetwork inlocal and international To open up the linkages to the shippingthat facilitates trade and tounsm ina safe sea. manner. Imgation and To ensure that water resources Increasedagricultural land under irrigation. Water are well protected and managed Reduceddependence on rain-fed agriculture. Development to meet agricultural, domestic Basic water requirements o f every Malawian and industrial demands. are met while the country's natural ecosystem is enhanced. Increased access to water i s within 500m distances. 12 Malawi GrowthandDevelopment Strategy Longandmediumterm goals ExpectedOutcome Ensure the provision o f a Improved mobility and accessibility of the Infrastructure coordinated transport population to key road corridors within Malawi environment that fosters a safe and out o f Malawi and facilitate the continued and competitive operation o f development o f the country's rural areas. commercially viable, financially By 2011, 71% o f the road network will be in sustainable, and environmentally good condition, 18 % in fair condition with fnendly transport services and only 11 % mpoor condition. entemrises Energy To reduce the number and Reliable and sustainable energy supply and Generation duration of blackouts, increase increased access. and Supply access to reliable, affordable Increasedaccess from the current 6% to 10% electricity in rural areas and by2010and 30% by2020 other targeted areas (such as biomass-commercial energy mix target of 75% social facilitates). - 25% is set for 2010. Improve coordination and Power supply is connected to SAPP balance between the needs for energy and the needs o f other high growth sectors (such as tounsml Integrated To promote the growth and Enhanced re-distributiio o f wealth to all Rural development o f rural growth citizens. Development centers. Reduced negative consequences of rural-urban migration. Prevention Reduce the spread o f HIV and Behavioural change o f at-nsk groups and AIDS in the general population Prevention o f mother to child transmission, Management and inhigh-nsk subgroups. from blood supplyhealth facilities. o f Nutrition Improve the quality o f life o f Equitable treatment for PLHA and mitigate the Disorders, those infected and affected b y health impacts for PLHV o f HIV and AIDS KIV and HIVand AIDS. (including ARVs). AIDS Mitigate the health, socio- Minimize the pain, suffering, anxiety and loss economic and psychosocial o f service delivery at the individual, household, impacts o f HIV and AIDS on community and national levels individuals, families, Decrease work time lost due to caring for communities and the nation. PLHV and the amount o f money at the Active healthy life with reduced household level for care giving. burden o f diet-related, illness, Effective utilization o f food that encompasses deaths and disability among the quality o f the food allocated for men, women, boys and girls consumption and the biological utilization of livinginMalawi. nutrientsinthe body To improve the nutritional status Information is used in decision making on and support services for people policies and program interventions and policies living with and affected by HIV are well coordinated across the various and AIDS. ministnes. Increasedknowledge o f the interactionbetween nutrition and HIV and AIDS; Improved and diversified dietary practices for people livingwith HIV and AIDS; and Increased provision o f HIV and AIDS-related nutrition interventions. 13 Malawi Growth and Development Strategy 4.2 Key Priority Areas 4.2.1 Agriculture and Food Security Agnculture i s the most mportant sector o f the economy as it employs about 80 per cent o f the workforce, and contributes over 80 per cent o f foreign exchange earnings. Above all it also contributes significantly to national and household food secunty However, agriculture in Malawi is charactenzed by low and stagnant yields, over dependence on rain-fed farming which increases vulnerability to weather related shocks, low level o f irngation development, and low uptake o f improved farm inputs among others. Low profitability o f smallholder agnculture has also been influenced by weak links to markets, hightransport costs, few farmer organizations, poor quality control and lack o f informationon markets and pnces. Inaddition, due to highnsks in apcultural production and poor access to credit, investment and re-investment have beenpoor. Consequently, Malawi continues to suffer from chronic food insecunty at both household and national levels with many o f the problems being structural and economic in nature. The main contributing factors include over-dependence on rain- fed agnculture, low productivity, low incomes, poor road infrastructure, poor functioning markets, weak pnvate sector participation, poor early warning system and poor mechanization. In addition, past food security policiesg have been ineffective, resulting in stagnating aggregate food production and productivity, and poor functioning markets. The overall goal is, therefore, to increase agnculture's contribution to economic growth, by not only increasing production for food secunty, but also for agro- processing and manufactunng for both domestic and export markets. Emphasis will be on enhancing agncultural productivity, promoting food secunty and agro- processing o fkey crops. 4.2.1.1 Agricultural Productivity Goal The long-term goal is to mcrease agnculture productivity MediumTerm ExpectedOutcomes There are three mainmedium-term expected outcomes and these are; (a) Increased value added to agncultural products by rural farmers and onent smallholder sub-sector to greater commercialisation and international competitiveness; (b) Increased smallholder agncultural productivity, and (c) Increased livestock production. The Government's food security policy through most of the 1990s has had two pnmary objectives: (i) ensunng a minimum of I.8 to 2.0 million metric tons of domestic maize production' and (ii) avoiding sharp increases in the maize pnce to consumers, especially during the lean season of November to March. The main instrument used to achieve the first objective has been the widespread promotion of hybrid maize and inorganic fertilizer packages through preferential or free distribution of seeds and fertiliser. To achieve the second objective, the Government relied on ADMARC to domestically buy maize at the time of harvest or import it and sell it during the rest of the year at (affordable) pan-territorial pnces. Beginning in 199912000pan-territorial pnces were abolished, and the National Food Reserve Agency (NFRA) was created to manage the country's strategic grain reserve (SGR). 14 Malawi Growth and Development Strategy Key Strategies Main strategies include: 0 Strengthening linkages o f farmers to markets by connecting rural communities, targeting rural roads and developing farmer organizations and market information, Encouraging the expansion and intensification o f staple food production by smallholders, Providing effective extension services with more decentralized service delivery for agribusiness skills, 0 Increasing the use o fpest resistant vaneties and promotion of pest management, 0 Promotingsoil and water conservation and farming techniques; 0 Promotingimgation farming; 0 Ensunng that existing land nghts are recognized, clanfied and secured by appropnate legislation, and Encouraging and expansion o f horticulturalcrop production for agro-processing 4.2.1.2 Food Security Goal The long-term goal i s to make Malawi a hunger-free nation. Medium Term Expected Outcome The medium term expected outcome i s that food will be available for all Malawians in sufficient quantities and qualities, at affordable pnces. Key Strategies. Main strategies include: Improving agncultural productivity; Implementing policies to improve the functioning of maize and other food crop markets; Implementing policies that do not distort the market and which reduce dependency on food aid; Puttinginplace an effective early warning system;. Promotingincome generating activities; Improvingthe coordination and management o f food aid and imports; and Improving the ability to import and distribute food through better domestic regional connectivity, and Construction o f steel bin silos in strategic areas to mprove medium to long term food storage capacity 4.2.1.3 Agro-processing Goal The long-term goal is to increase the contribution o f agro-processing to economic growth, move up the value chain in key crops, and increase exportation of agro- processed products. 15 Malawi Growth and Development Strategy MediumTerm ExpectedOutcome The expected medium term outcome is substantial increase in contribution o f agro- processing to GDP The food and ago-processing sub-sectors account for more than 30 percent o f manufactunng output with value addition ranging between 30-35 percent. MEGS identified agro-processing as a hgh growth potential sector. Under the sector, processing largely concentrated on tobacco, tea, sugar, cotton and wheat. However, agro-processing o f fruits and vegetables, rice, cassava, macademia, cashew nuts, inshpotatoes and spices has potential for growth, but each ofthese are currently relatively small. To acheve this, constramts facing the sector need to be addressed. These include poor and inadequate infrastructure such as roads and electncity In addition, unfavourable macroeconomic environment, low level o f vocational skills, weak marketing and distribution systems for raw crops, low productivity o f smallholders, and hgh import duties on equipment. Key Strategies Main strategies include; Improving infrastructure for agro-processing, Reviewing the policy and regulatory frameworks impacting on agro- processing Buildingcapacity for small scale enterpnses, and Improvingproductivity o f smallholder farmers. 4.2.1.3.1: Core crops of agro-processing The agnculture sector has inthe past beendominated by tobacco, tea and sugar as the major foreign exchange earners. In the medium term these crops are expected to continue to dominate amidst the challenges they are currently facing. The importance o f these crops for this country cannot be overemphasized hence efforts will continue going towards these crops in order to maximise their economic contributions to the agnculture sector in particular and the economy in general. The overall goal i s to achieve sustainable agncultural production and increased incomes for farmers. (a) Tea Medium-termExpectedOutcome The medium term expected outcome i s increased production o f tea, especially clonal tea vaneties that are competitive on the world market. Adoption o f clonal tea i s a result o f the limited prospects for the low yielding vaneties currently grown." Though tea ranks next to tobacco as a major foreign exchange earner, its production faces a number o f constraints including low pnvate sector investment in irngation, lack o f appropnate factory shells, poor marketing system and high operational costs. Key Strategies The tea industry will focus on increasing tea estate and smallholder profitability and reinvestment, as well as value addition. The current strategies are centred on pnvate sector tahng a leading role, while Government focuses on the broader constraints, loMalawi EconomicGrowth Strategy 16 Malawi Growth and Development Strategy such as availability o f reliable and cheap sources o f power (electncity) and the creation o f a favourable macroeconomic environment. The sub-sector and Government will work together to develop focused investment incentives and other measures to strengthen the industry Other strategies include; 0 Promotingclonal tea vanety to increase productivity, 0 Refurbishing factones, 0 Promotingmarket onented processing of tea and Improving the marketing system. (b) Tobacco Medium-termExpectedOutcome The medium term expected outcome is value addition to tobacco and maintenance o f market leader position inburley tobacco. Tobacco is the main export crop accounting for over 70.0 per cent o f total export earnings. However, over the past several years, there has been a decline in average yields and profitability o f Malawi's tobacco. The sub-sector faces a number of constraints which include widespread use o f low quality seed, increased incidences of disease and pests due to inadequate crop rotation, and significant post-harvest losses due to inadequate cunng barn infrastructure. The decline in profitability i s also due to inefficiencies in the current marketing system. The industryalso faces regional competition. Key Strategies The main strategy is to increase production o f flue cured, NDF tobaccos by rationalization o f fees, creating a more efficient and fair system between farmers and auction houses, strengthening contract farming, and explonng additional markets for tobacco, including tobacco products. Other strategies include; 0 Establishmg cooperatives, Promotingtobacco products processing, Providing farmers with mputs, and 0 Enhancing extension services. (c) Sugar Medium-termExpectedOutcomes The medium term expected outcome is increaseL production o f sugar by 23 percent. For Malawi to compete successfully as an international player in the sugar market, it needs to ensure that its sugar industry is profitable and i s able to reinvest in growing and processing. However, the sub-sector is faced with a number o f constraints which include access to the major Europeanmarkets, and poor transport linkages to ports Key Strategies 0 Negotiating Economic Partnership Agreements (EPAs) with European Union to ensure fair trading o f sugar, 0 Promotingout-grower schemes for smallholders, and 17 Malawi Growth and Development Strategy 0 Improving inter modal transport for effective linkages to ports. (d) IntegratedCottonIndustry Goal The long-term goal is to develop a vibrant cotton growing andprocessing mdustry Medium-termExpectedOutcome The medium term outcome for the sector is increased production o f garments made from locally woven cotton cloth as opposed to imported synthetic fabncs. This will require development o f a local textile industry to increase the flow o f cotton from growers and ginners, thereby having a positive impact on the cotton sector and opening up textile products for export. Currently, the linkages between the cotton sub-sector (production o f lint cotton) and textile and garment production (manufactunng) are weak. In addition, there are opportunities for increased volumes o f cotton lint export within the region, especially in South Afnca and neighbounng countnes. Key Strategies Government will encourage the integration o f production, processing and marketing o f cotton products. Other strategies include: 0 Producing raw cotton and ginning; 0 Garment manufactunng for export markets; 0 Reducing out of factory costs such as transportation, and 0 Identifying and negotiating trade opportunities at the regional, international and global level. Wheat Goal The long-term goal i s to develop a vibrant wheat production and processing industry Medium-termExpectedOutcome The medium term expected outcome is increased production o f wheat by expanding the current hectarage from 2000 hectares to 30000 hectares. Reliance on rainfed conditions, poor agronomic practices and seed quality, amongst other constraints have consequently led to low wheat production o f below 2000 metnc tonnes per annum since 1991/92 season. This i s far short o f the estimated national consumption of 60,000 metnc tonnes per annum. Key Strategies The main strategy i s to increase production, processing and marketing o f wheat. 18 Malawi Growth and Development Strategy Other strategies include: 0 Promotingappropnate agronomic practices through extension and training; 0 Providing improved seedvaneties and other farm inputs; 0 Promotingimgation technology to expand production; 0 Promotingsmall and medium scale wheat processing, and 0 Improving market access and intelligence. 4.2.2 Irrigation and Water Development Imgation and water development i s key for Malawi due to its direct linkages with agnculture and energy Imgation will contribute towards reduction o f the over dependence on rain-fed agnculture while proper conservation o f water will also contribute towards the generation o f electncity In addition, water is also an important resource for both household and industnal use hence ensunng availability o f water i s therefore central to achieving the MGDS objectives. Management of water supply and sanitation draws many players from donor community, public entities, civil society andpnvate institutions. Significant progress has been made with the introduction of coordination structures for the vanous players in the sector. Despite this, the sector faces challenges with the degradation of water resources, inadequate services coverage, increasing water demand as a result o f increasing population, HIV and AIDS prevalence, insufficient capacity, inadequate promotion o f hygiene and sanitation, lack o f an integrated approach to water resources management and development, climate change and lack o f mitigation measures for water-related disasters. On water resource management, the challenges are several, and these include lack o f a good monitonng and evaluation system, and a good management mformation system resulting in improper documentation o f information and lack o f a consolidated database on water point allocations. In addition, vandalism and theft of water supply and sanitation facilities i s wide spread inthe sector. Goals The long-term goal is to ensure that water resources are well protected and managed to meet agricultural, domestic and industnaldemands. Medium-TermExpectedOutcome In the medium term, it is expected that Malawi will have increased access to water resources averaging a distance o f 500m from communities. Key Strategies To achieve sustainable and integrated water resource management and development, Malawi will need more efficient and effective practices by among other things, empowenng national authonties to manage using integrated water resource management approach and establish good monitonng systems. The provision of water will also be linked closely to agnculture and other environmental problems that affect water supply such as soil erosion due to poor farming practices. Maln strategies include the following: 19 Malawi Growth and Development Strategy Constructing and promoting small and medium scale imgation schemes to enhance food crop production. Constructing multi-purpose dams that apart from generating elechcity will also be used for imgation, piped water supply, as well as promoting fish farming. Improving sustainable access to water supply and sanitation in urban, pen- urban and rural areas by establishing water supply and sanitation systems using demand responsive and demand driven approaches, and the establishment o f contingency water supply reserves and sanitation backups. Integrating rural water supply and participatory hygiene and sanitation transformation. Empowenng national authonties to manage water resources using integrated water resource management approaches; Establishmg good monitonng systems; Improving the quality o f surface and ground water and developing a system for pollution control; Improving sustainable access to water supply and sanitation in urban, pen urban and rural areas by among others establishing water supply and sanitation systems using demandresponsive and demand dnvenapproaches; Establishngcontingency water supply reserves and sanitation backups; and Integrating rural water supply with participatory hygiene and sanitation transformation. Transport InfrastructureDevelopment Better domestic and regional connectivity entails improving the current state of transport infrastructure in the country However, the state o f Malawi's transport infrastructure is characterized by poor road network, poor and limited access to ports, limited air links, freight and rail capacity The inadequacy o f the transportation infrastructure results in high costs o f production, where transportation represents 55 percent o f costs, compared to 17 percent in other less developed countnes. With the new policy direction, it is expected that improved transportation will contribute to reduced lead times on export, decreased cost o f domestic truclung, lower costs of cross-border and transit trade with neighbounng countries, lower cost to reach domestic, regional and international markets (supply and distribution) and improved mobility and connectivity o f rural producing communities to markets. Particular emphasis will be placed on the following two areas: Improving mobility and accessibility o f the population to key road comdors within and out o f Malawi while facilitating the improved mobility and accessibility o f rural communities to goods and services in the rural areas at low cost. Implementing the Shire Zambezi Waterway programme in order to open up the country to the Indian Ocean. 4.2.3.1 Road Transport Hightransport costs and pooraccess to some parts ofthe country remainan important threat to fostenng economic growth in Malawi. Hightransport costs partly result from the country's landlocked position and small market size and also from the continuing inefficient operating environment faced by the domestic and international operators in 20 Malawi Growth and Development Strategy spite o f liberalization o f the transport sector. Poor access roads mainly result from the detenorating condition o f the country's overall road network, especially in the rural areas. This problem is compounded by the enormous backlog for maintenance o f the road infrastructure, unsafe and impassable road network (37 percent i s in poor condition), lack o f competition, and high road taxes which increases the cost o f truckmg. Poor quality feeder roads also impact on the ability o f rural areas to engage ineconomic activities. Goal The long-term goal i s to reduce the cost o f road transportation in order to contribute positively to economic growth. ExpectedMediumTerm Outcome Inthe medium-term improvedtransportation is expected to contribute to reducedlead times on export, decreasedcost of domestic trucktng, lower costs o f cross-border and transit trade, lower cost to reach domestic, regional and international markets and improved mobility and connectivity o f rural communities to markets. Efforts will emphasise on improving mobility and accessibility o f the population to key road comdors within and outside Malawi while facilitating improved mobility and accessibility o f rural communities to goods and services inthe rural areas at low cost. KeyStrategies The strategies will concentrate on ensunng availability o f adequate, safe, reliable, efficient and economical transport services in key comdors that meet the country's current road transport needs and aligned to the future vision. Main strategies will include: Providing adequate network o f roads based on appropnate standards through rehabilitation and upgrading o f "all weather" roads to meet sub-regional agreed standards; Undertalung routine road maintenance to clear backlog through use of modified "Performance-Based Term Maintenance Contracts"; Buildingthe capacity o f localpnvate sector to construct quality roads; Replacingtimber-deck bndges with concrete decks; Maintaining urban and rural road networks; Upgradingall unpaved roads from fair to good condition; Involving the pnvate sector inthe monitonng and operations o f road transport services; Implementingappropnate road user charges; Harmonising the country's highway code, road signs, signals and axle-load regulations within the region; Improving information coordination on the flow o f regional and international cargo through the development o f pnvate sector freight forwarding companies; and Creating one stop border post on all major transport comdors to allow for the smooth flow o f traffic and developing an integratedapproach to road safety 21 Malawi Growth and Development Strategy 4.2.3.2 Water Transport Water provides a better and cheaper alternative means o f transport for certain parts o f the country and as a link to the sea. Malawi has not benefited much from this mode o f transport because the port system i s inadequate to handle the present exports o f agro-processing industry and imports. Furthermore, siltation at Beira, which is the nearest port, i s a major constraint. Given the current transport bottlenecks, this mode o f transport has been pnontised as an alternative means for export-led growth. Government, therefore, has an obligation to maintain the ports and explore ways to involve the pnvate sector. In view of this, Government has pnontised the Shire Zambezi waterway project as the main activity inthis sub-sector. Goal The long-term goal is to open up the linkages to the sea. Expected Medium Term Outcome The expected medium term outcome is to ensure an active inland shipping network in local and international shipping, and that trade and tomsm are facilitated in a safe manner while protecting the environment. Key Strategies For the water transport to be effective, the sub-sector will have to be closely linked to the rail and road networks. For instance developing the Shire Zambezi Waterways will demand that the rail from Nsanje to major commercial cities like Blantyre, Lilongwe and Mzuzu be developed or rehabilitated for maximum benefit. Main strategies will include: 0 Developing an efficient and productive mantme transport system that meets national and regional requirements; and 0 Dredging, opening up channels and acquinng badges or ships, which would navigate the Shire Rwerthrough Zambezi and to the Indian ocean. 4.2.4 Energy Generation and Supply Energy i s a crucial input into any industnalprocessing and serves as the life-blood for any economy Malawi is relatively well endowed with a wide vanety o f energy resources but a full potential o f the energy sub-sector remains far from being realized owing to a number o f structural, operational and institutional challenges. The provision o f energy in Malawi is inadequate, unreliable and inaccessible to all who needit. This i s mainly due to lack o f competition 111the sector; siltationresulting from deforestation; poor farmmg practices and management; weeds and water hyacinth on the Shire Rwer which affects hydro-generation; expensive spare parts which inhibit maintenance o f equipment leading to frequent breakdowns; and lack o f progress on regional interconnection and commitment to tap into other energy sources. In addition to these challenges i s the limitation o f public investment in power generation and widespread vandalism o f equipment. A well-developed energy sub-sector can enhance stable supply o f power, increased generation and transmission capacity for improved service delivery and increased output in the economic and social sectors, respectively Increased generation and transmission capacity o f electncity will support other programmes such as Malawi 22 Malawi Growth and Development Strategy Rural Electrification Project (MAREP). The sub-sector also has strong backward and forward linkages with other sub-sectors, for instance, use o f power transmission lines would also increase capacity for telecommunications. The objective o f the MGDS is to reduce the number and duration o f blackouts, mcrease access to reliable, affordable electncity in rural areas and other targeted areas, improve coordination and the balance between the needs for energy and those o f other high growth sectors such as tounsm and mining. Goals The long-term goal is to generate sufficient amount o f energy to meet the economic and social demands. MediumTerm ExpectedOutcome Inthe medium term, it is expected that the country will have accessible, reliable and sustainable energy supply At the same time, rural communities will begin to use alternative energy supplies in underserved areas while managing energy related environmental impacts. Key Strategies To achieve an efficient energy supply, strong inter-sectoral linkages especially with the water, natural resources and agnculture sectors will have to be established. An efficient supply o f hydropower requires a constant supply o f water through proper conservation o f catchment areas, connections to neighboumg countnes and explonng into other sources o f energy The sub-sector will also require strong public-pnvate partnerships especially in generation, distribution and transmission. Mam strategies include: Improving efficiency in generation, transmission and distribution; Ensunng provision of reliable electnfication to key mining, imgation, business, tounsm, and other economic activities. Improving management o f Electricity Supply Commission o f Malawi (ESCOM). and other service providers Accelerating mplementation o f regional interconnectivity; Constructing mini hydro power stations along the Shire and other major nvers to supplement electncity supply inthe three regions. Expanding the Rural Electnfication Programme (increase resources, promote development of micro hydropower stations and use o f solar energy for o f f gnd power supply) and use o f both gnd andoff-gnd options; Ensunngthat energy provision takes into account and puts inplace measures to deal with negative environmental impacts that may set in, and Encouraging pnvate sector investment in energy generation, transmission and distribution. IntegratedRuralDevelopment The MGDS recognize that broad based economic growth and development cannot be achieved if rural areas with potential for growth are sidelined. In this context, Government will stnve to promote integrated rural development among other things through rural growth centers. This i s expected to resuscitate the rural economies and transfonn them into potential engines for economic growth that will contribute to 23 Malawi Growth and Development Strategy sustainable growththat will result inre-distribution o f wealth to all citizens while also mitigating the negative consequences o f rural-urban migration. Emphasis will be placed on infrastructure development such as roads and communications, energy supply, ago-processing and manufactunng. This is envisaged to promote pnvate sector investment that will create employment and improve incomes o f the rural people. Goal The long-term goal i s to develop rural growth centers to contribute effectively to economic growth through the creation of employment opportunities thereby enhance redistribution o f wealth to all citizens andreduce rural-urban migration. Medium-Term Expected Outcome In the medium-term it is expected that developed rural growth centers will create employment that will enhance incomes for rural communities and in-turn reduce rural-urban migration trends. Key Strategies; Integrated rural development calls for coordinated efforts from a number areas. In particular, the provision o f key infrastructure i s a prerequisite if rural growth centers are to develop. As such, the main strategies will include the following: 0 Promoting the growth and development of rural growth centers through the provision o f utilities and communications network to facilitate the linkage o f production areas to markets; Implementingrural electnfication programme effectively; 0 Promoting and implementing economic empowerment programes such as MARDEFand OVOP; and 0 Improving the process o f providing title to land in order to encourage investment through ownership o f land. 24 Malawi Growth and Development Strategy 4.2.6 Preventionand Management of NutritionDisorders,HIV and AIDS Malawi like many other Sub-Saharan Afncan countnes has been severely affected by HIV and AIDS. Its impact remains devastating and the country's efforts are inadequate given the pace o f the spread o f HIV and AIDS. Poverty and HIV and AIDS are reciprocally influenced. Despite coordinated efforts the country still faces a number o f challenges m containing the spread and impact o f HIV and AIDS on development. The HIV and AIDS pandemic has compounded the dual burden o f malnutntion and disease. It increases the body's need for micronutnents, calones and protein while simultaneously decreasing the body's ability to work. This means that as more nutntious food i s needed within a household, less labour i s available with which to produce or obtain it. This leads to less nutntious food for everyone else in the household and inadequate diet for the person living with HIV and AIDS. This means that tackling HIV and AIDS problems alone will not be a lasting solution. As such, Government advocates the need for addressing issues o f HIV and AIDS and nutntion as a package. This will translate in increased knowledge o f the interaction between nutntion and HIV and AIDS; improved and diversified dietary practices for people living with HIV and AIDS; and increased provision o f HIV and AIDS-related nutntion interventions. 4.2.6.1: HIV and AIDS Prevention and Management HIV and AIDS is a socio-cultural, economic, political, development and health issue which has brought havoc to all sectors o f the economy in Malawi and other developing countries. This has created a big human power shortage o f ranging between 25-60 percent ~fl developing countnes. It i s a social problem because o f its negative consequences on the communities and social structures. It i s a cultural issue because some cultural practices and beliefs fuel the spread o f the disease and mask positive traits o fthe system while encouraging stigma, discnmination and denial. It i s a political problem because a sick person will not contribute to the political development o f the country It i s a health issue because it affects directly a large number o f people and the health-care system itself or fabncs o f society HIV and AIDS i s an economic issue as it leads to reduction in economic growth by reducing the productivity of the labour force and drains mvestment resources in all sectors. HIV and AIDS is a development issue because it affects negatively all sectors of the economy Malawi like many other Sub-Saharan Afncan countnes has been severely affected by HIV and AIDS. The first case was reported in 1985 and to-date, despite so many years o f national response, the impact remains devastating and the country's efforts are inadequate given the pace o f the spread o f HIV and AIDS. Poverty and HIV and AIDS are reciprocally influenced and Malawi happens to have more than 52.4 percent o f its population living in poverty The national adult HIV prevalence in the reproductive age group o f 15-49 years has slightly declined from 14.4percent in 2003 to 14.0 percent in 2005. HIV and AIDS prevalence among antenatal clients has also declined from 19.8 percent in 2003 to 16.9 percent in 2005. Approximately 930,000 people are living with HIV and AIDS, including 70,000 children under the age o f 15. According to the Malawi Demographic Health Survey (MDHS 2004), prevalence o f HIV and AIDS was estmated at 12.8 percent of the population and around 30-35 percent o f all pregnant women aged between 15 and 49 years and 640,000 people have died of AIDS at a rate o f 86,000-100,000 annually HIV and AIDS i s now the 25 Malawi Growth and Development Strategy leading cause o f death inthe most productive age group, resulting in50,000 to 70,000 adult and child deaths annually HIV and AIDS mortality rate is close to 700 deaths per 100,000 people. Out o f Malawi's one million orphans, 500,000 have lost one or both o f their parents to AIDS. A fifth o f all households in Malawi take care o f one or more orphans; 49 percent o f these are female headed Malawi's response to HIV and AIDS began in 1986, initially concentrating on preventing further transmission o f the virus. Since then Malawi has demonstrated increased commitment to addressing HIV and AIDS through the establishment o f the National AIDS Commission WAC) in July 2001 to manage a multi-sectoral response to the pandemic. The country has made substantial investment to buildand maintain a positive partnership with donors, bilateral and multilateral organizations and vanous stakeholders. Recently, Government has established the Malawi Partnership Forum on AIDS, where all stakeholders come under one umbrella for improved coordination and harmonization of the national response. Over the past fifteen years the country has moved from a point of denial to a situation where there i s almost universal awareness o f HIV and AIDS. In response to the burden o f the epidemic on the formal health care system, the Government has encouraged communities and households to take up the challenge o f providing home based care and support. At present, public organizations, community-based organizations (CBOs), Civil Society organizations, public, and pnvate sector institutions have all become engaged in vanous ways in the fight against HIV and AIDS. This has led to a dramatic increase in the number o f community groups providing home based care as well as increased number o f trained community home based care providers. Inorder to institutionalise work on nutntion, HIV andAIDS, the Department o f Nutntionand HIV and AIDS inthe Office o f the President and Cabinet was created to coordinate these activities. Nonetheless, Malawi still faces a number o f challenges in containing the spread and impact o f HIV and AIDS on development. Key constraints in containing the HIV and AIDS scourge are: hunger and poverty which make individuals more vulnerable to infection; inadequate supply of Anti-retrovirals (ARVs) and access to nutntious diets; low levels o f education; limited institutional capacity; deep-rooted harmful socio- cultural values and practices, beliefs and traditions and poor coordination amongst the service providers. Goal The long-term goal i s to prevent further spread o f HIV and AIDS and mitigate its impact on the socio-economic and psychosocial status o f the general population and highnskgroups. Medium-termExpectedOutcomes The medium-ternexpected outcomes include: mproved behaviour change o f people particularly the high nsk groups which include the youth, commercial sex workers, mobile and other vulnerable populations; increased number o f people accessing voluntary counselling and testing (VCT) and sexually transmitted infections (STI) management services; increased number o f women accessing the Preventive Mother to Child Transmission (PMTCT) services; improved health status or extended life o f the infected people through increased uptake o f ARVs and nutntious diets and 26 Malawi Growth and Development Strategy nutntion therapy; and community home based care services; protection and care o f children and families affected by AIDS; and unproved planning, management and coordination o f all stakeholders and development partners in the fight against HIV and AIDS increased number o f traditional counsellors trained in HIV and AIDS education. K e y Strategies HIV and AIDS requires a multi-pronged approach of prevention and treatment to reduce its spread and impact. Main strategies include: Improving knowledge and capacity o f young people, orphans, the elderly and physically challenged and other vulnerable groups to practice safer sexual intercourse and increase their access to HIV testing and counselling; and behaviour change. Initiating and strengthening joint planning, monitoring and evaluation processesamong national authonties, stakeholders and development partners; Implementing and increasing equitable access to ARVs and treatment o f opportunistic infections; Buildingand strengthenmg the capacity of public and private organizations to mainstream HIV and AIDS into their core businesses; Promoting high quality community home-based care services, adequate nutntion, including provision o f nutntion therapy for people living with HIV and AIDS (PLHA); Expanding services for prevention o f mother to child transmission, testing and counselling, access to condoms, STI management, and access to behaviour change communication; Integrating the elderly, orphans and the physicallychallenged affected by HIV and AIDS into the mainstream development Promoting adequate nutntion, including provision o f nutntion therapy that cover assessment, counselling, education and demonstration, supplementary feeding, therapeutic feeding, referral to health facility and production o f hgh nutntive value foods for a nutntious diet to HIV andAIDS individuals; Producing, enacting and enforcing HIV and AIDS legislation. Improving the provision of support and protection o f the infected and affected groups; and Buildingcapacity at all levels inthe national response to HIV and AIDS with special focus for local service delivery 4.2.6.2: Nutrition Nutntion i s associated with health in the sense that malnutntion can lead to illhealth. Malnutntion i s both a cause and a consequence o f poverty in developing countnes and continues to retard economic growth and development. The effect o f under nutntion is wasting, under-weight, stunting and mental retardation, which has far reaching consequences. A poorly nounshed body i s pnmary and highly susceptible to infections such as Tuberculosis, malana, diarrhoea, acute respiratory infections, HIV and AIDS. Under nutntion is a factor commonly associated with maternal and childlinfant mortality Protein-energy malnutntion (PEM) i s very high in Malawi, with under-five children stunting at 48.0 percent; wasting at 5.0 percent, increasing to 9.0 percent dunng the lean periods. Micronutnent malnutntion such as sub-clinical Vitamin A deficiency i s at 80.0 percent o f pre-school children, 38.0 percent o f school 27 Malawi Growth and Development Strategy age children, 57.0 percent o f child-beanng age women and 38.0 percent in men. Anaemia i s at 73.0 percent o f pre-school aged children, 22.0 percent o f school aged children, 46.0 percent o f non-pregnant women, 47.0 percent o f pregnant women, and 17.0 percent o f men. Iodine deficiency disorders are also common despite Malawi's adoption o f Salt IodizationAct. It is estimated that 64.0 percent o f children have low Intelligent Quotient (IQ) inareas with highiodine disorders. The underlying causes o f under-nutntion include household food insecurity resulting from inadequate food production or low incomes; poor child feeding and care practices; inadequate education and lack o f knowledge which lead to poor food processing and utilization and sometimes cultural beliefs which deny women and children consumption o f high nutntive value foods. In addition, poor mstitutional coordination o f nutntion programmes has also been a bigconstraint. Goal The long-term goal i s to ensure nutntional well-being o f all Malawians. Medium-termExpectedOutcome The key expected medium-tern outcomes are effective utilization of quality food and the biological utilization of nutnents in the body; reduced levels o f under nutntion; reduced incidences o f dietary related non-communicable diseases and micro-nutnent disorders; increased human productivity; and strengthened structures and coordination for implementation o f policy and programme and enhanced capacity for nutntionists and dieticians at all levels. Key Strategies Effective implementation o f the nutntion strategies will require co-ordination among the key stakeholders. To successfully achieve the intended goal and outcomes, to a greater extent, will rely on what happens in other sectors like agnculture and food secunty, education, health and gender. Main strategies include; Promoting the control, prevention and treatment o f micro-nutnent deficiency disorders particularlythose causedby vitaminA, iodine and iron deficiencies; Promoting control, prevention and treatment of diseases that have direct impact on nutntion and human well-being; Intensifying community nutntion assessment, counselling, education and demonstration, supplementary and therapeutic feeding, referral to Nutntion Rehabilitation Units; Promotingthe production o f nutntious foods and livestock; Harmonizing and improving food and nutntion secunty information system for evidence based interventions; Reviewing and including nutntion in c m c u l a o f all learning and training institutions; Targeting the elderly, pregnant and lactating mothers, under five and school going children, orphans and the physically challenged with nutntion services to mprove their well-bemg; Enhancing co-ordination o f nutntionprogrammes; Building capacity for nutntionists, dieticians, and community nutntion workers; 28 Malawi Growth and Development Strategy Producing, enacting and enforcing nutntion legislation; and Monitonng and managing dietary relatednon-communicable maladies. 4.2.6.3: Interaction ofNutrition,HIV andAIDS HIV and AIDS affects nutntion through increases in resting energy expenditure, reduction in food intake, poor nutnent absorption and loss, and complex metabolic alterations that culminate in weight loss and wasting. Malnutntion reduces overall immunityand increasesthe nsko fdiseases andrelated conditions, which expedite the progression o f HIV into AIDS. HIV, inturn, destroys the natural immune system and increases the risk o f infections and diseases. These diseases prevent adequate intake and uptake o f vital nutnents. Additionally, both the disease itself and antiretroviral therapy increase the body's overall nutnent demand. As the virus progresses from Stage 1 to Stage 2, a child's energy demand increases by 10.0 percent, and by up to 20.0 percent at Stage 3. In HIV positive adults, calonc need can increase up to 30- 40.0 percent above the normal recommendeddaily energy requirement in stage 3. The HIV and AIDS pandemic has accordingly compounded the dual burden o f malnutntion and disease. HIV and other chronic diseases increase the body's need for micronutnents, calones and protein while smultaneously decreasing the body's ability to work. This means that as more nutntious food is needed withn a household, less labour i s available with whxh to produce or obtain it. Ths leads to less nutntious food for everyone else in the household and inadequate diet for the person living with HIV/AIDS . Goal The long-term goal is to improve the nutntional status and support services for people living with and affectedby HIV andAIDS. Medium-termExpectedOutcomes The medium-term expected outcomes include increased knowledge o f the mteraction between nutntion and HIV and AIDS; improved and diversified dietary practices for people living with HIV and AIDS; and increased provision o f HIV and AIDS-related nutntion interventions." . Key Strategies . Recruitmentandtraining ofadequate personnel; Reviewing and including nutrition, HIV and AIDS interaction in education curricula o f all learning and training institutions; Compiling and dissemnating best approachesto providing nutritional therapy to PLHA, . Building capacity for nutrition service providers on specialised nutntion care for PLHAs; Providing workplace-based nutrition therapy to enhance positive living for PLHAs; . Facilitating access to sustainable economic social protection for households affected by HIV and AIDS; and Buildingcapacity at all levels with special focus on semce delivery "Themainnutritioninterventionsincludecounsellingonspecificbehaviours, prescribedhargeted nutrition supplements and linkages with food-based interventions and programmes. 29 Malawi Growth and Development Strategy Chapter 5: MGDSTHEMES This chapter summanzes the other focus areas of the MGDS and these are outlinedm the five themes that represent a broad framework o f the economic growth and development pnonties for Malawi. The six key pnonty areas discussed in the previous chapter have been singled out from these thematic areas being areas where Government will concentrate its efforts in the short to medium-tern in order to realize immediate economic benefits for the well being o f the people. The other focus areas outlined inthe themes are also pnonties for Malawi as the country stnves to create a favourable environment for active pnvate sector participation and investment in order to diversify the economic base, develop human resource base, promote good governance, and protect the most vulnerable people who may not benefit from the process o f economic development. The five themes have been developed to offer a comprehensive package that deals with diverse issues facing this country Government will pursue these issues with vigour there by achieve socio-economic development but also attain the MDGs. The five thematic areas are: Sustainable Economic Growth; Social Protection; Social Development; Infrastructure development and Improved Governance. 30 Malawi Growth and Development Strategy 5.1 Theme One: Sustainable Economic Growth Sustainable economic growth i s central to Malawi's ability to reduce poverty and achieve the MDGs. Without this growth, it will be impossible to deliver Government's vision o f creating wealth and employment for all the people o f Malawi, transforming from a consumption-based economy to a production-based economy, and gradually emerging as an industnal nation. To this end, Malawi will seek to increase domestic and foreign investment in productive sectors. It will also seek to promote exports by addressing supply constraints, to diversify the economy and ensure that tlus growth i s shared among all Malawians. The strategy for sustained economic growth requires action on multiple fronts in order to deliver on these national goals. These include: maxmizing the contributionto economic growth through the potential growth sectors; puttinginplace an enabling environment for pnvate sector led growth; improving regional integration; and empowenng rural communities to be part o f economic activities. Sustainable economic growth is compnsed o f six sub themes namely; potential growth sectors, enabling environment for private sector led growth, export-led growth, conservation o f the natural resource base, economic empowerment, land and housing. Sub themes on apculture and food secunty that are particularly key for the development of this country hence have been singled out and placed as a key pnonty area and are discussed m Chapter 4. Table 5.1 presents a summary o f the long-term goals and medium-term expected outcomes o f the sub themes under sustainable economic growth. 'able5.1: Summary 4 Sub Theme Long-TermGoal Medium-TermOutcome Increasingproductivity, Highgrowthis realisedIntourism, 1. Potentia1growth diversifythe economy mining, andmanufacturing., sectors andachieve exportled Increasedproductivityandprotection growth. of naturalresources(fisheries, Increasingthe forestry, mining, environment). contributionoftourism To establishMalawias a pnncipal to GDP from 1.8 percent andleadingeco-tounsmdestination to 8.0 percentby 2011. inAfrica. Increasingthe To increaseproductionoutput and contributionof the value addedby small, medium and miningsector to GDP by large-scaleminers at least 10percent annually. Increasingmanufactunng output with growing value addition, export development and employmentcreation. Sub Theme Long-TermGoal Medium-TermOutcome I 31 Malawi Growth and Development Strategy 2. An enabling Increase private sector Increasedbusiness enterprises that environment for foreign and domestic contribute positivelyto economic private sector led investment growth and increase domestic market growth supply; Increasedforeign direct investment; Improvedpnvate sector competitiveness. 3. Export led growth Malawi becomes a net Increasednumber o f businesses exporter accessing the international markets with products 4. Conservation of the Reduced environmental To ensure sustainedfishavailability natural resource base degradation. for food and nutrition security as well to maintain fish species as income generation. and bio-diversity. To ensure sustainable use and management o f forestry resources. To ensure sustainable use and management o f forestry resources. 5. Economic Reduceincome disparity, Increased employment and income o f Empowerment Increase inemployment, the poor from on and off farm and income activities; Increased productivity o f rural communities / businesses and their contribution to economic growth; Women, youth and the disabled fully participate ineconomic activities. 6. Land and Housing Ensure tenure security efficient use of land and land based and equitable access to resources and equitable access to land land by all productive Malawians and other Improved housing investors. delivery systems, processes, procedures, Provision of adequate and conducive and services with framework for improved access particular focus on vulnerable and low- income groups 5.1.1 Sub Theme One: Maximizingcontributionto economic growththroughpotentialgrowthsectors The economy has shown fluctuating, but generally low growth rates over the last decade. The real GDP growth has been highly vanable, mainly because o f the poor performance o f the agncultural sector due to over-dependence on rainfed agnculture, unfavourable macro-economic environment and high cost of production. The low growth rates, coupled with a population growth rate of nearly 2.0 percent per annum, have resulted in a sharp fall in per capita consumption. In general, there has been limitedprogress on economic basediversification. Therefore, agnculture continues to be the main source of economic growth for Malawi. The industnal sector remains basic and is constrained by high real interest rates, high transport and energy costs. Overall, the economy i s vulnerable to a number o f factors such as drought, high transport costs, and over-dependence on unreliable external aid. 32 Malawi Growth and Development Strategy Exports remain heavily concentrated ina narrow range o f pnmary commodities, with tobacco accounting for over 70.0 percent o f foreign exchange earnings. The majonty o f these commodities are sold at low and declinlng world pnces. This i s a result o f limited value addition capacity within the manufactunng sector. Economic growth i s further constrained by the land-locked nature of Malawi, low per capita income resulting in low effective demand within the country; unreliable infrastructure, chronic food insecunty and limitedopportunities for exports. These represent special barners to pnvate investment and the strategies herein are designed to address these Malawi specific bamers. For Malawi to achieve an annual economic growth rate o f at least 6.0 percent, there must be a concerted effort by the pnvate sector, Government, and all stakeholders to accelerate growth and economic diversification. Inmuch as the economy continues to be driven by the agncultural sector, the other sectors o f manufactunng, mining, tounsm and agro-processing will play an mportant role in generating economic growth. As such the creation o f a favourable macroeconomic environment will be a prerequisite for investment inthese sectors. The goal is to increase productivity, diversify the economy and achieve export led growth. To attain this, potential growth sectors will be positioned to realise the targeted economic growth and increase employment. The MEGS identified tounsm, mining, manufactunng among others as potential high growth sectors. Currently, these sectors face specific constraints that hinder their ability to reach full potential. MGDS will, therefore, focus on addressing these specific constraints and engage private sector in honest dialogue to implement strategies to acheve the desired mediumterm outcomes. (a) Tourism Long-term Goal Increase the contributiono f tounsm to GDP from 1.8 percent to 8.0 percent by 2011. MediumTerm ExpectedOutcome To establish Malawi as a pnncipal and leading eco-tounsm destination in Afnca. Apart from loolung for tounsts outside Malawi, there is also an opportunity to increase domestic tounsm. According to the World Travel and Tounsm Council, tounsm is expected to generate 7 1 percent o f new jobs annually in Malawi. It i s expected that the contribution o f the tounsm sector to GDP will increase from 1.8 percent in 2005 to 8.0 percent by 2011. A number o f constraints need to be addressed in order to achieve the expected outcome. These include; high transport costs and poor access roads to tounst destinations, poor and uncoordinated promotion activities, and threats to flora and fauna. KeyStrategies Government will work closely with the pnvate sector to strategically diversify tounsm products, identify niche opportunities, and make Malawi's tounst destinations a good value propositionagainst competitors in the region. To facilitate pnvate sector investment intounsm Government will pnotitise the construction and rehabilitation o f roads and landing stnps to key destinations, buildcapacity o f communities intounsm 33 Malawi Growth and Development Strategy through tailor-made courses intraining institutions and coordinate efforts for a unified position on tourism promotion to reach potential customers in international and regional markets. The main strategies include: 0 Develop quality and diversified products and services based on the natural and cultural resource hentage to attract tounsts; 0 Increase capacity to service additional tounsts inaccommodation facilities that are competitive with other tounst destinations in the region, including transportation l i n k s to tourism destinations; 0 Improve the reach o f tounsm products to domestic, regional and international markets; and 0 Facilitate investment, infrastructure development and visitor management programmes inundevelopedareas with proventounsm potential. b) Mining Goal To increase the contribution o fthe miningsector to GDP by at least 10percent annually MediumTerm ExpectedOutcome The medium term expected outcome for mining i s to increase production output and value added by small, medium and large-scale miners, to supply industnal raw materials in the country (import substitution) and to begin exporting minerals. To achieve this, a number o f constraints facing the sector need to be addressed. These include; lack o f up-to-date information on mineral resources, poorly coordinated institutionalsetting, highinitial investment costs and inadequate incentives for pnvate sector to engage in medium scale mining. In addition, small-scale miners lack skills to add value to mineral products, while electncity disruptions threaten productionand safety o f miners. Key Strategies Government will work with mining companies to accelerate the geological and mineral data acquisition and dissemination to strengthen public-pnvate partnerships in infrastructure provision. It will continue to provide extension services to small-scale miners to learn value added skills. It will also improve the regulation and monitonng o f mining to reduce threats to the environment, enforce safety standards, and reduce smuggling. Main strategies include: 0 Strengthening the institutional capacity o f Geological Surveys to effectively promote mining, monitonng and enforcement o f environmental safety standards; 0 Ensunngcompliance by small, medium and large scale miners to environmental and safety standards; 0 Supporting small scale miners by integrating them into the minerals market and increasing their value added; 0 Increasing investment by pnvate sector companies in medium and large scale mining; and 34 Malawi Growth and Development Strategy 0 Providing up-to-date informationand geographical mapping on mineral resources. C) Manufacturing Goal The long-term goal is to increase rnanufactunng output with growing value addition, export development and employment creation. Medium-termExpectedOutcome The medium term outcome for the sector is to increase the contribution o f the rnanufactunng sector to economic growth. Currently, the sector i s small, output has stagnated and there is low capacity utilization across all sub-sectors. Capacity utilization i s hindered by high cost o f doing business and poor management. Most firms use relatively simple technology and rely on imports for their intermediate inputs. In addition, the industry faces difficulties in accessing markets due to low product quality and highcosts o f inputs, poor infrastructure (roads, water, and energy) and a discretionary system o f taxes, rebates and incentives. Key Strategies The Government will work with the pnvate sector to establish conditions for manufactunng to take off. The pnvate sector will look for ways to strengthen the links with raw matenal sources, especially in the agricultural sector and consider additional processing in the rural areas. Government will also take appropnate measures to promote private sector investment among other things through empowenng indigenous businesses. Main strategies include: 0 Improving the quality o f products and productivity o fboth labour and capital; 0 Enhancing skills through better integration o f science and technology into vocational training; 0 Enhancing the capabilities o f Malawi Bureau o f Standards and other related bodies to perform their functions; 0 Developing additional incentives for investment mcluding redefiningthe roles and responsibilities o f support institutions, and worhng to target infrastructure phasing to the benefit ofthe manufactunng sector; and. 0 Reducing the cost o f doing business by reviewing licenses, taxes and good governance. 5.1.2 Sub Theme Two: EnablingEnvironmentfor PrivateSector Development Government recognizes that the pnvate sector is an engine for growth and wealth creation. In Malawi, the pnvate sector is not well developed. Pnvate sector investment has remained very low averaging around 3.0 percent o f GDP This low level o f investment has negatively affected the economy's ability to diversify the economic base and exports. This situation has arisen due to poor macroeconomic environment, hightransportation costs, and supply-side constraints. The participation o f pnvate investors in the economy has also remained limited due to low investor confidence, poor management, and limiteddomestic market. 35 Malawi Growth and Development Strategy Goal The long-term goal is to create an enabling environment for pnvate sector to increase domestic and foreign investment. To achieve this goal, Government will support, encourage and engage the pnvate sector and all relevant stakeholders in result onented dialogue to ensure tangible improvement in the business environment. Emphasis will be on economic policy, legal framework, infrastructure and good governance. Deliberate efforts will also be made to empower the indigenous Malawians so that they benefit from their engagement inthe economic activities. MediumTermExpectedOutcome Itis expected that inthe mediumterm there will be an increase inthe number of local firms producing goods that are competitive in regional and international markets. MEGS highlights a number o f constraints currently facing the pnvate sector in Malawi. These include detenoration o f infrastructure, irregular power supply, unreliable water supply and sanitation services, low access to credit, high tax rates and hightransport costs. There i s also a significant shortage o f skilled workers to supply the pnvate sector with a productive workforce. The education system i s not producing enough graduates to meet current and future economic needs. Besides, training offered is inappropnate for business needs. This is further compounded by productivity losses due to high incidences o f malana, HIV and AIDS. Key Strategies. 0 Improving infrastructure especially access to reliable and seasonally pnced electncity, water and improved mter-modal transport to regional and domestic markets through direct mvestment, pnvatisation, build, operate and transfer arrangements and public-pnvate partnerships; e Improving vocational training by focusing on improving the TEVET system; 0 Improve worker productivity and ability o f firms to produce quality products 0 Implementingtax reforms; 0 Improving coordination for domestic and international investors and access to information. 0 Improving micro-finance schemes and programmes; 0 Ensunngsecure landregistrationand functioning landmarkets; and 0 Promotiono f occupational safety and labour protection. 5.1.3 Sub Theme Three: Export LedGrowth Goal The long-term goal is to turn Malawi from being a net importer to a net exporter and effectively integrate it into regional and international markets. MediumTermExpectedOutcomes The medium term expected outcome is to increase the number o f firms that are producing products that are competitive on regional and international markets. The national export strategy will include promoting production of goods and services where Malawi has comparative advantage to take advantage o f the existmg regional markets. There are a number o f constraints to achieve this and these are unfavourable 36 Malawi Growth and Development Strategy macroeconomic environment, poor infrastructure, high transport costs, unfavourable terms o f trade, over-reliance on neighbounng countnes for transportation o f imports and exports due to the land-locked nature o f Malawi, and lack o f direct flights to Europe senously undermines the potential for both tounsm and the exportation of highvalue fresh agncultural andhorticulturalproduce. Key Strategies. 0 Reducing cost o f reachmg external markets due to infrastructure by focusing on linkages through Mozambique, the Shire Zambezi waterway, and reduced restnctions on air transport; 0 Reducing lead times on export and improved efficiency by improving the efficiency o f customs, harmonizing border crossing with neighbours; 0 Improving marketability o f products to international markets by improving certification (coupled with efforts under the enabling environment) and developing science andtechnology; 0 Improving trade network and information for firms for export; and Maximizing the benefits o f trade through better knowledge. 5.1.4 Sub Theme Four: Conservationof the naturalresourcebase Conservation o f the natural resource base i s an important factor that will contribute to the achievement o f the sustained economic growth and development objectives o f the MGDS. It is recognised that weak management o f natural resources i s a major problem in Malawi. This i s exacerbated by population growth, environmental degradation, and encroachment o f agncultural and settlement activities on forestry and marginal lands. There are three main areas o f focus: fishenes, forestry, and wildlife conservation management. The goal is to improve management o f fish species, forestry and wildlife biodiversity and reduce environmental degradation and conserve the natural resource base, while contributing to economic growth. (a) Fisheries Fishfrom Lake Malawi is a major source of the population's proteinrequirement, and the industry provides direct and indirect employment. However, this sub-sector i s charactenzed by low productivity, decline in fishery levels due to over exploitation, poor pre- and post-harvest handling by communities, and poor enforcement o f legislation and preservation o f fish. Goal The long-term goal is to maintainfish species and bio-diversity Medium term expected outcome The medium term outcome is to ensure sustamed fish availability for food and nutntion security as well as income generation. It i s expected that an estunated 500 fish-ponds will be constructed rehabilitated and stocked with fish for breeding in the next five years. 37 Malawi Growth and Development Strategy Key Strategies The main strategy is to increase and sustainthe productivity o f small and large scale fisheries for both domestic and export markets. To acheve this, the following actions will be pursuedamong others; Enforcinglegislation to ensure sustainable production o f fish; 0 Promotingthe use o fmodem techniques o f fishmg; 0 Capacity buildingthrough community training; and 0 Development o f small-scale fish farmingand deep-water fishing. (b) Forestry Goal The long-termgoal is to reduce environmental degradation. Medium term expected outcomes The medium term outcome is to ensure sustainable use and management o f forestry resources. Currently there i s a high rate of deforestation and uncoordinated management o f forestry resources resulting in a lack o f policy coherence. The denudation o f forest cover accelerates soil erosion and also erodes natural resource- based livelihoods. This is also caused by high dependence on wood as a source o f household energy, limited skilled manpower, and dependence on public forests for raw matenals. An estmated 200,000 hectares o f forest-land is expected to be replantedby year 2011inorder to reverse the negative impacts o f deforestation. Key Strategies 0 Improving productivity and value added by the industnalforestry sector, while balancing it with sustainable practices; 0 Increasing reforestation efforts for key areas; 0 Improving enforcement o f regulations for forestry management; 0 Initiating afforestation and environmental rehabilitation programmes in pnonty areas; and 0 Introducing incentives for pnvate sector participation inforestry (c) EnvironmentalProtection Goal The long-term goal i s to conserve natural resource base through sustainable use and management o f natural resources and the environment. Expected medium term outcome The medium term expected outcome is improved compliance with environment and natural resource management laws. The main constraints to improved compliance include weak enforcement capacity, few economic incentives for compliance, and conflicting service delivery in management o f natural resources. Inaddition, there i s very limited environmental awareness inMalawi. 38 MalawiGrowth and Development Strategy Key Strategies 0 Improving enforcement o f environmental policies and legislation; 0 Improving cooperation in environmental management, natural resource management and development; 0 Raisingawareness o f issues o f environmental protection; 0 Incorporating environmental issues inschool cumcula; and 0 Establishmg o f an environmental management information system. (d) Wildlife Goal The long-term goal i s to conserve and manage protected areas and wildlife. Medium-term expected outcome The medium term expected outcome is to conserve, manage and develop wildlife resources to effectively contribute towards sustainable development o f biodiversity and the tounsm industry in Malawi. Wildlife forms a big percentage o f tounsm attraction. The sub-sector is constrained by a number o f factors and these include; poaching, poor infrastructure development, Tsetse fly infestation, human-anmal conflicts and understaffing. Key strategies 0 Enforcing wildlife law; 0 Improvingprotected area infrastructure; Eradicating tsetse flies inprotected areas; 0 Improving capacity and institutional buildingfor collaborative management; 0 Improving capacity for problem animal control; 0 Improving eco-tounsm 111protected areas; and 0 Improvingwildlife research and monitonng capacity 5.1.5 Sub Theme Five: EconomicEmpowerment Malawi's expenence with economic empowerment programmes can be traced to the early 1960s. Despite the vanous initiatives by Government, donors, and NGOs, most Malawians are still involved in low-return, small-scale enterpnses. The large-scale, high-value businesses are owned by foreigners and a minonty o f Malawians. Situational analysis as part o f the development o f National Economic Empowerment Policy shows that lack o f empowerment is caused by a number o f factors and manifests itself in the inability by the majonty o f citizens to control their economic destiny It affects citizens depending on their race, gender, age, locationandeconomic disposition. Rural communities are most affected by lack o f facilities and infrastructure supporting the development o f businesses. With over 85.0 percent o f the population living in rural areas, there i s need to specifically target rural communities if a significant impact in empowenng Malawians i s to be made. This will require that pnvate investment in these areas is fostered and the culture o f handouts and political patronage to rural communities i s curtailed. 39 Malawi Growth and Development Strategy Despite past efforts, women in Malawi remam marginalized compared to men. Women have less access to education, credit, land, and property In addition, they have less access to employment opportunities both in the public and pnvate sectors, technology, and other key market information to support their business activities. Unemployment among the youth has worsened over the last 20 years. Increasingly, the youth are completing their education with very little prospect o f secunng ajob, or engaging inentrepreneunal activities. Due to lack o f expenence, very few employers are willing to recruit and train them on thejob. Finally, people with disabilities are usually the most affected in terms o f access to assets and other facilities required to become economically empowered. They expenence difficulties accessing financial services and capital, skills development programmes, and technology developments. They are also the most affected by poor infrastructure such as roads, communication, and buildings not designed to accommodate or meet their special needs. A coherent and integrated approach i s needed to contribute towards solving the vanous causes o f disempowerment, which exist indifferent sectors o fthe poor and disadvantaged inMalawi. Goal The long-term goal is to create wealth for allpeople. MediumTerm ExpectedOutcome The medium term expected outcome i s to mcrease the productivity of rural communities and businesses, employment and income, increase the number o f women and youth who are actively participating in public and pnvate sectors and to ensure that the urban poor are able to contribute to economic development. Despite the vanous economic empowerment initiatives that Malawi has undertaken so far, many challenges remain that hinder Malawians from exploiting their full potential to participate in wealth creation. These include weak linkages to markets and few incentives for rural communities to organize themselves for productivity enhancement, limited access to micro-credit and high default rates, lack of business advisory services or training opportunities, and an increase inrural-urban migration. Key Strategies Economic empowerment has many facets, and therefore requires a multi-pronged approach. This requires proper coordination to avoid overlaps and conflicts. While many economic empowerment initiatives exist in Malawi, there i s no overall coordinating institution. Many policies have not been implemented because there has been no specialised institution to take full responsibility and authonty To be effective, proper coordination, management, monitonng and evaluation o f all economic empowerment initiatives are needed. The main strategies include; 0 Targeting infrastructure development to ensure that rural roads link rural communities to markets; 0 Developing rural cooperatives to lower transaction costs o f dealing with rural entrepreneurs and helping communities increase their bargaining power. This will be through targeted programs for rural areas complemented by current programs undertakenby ago-processing companies; 0 Strengthening the policy environment for micro-finance, including improved coordination o f donor programs to decrease market distortions. This will 40 Malawi Growth and Development Strategy focus on providing innovative credit schemes and developing a network o f practitioners while enhancing mechanisms to decrease the default rate; 0 Offenng vocational training and other training for small businesses; and 0 Targeting women and their participation ingrowth throughbusinessprograms. 5.1.6 Sub Theme Six: LandandHousing Land is a basic factor o f production as well as an important source o f livelihood for most Malawians. There are three legally recognised types o f land tenure in Malawi: customary, pnvate and public. Customary land tenure i s the most widespread category However, other sub-tenures that are commonly practised by customary landholders (renting and borrowing) are not legally recognised. Registered pnvate land (freehold and leasehold) accounts for less than 8.0 percent o f the land area. Inadequate access to land has beenidentified as one o f the cntical factors contributing to poverty in the country The land sector impacts on poverty in three main ways: inequitable access to productive resources and processes, unequal land distribution, and land tenure insecunty However, discnmination in access to land based on social status, economic status and gender i s a major constraint. For example, it is easier for nch people to access land than the poor, or where influential members o f clans make unilateral decisions on land, very often without pnor knowledge o f other members o f the groups. Inaddition, the following constraints or challenges have to be addressed; rapid population growth; poor land use practices, lack o f effective representation o f vulnerable groups in land administration and use matters, lack of awareness about the land policy and its implications on people's livelihoods, poor formal land markets, and poor coordination among the existing network o f field staff, NGOs, faith organizations, community based organizations etc on land matters. Goals The long-term goal is to ensure tenure secmty and equitable access to land for the attainment of broad-based social and economic development through optimum and ecologically balanced use o f land and land- based resources. ExpectedMediumterm Outcomes The medium term expected outcome is the efficient use o f land and land based resources and equitable access to land by all productive Malawians and other investors. Key Strategies 0 promoting and facilitating opportunities for lowenng land transaction costs and enhance the operation o f effective landmarkets, supporting the pnvatisation o f some land services inan effort to encourage the development o f pnvate sector participation inland sector activities; 0 promoting community participation and public awareness at all levels, 0 ensuring the adoption of environmentally sustainable land use practices, legislating land with provisions that enshne tenure secunty not only to enhance tenure secunty, but also build confidence and encourage investment on land. 0 Legislation o f land that discourages discnmination on grounds o f status, gender or vulnerability; 41 Malawi Growth and Development Strategy 0 Implementingtransparent and accountable land allocation systems; and 0 Increasing tax on land to realistic levels that will discourage underutilization and speculation. 42 Malawi Growth and Development Strategy 5.2 THEME TWO: SOCIAL PROTECTIONAND DISASTER RISK MANAGEMENT Achievement o f sustainable economic growth and development by itself may not automatically translate into improved quality o f life for the most vulnerable Malawians. It i s therefore necessary to design programmes that will protect them as they may not be able to take advantage o f the benefits from economic growth. It is also necessary to protect those that are not chronically vulnerable, but fall into vulnerability due to economic shocks from time to time. The recent poverty and vulnerability study noted that 95.0 percent o f households surveyed reported at least one economic shock in the past five years, with most households expenencing more than one type o f shock. Coupled with the findings that there was a 30 percent fluctuation in poverty between 1998 and 2005, the need to have programs that keep the non-poor from falling into poverty is essential." Recent analysis suggests that small increases in expenditure growth can move people out of poverty, while economic shocks can quickly push people into poverty Thus, social protection strategies should include measures to decrease the nsk o f shocks and strengthen resilience to shocks (such as those identified in food security and economic empowerment). Social protection programs will therefore be designed to protect the most vulnerable. 13 There i s also need for measures to protect the most vulnerable groups like the elderly, the chronically sick, orphans and other vulnerable children, malnounshed children, lactating mothers and destitute families. Special groups o f persons with di~abilities'~ are also included in this category These groups o f people are vulnerable to risk and typically lack appropnate nsk management instruments, which constrains them from engaging in higher return activities to enable them move out o f chronic poverty Populations affected by disasters also qualify for social protection since disasters affect the livelihoods and social economic asserts o f affected groups. Social protection and disaster management are therefore necessary as they restore peoples' capacity to attain prospenty, create wealth and contribute to economic growth and development. Sub Theme LongTerm Coals MediumTermExpectedOutcomes Protectingthe Vulnerable Improvementsinthe socio- The most vulnerable with limited economicindicatorsofthe factors of production are sufficiently mostvulnerable cared for as are the vulnerable who can be negatively impacted by economic shocks. Disaster Risk Reduction in the SOCIO- The impact of disasters on the Manaeement economicimDactof disasters. vulnerable reduced. IS Social protection is particularly important because it ensures that the vulnerable, who may be on the penpheral o f economic activity and thereby not benefit from growth, `'IHS2 data showed that 30% of the poor moved out of poverty during the periodwhile 30% of the non-poor moved into poverty-thus not impacting the overall percentage of poor. l3Vulnerability to nsks, food security and social protectionin Malaw, Preliminary results of the poverty and vulnerability assessment, workshop, Lilongwe December 7-8,2005 l4The group "personswith disabilities"refers to personswith disabilitiesthat are unable to create their own income and wealth. 43 Malawi Growth and Development Strategy are well protected. Three main areas o f focus have been outlined. First i s the sub theme on empowenng farmers and rural communities by improving their integration into the economic market, increasing their productivity and contribution to economic growth. Secondly, the focus has been on the most vulnerable who may not be able to enjoy the benefits o f growth and therefore there will be needto have plans inplace for their protection. Lastly, focus has been on disaster management especially the scaling up o f efforts to strengthen capacity for response. More importantly, there will be need to ensure that social protection programmes are formulated as a spnng board for the poor and they should provide them with the capacity to come out o f vulnerability and engage inproductive work. 5.2.1 Sub Theme One: Protectingthe Vulnerable Vulnerability can be defined as the likelihood o f being harmed by unforeseen events, or susceptibility to exogenous shocks. The most vulnerable broadly include individuals or households affected by disasters; households headed by orphaned children, the elderly and single-parents (especially female heads); persons with disabilities; under-five children, lactating and pregnant mothers; orphans, and the unemployed and underemployed, and the land-constrained in rural areas. It is noted, however, that this general categonsation does not mean that all people or households falling under these categones are the most vulnerable. The determining factor is their inability to meet their basic needs and on the basis o fpoverty charactenstics. Currently, efforts to protect the most vulnerable have faced many problems. Most o f the past market-based policies and interventions have been inefficient, fiscally unsustainable and mostly benefiting the non-poor than the poor. Consequently, all the market-based policies o f social protection were abolished under the economic reforms. The administered programs are fragmented, uncoordinated and are poorly targeted. On the other hand, direct assistance and social welfare transfers are small in size and limited in coverage, largely due to financial constraints. The informal social protection, likewise, has become over-stretched and vulnerable to shocks due to increased poverty and the HIV and AIDS scourge. Several key challenges and constraints have made it difficult to improve the quality o f life of the most vulnerable. These include clear lack o f focus in implementing cost- effective interventions especially the area o f preventing and reducing the high prevalence o f stunting and wasting in children less than two years o f age. Inadequate planning and lack o f integration regarding data on the country's development and growth strategies on the one hand and the nsks and obstacles to these strategies on the other hand, posed by structural weaknesses and fluctuating resource needs for the chronically poor. Poor targeting has also been a constraint mainly due to msufficient data regarding the charactenstics, location, challenges and needs o f the vulnerable. Other constraints include inadequate knowledge regarding processes, transfer mechanisms, power dynamics, and incentive structures o f target communities; poor donor and stakeholder coordination in the design and delivery o f programs, and this also touches on lack o f coordination of social protection programs in general. 44 MalawiGrowth and Development Strategy Goals The long-term goal is to mprove the life o f the most vulnerable. MediumTerm ExpectedOutcome The expected medium-term outcome is to increase assets o fthe poor to enable them to meaningfully engage insustalnable growth and contribute to poverty reduction. Key Strategies Inorder to realize the goals and expected outcomes as outlined above, there is needto undertake the following strategies which complement efforts for economic empowerment and social development:- Providing efficient and effective support to the most vulnerable with very limitedfactors o fproduction. Improving planning and integration o f knowledge on the needs o f the chronically poor. Providing opportunities for the poor farmers and rural communities to graduate from poverty by facilitating their integration in mainstream apcultural productivity and enabling them to create wealth. Specifically, there shall be a provision o f subsidized apcultural inputs to poor farm families; undertake public works programme (PWP). Promoting savings culture inPWPs, and Providing capital for income generating activities through programmes such as MARDEF 5.2.2: Sub Theme Two: ImprovingDisasterRiskManagement Malawi is frequently affected by natural disasters and calamities. Apart from disasters that hit traditional disaster-prone areas like the Shire Valley, acute food shortage i s the worst form o f humanitanan cnsis inMalawi. Lakeshore areas are also prone to severe flooding dunng years o f heavy rains. Hailstorms also destroy crops, livestock, and other infrastructure thereby reducing productivity and removing the sources o f livelihoods. It is therefore important to harness wealth creation and poverty reduction by putting in place adequate disaster nsk management measures that go beyond emergency response to preparedness, prevention and mitigation as well as rehabilitation and reconstruction. Nevertheless, disaster nsk management efforts face a number o f challenges and constraints among which are inadequate funding, poor response to disasters and lack o f an effective early warning system. Goal The long-term goal is the reduction in the socio-economic impact o f disasters as well as buildinga strong disaster management mechanism. MediumTerm ExpectedOutcome The expected medium-term outcome is reduced impact o f disasters by improved disaster riskmanagement. Key Strategies 0 Developing and strengthening institutions responsible for disaster nsk management, 45 Malawi Growth and Development Strategy 0Institutingnecessary disaster nskmanagement mechanisms 0 Implementingmitigationmeasures indisaster prone areas; 0 Integrating disaster nskmanagement into sustainable development plannmg at all levels; 0 Developing and strengthen coordination o finstitutions in disaster management and relief services; 0 Establishmg an early warning system for Malawi; and 0 Timely provision of emergency relief assistance to affected populations while measures shall be institutedaimed at improving mitigation and rehabilitation of areas affected by disasters. 46 Malawi Growth and Development Strategy 5.3 THEME THREE: SOCIAL DEVELOPMENT A healthy and educated population is necessary to achieve sustainable economic growth. By buildinga healthy and educated population as well as achieving economic growth, Malawi seeks to achieve and sustain Millennium Development Goals. Major economic sectors o f agnculture and industry require an educated, skilled and healthy workforce to take on new challenges and acheve the goals o f the sectors. The Strategy recognizes the mterrelated nature o f issues o f education, health, population, HIV and AIDS, nutritionand gender. These issues therefore have to be dealt with ina balanced manner, without neglecting any one o f them if Malawi is to achieve economic growth and development as well as acheve the MDGs. It i s in this context that t h s Strategy proposes to address these issues in a coherent manner under one theme o f social development. However, considenng the impact that HIV and AIDS and malnutntion have on the economy, Government has placed these as key pnonties for the short to medium-term. As such these issues have been taken from this theme and are discussed under key pnonties in Chapter 4. The overall goal o f this theme i s to develop human capital for full participation rn the socio-economic and political development o f the country & Population Decrease child morbidity and mortality including deaths due to treatment regime are followed diarrhoea especially in children ---- ARV Increasedvaccination rates under 5 years o f age --Increase life expectancy at buth from 40 to 45 Education Gender 47 Malawi Growth and Development Strategy 5.3.1 Sub Theme One: HealthandPopulation (A) Health A healthy population is not only essential but also a pre-requisite for economic growth and development. There i s a very close and strong correlation between health status and level o f development. That is, countnes with good health are highly developed, whereas those with poor health are underdeveloped. Malawi's health situation based on the health indicators such as maternal mortality rate, child mortality rate, child and maternal malnutntion, life expectancy, access to health facilities i s very unsatisfactory While some achievements have been made after implementing a number o f policies, some o fthe health indicators are the worst in the world. For instance, for every 100,000 live births, 1,120 mothers die due to limited access to quality reproductive and health services, infant mortality and child mortality are estimated at 76 and 133, respectively per 1000 live births due to limited access to health services and malnutntion. Though Government i s malung efforts to bring about improved health, it faces a number of challenges. These include inadequate health personnel, prevalence o f diseases such as HIV and AIDS, tuberculosis, malana and acute respiratory infections, and migration o f health personnel to other countnes. Recent assessmentshave shown that there are more than 100,000 people per qualified physician. There i s inadequate supply o f essential drugs due to budgetaryconstraints, which is compoundedbypilferage. Ingeneral, the health infrastructures or facilities are very poor. HIV and AIDS is a big challenge in attaining a healthy nation and this senously affects development efforts in all sectors. The highprevalence o f HIV and AIDS has senously affected the health services delivery systems, subsequently the health status o f the country's population. Detailed situation analysis on HIV and AIDS and measures currently in place to contain the scourge and challenges being faced are presented inthe subsequent section on HIV and AIDS. Goal The long-term goal is to improve health o f the population at all levels ina sustainable manner. Medium-termExpected Outcome The expected medium term outcomes are, among others, improved provision o f essential health care services; reduced infant mortality rate from 76 to 60 per 1,000 live births; reduced child mortality rate from 133 to 90 per 1,000 live births; and reducedmaternal mortality rate by 50 percent from the current level o f 984 deaths per 100,000 live births. Key Strategies Successful achievement o f the intended goals and expected outcomes will, to a greater extent, rely on what happens in other sectors like production o f food in agnculture, disease treatment and prevention in the health sector, relevant cumculum in the education sector and reduction o f gender inequality The targeted programs under the health sector support program will be complemented by educational efforts to improve nutntion, food production, and general improvements in infrastructure in 48 Malawi Growth and Development Strategy rural areas. The Government will work with partners inthe donor community, NGOs, and at the village level to leverage the resources devoted to the improvement inhealth related goals. Improving health requires a multifaceted or integrated approach with a combination o f preventive, educational and clinical measures. By bnnging these together, the costs o f interventions can be minimized and their effectiveness maximized. The MGDS seeks such integration. Main strategies include the following: 0 Increasing the retention o f qualified health workers through a targeted program for healthcare workers; 0 Improving worlung environment for healthpersonnel; 0 Increasingthe availability and eliminatingtheft o f drug supply; 0 Improving health facilities through targeted facilities infrastructure (roads, water, health buildings,water, communication and medicalequipment); 0 Improving equipment at healthcare facilities, especially maternity services; 0 Improving financial management, monitoring and supervision o f health care facilities; and 0 Providing comprehensive health services package that include treatment o f diseases and infections, awareness programmes and education through Government and pnvate hospitals. (B) Population The MGDS recognises that there is a strong linkage between issues o f population and health as such efforts from these two fronts compliment each other. However, there are other elements o f population that cannot be conclusively addressed by efforts in the health sector alone because o f its broad nature. These include population data analysis and dissemination for development planning. This is particularly important for the determination o ftotal demand for goods and services inthe economy Goal The long-term goal i s to mcrease the number o fpeople with good living standards. MediumTerm ExpectedOutcome The medium term expected outcomes include: increased life expectancy from 37 years to 45 years; reduced population growth rate from 2.0 percent to 1.5 percent per annum; reduced total fertility rate from 6.0 to 4.9; and increased contraceptive prevalence rate from 33.0 percent to 40.6 percent. Key Strategies Lowenng fertility in all reproductive age groups through advocacy programmes; Expanding the range and improving access and quality o f health services focused on common healthproblems to reduce morbidity and mortality; Providing accessible, affordable and comprehensive reproductive health services through informed choices in order to enable them to attain their reproductive health nghts and goals; Improving the quality o f life o fthose infected and affected by HIV and AIDS; Enhancing programmes which increase awareness o f the population, reproductive health and HIV andAIDS challenges; and 49 Malawi Growth and Development Strategy 0 Improving methods o f collection, analysis and dissemination o f demographic and socio-economic data, disaggregated by age, sex, distncts, and Traditional Authonty through capacity building. 5.3.2 Sub Theme Two: Education Education i s the key for attaining prospenty It is a catalyst for socio-economic development, industnal growth and an instrument for empowenng the poor, the weak and the voiceless. Education enhances group solidanty, national consciousness and tolerance o f diversity Government is mplementing a number o f reforms in order to improve the current situation especially to increase access and retention at all levels; improve the quality and the relevance o f education being provided; improve equity, management and supervision; and the traming o f more teachers for both pnmary and secondary levels. This will be achieved through construction of additional classrooms, provision o f relevant school supplies, training o f more teachers and upgrading the existing under qualified ones. Curnculum reviews and reforms are in progress to improve the relevance o f education so that the system can produce both white-collar job seekers and blue-collar job providers and the self-employed. Effective policies and systems are being established to enhance equity in education and effective management o f the education sector. Improvement and relevance o f the education system in Malawi continues to face a number o f challenges due to poor policy decisions made over the past few years. These have negatively affected the quality and relevance o f education being provided especially at pnmary and secondary levels. Such policies included the sudden declaration o f the Free Pnmary Education Policy, the conversion o f the former Distance Education Centres (DECs) to Community Day Secondary Schools (CDSS) and the use o f untrained and under qualified teachers inthe system due to inadequate numbero fprofessionally qualifiedteachers. The relevance o f education has also been negatively affected by lack o f timely reviews and reforms o f the school curncula, consistent with the current national needs and aspirations, and also through the unwarranted addition o f irrelevant subjects to the old curncula and the removal o f relevant subjects such as technical, vocational and entrepreneurship education subjects. Other factors compromising education quality and relevance include: backward cultural altitudes o f education for girls, inadequate infrastructure including for people with special needs, internal inefficiencies such as highabsenteeism, hghrepetition anddropout rates, and also lack o fschool inspection or ineffective supervision and monitonng. These have rendered the system to be inefficient. The completion rates, pass rates and transitional rates from one class to the next and from one level to the next are very low Goals The education sector has identified three pnonty goals. These are to equip students, especially at the basic education level with basic knowledge and skills to enable them function as competent and productive citizens; at secondary level, to provide the academic basis for gainful employment in the informal, pnvate and public sectors; 50 Malawi Growth and Development Strategy and at tertiary level, to produce hgh quality professionals with relevant knowledge and skills inrelevant fields. Medium-termExpectedOutcomes At pre-school level, the expected medium term outcome is to have an expanded infrastructure and increased access. At pnmary school level the expected medium term outcome is to substantially reduce absenteeism, repetition and dropout rates. At secondary and tertiary levels the expected medium term outcome is increased access and improved quality and relevant education for both sexes and students with special needs. Key Strategies 0 Rehabilitating existing schools and building additional school infrastructure includingteachers houses at all levels; 0 Training more teachers; 0 Improving the teaching-learning environment to reduce absenteeism, repetition and dropout rates for both sexes; 0 Reviewingand reforming school cumcula to address national needs; 0 Implementing affirmative policies relating to selection o f pupils and students to secondary and tertiary levels; 0 Providing a conducive environment for girls and students with special education needs to enhance equity; and 0 Equiping managers with managenal skills through targeted training and induction. 5.3.3 Sub Theme Three:Gender Gender issues are an integral part o f the overall national development agenda. Gender inequalities in accessing productive resources, development opportunities and decision malung affect economic growth and development. The Gender Development Index for Malawi o f 0.374 indicates that large dispanties between men and women exist. Women who constitute about 51 percent o f the population are marginalized in social and economic spheres such that they are unable to effectively contribute to social, economic and political development o f Malawi. Education i s a key factor for women empowerment. However women tend to have lower education levels than men leading to their lower participation in many areas o f development. The main challenges are socialkultural factors, limited access to means o f production, and limitedparticipation in social and economic activities. The abuse o f human nghts or gender-based violence i s tilted towards women and children and has accelerated other factors in their disfavour such as spread o f HIV and AIDS.. In addition, the coordination and mplementation o f gender related policies is weak inMalawi. Goal The long-term goal is to mainstream gender in the national development process to enhance equal participation o fboth sexes for sustainable development. 51 Malawi Growth and Development Strategy Medium-termExpectedOutcome The expected medium term outcome i s reducedgender inequality KeyStrategies Gender i s not a stand-alone Subject, as such achievement o f Government's goals and outcomes will very much depend on mainstreaming gender issues in all the other sectors. Main strategies mclude; 0 Strengthening the institutional capacity for effective co-ordination o f gender policy implementation; 0 Talung affirmative action to increase women and children decision makers in highlevels ofthe public andpnvate sectors; 0 Promoting gender equality through advocacy; and 0 Brealung the culturalhraditional factors which create and perpetuate gender inequalities. 52 Malawi Growth and Development Strategy 5.4 THEME FOUR: INFRASTRUCTUREDEVELOPMENT Infrastructure i s one o f the prerequisite for economic growth. It is a key component for creating an enabling environment for pnvate sector dnven growth and provision of timely and quality social services. Provisiono f infrastructure inthe areas o f transport (road, rail, air and water), water supply and sanitation, electncity, telecommunications, and information technologies contribute to enhanced productivity o f business establishments in the country Infrastructure services are complementary innature and must be provided as a package for maximum benefits of development endeavours set int h s Strategy In general, infrastructure in Malawi is grossly inadequate, charactenzed by low availability, unreliability and expensive. Overall, the infrastructure limitations in Malawi can be attributed to weak transport infrastructure (network and condition); highcost of transportationresulting inhighcost o f goods and services; unreliable and expensive utilities (water, electncity, and telecommunication); weak capacity o f information technology in both pnvate and public sectors. This i s compounded by Malawi's landlocked status, which i s a major disadvantage to businesses as it increases the costs to mporters and exporters relative to regional competitors. Ifthe country i s to register positive economic growth these limitations needto be addressed. Development o f infrastructure will contribute to the achievement o f a number o f the expected outcomes o f the MGDS. Specifically, a well developed infrastructure will contribute to reduced cost o f doing business in Malawi as it will improve its attractiveness as an investment destination; increased access to markets, clinics, schools, especially in rural areas and reduced incidence of water-borne diseases and environmental impacts from poor water usage and poor sanitation. However, the provisiono f infrastructure i s not an end initselfbut provides an enabling environment for the economic and social activities. In line with the goals o f the MGDS, infrastructure development would focus on provision o f infrastructure services as a package, which will promote activities inthe vanous sectors o f the economy This theme is made up o f five sub themes namely transport; energy; water and sanitation; information, communication technology; and science, technology and research. Government has singled out transport infrastructure particularly roads and manne with respect to the Shire Zambezi Waterway as some o f the key pnonty areas for the MGDS. Similarly, energy, water and sanitation have also been singled out as key prionty areas. It is envisaged that the development o f these selected mfrastructure development initiatives will contribute to the realization o f the immediate economic benefits for Malawi. Hence these issues have been taken from this theme and are discussed in Chapter 4 within the context o f Government's key pnonty areas for the short to medium-term. The remaining other focus areas are outlined below 53 Malawi Growth and Development Strategy nary of Theme 4; Infrastructure evelopment Longand mediumterm goals Ensure the provision of a coordinated Transport transport environment that fosters a safe accessibility o f the population to and competitive operation o f commercially key road comdors within Malawi viable, financially sustainable, and and out o f Malawi and facilitate environmentally fnendly transport services the continued development of the and enterpnses country's rural areas. By 2011, 71% o f the road network will be in good condition, 18 % in fair condition with only 11% inpoor condition. ICT Telecommunica Ensure universal access, connectivity and Formation o f public/private sector tions affordable informahon and partnerships in the provision of communications technology telecommunications services. Information Increasedtechnical skills and Technology Improve use of technology in companies, updated knowledge are usedby education, and service delivery public and private sector institutions Broadcasting Developed its broadcast Empower the nation and accelerate infrastructure using the modern economic growth and development telecommunication technologies through the collection, analysis, processing and develop the sub-sector to be and dissemination o f accurate and timely private sector dnven and oriented. information. Science & Develop, disseminate and promote Well-coordinated science and Technology utilization o f technology to improve technology generation and productivity and quality o f goods and dissemination. services Effective and efficient operation o f science and technology institutions. 5.4.1 Sub-ThemeOne: Air and RailTransportation This sub theme focuses on air and rail transportation since road and water transportation have been particularly singled out as some o f the key pnonty areas where Government will concentrate its efforts in the medium-term. These have been discussed under chapter 4 o f this document. 5.4.1.1 Air Transport Air transport is the most efficient and effective means o f transportation. However, Malawi faces a number o f constraints such as arfreight costs which are higher than neighbounng countnes, and landing nghts restnctions and fees are prohibitive hence uncompetitive. Facilities at major airports are either below international standards or not available. While Malawi is stnving to become a productive exporting economy there are no proper storage facilities at the international airport. In light o f this problem, the focus inthe medium term will be to ensure that the international airports conform to international standards through the provision o f the relevant services and facilities. 54 Malawi Growth and Development Strategy Goal The long-term goal i s to reduce the cost o f air transportation while ensunng international competitiveness. Expected Medium Term Outcome Inthe medium term it is expected that Malawiwill attain andmaintain a competitive, self-sufficient and sustainable civil aviation environment that ensures safety in accordance with national and international standards and enables the provision o f services ina reliable and efficient manner. Key Strategies The objective o f an affordable air transport i s to attract tounsts and export o f agro- processed products. This will call for availability o f supportive accommodation facilities at the airports, availability o f appropnate storage facilities and provision o f appropnate information facilitates and packages to visitors. Strong public-pnvate partnerships will be promoted to facilitate pnvate investment. Main strategies include: 0 Promotingand facilitating a competitive, sustainable and efficient air transport industry; and 0 Providing a safe, efficient, reliable aviation infrastructure that complies with international standards. 5.4.1.2 RailTransport Goal The long-term goal is to have an efficient, affordable and effective rail network that eases pressure from the road network and provides an alternative means o f transport both to people and goods. Expected Medium Term Outcome In the medium term, it is expected that the rail sub-sector will be a well-managed, viable and sustainable system that promotes accessibility as well as affordable and reliable movement o f goods and people. Key Strategies The development o f the rail network will have to be linked to target areas such as ports, industnal sites and national borders. Main strategies include: 0 Improving operational efficiency and commercial viability o f the existing railway infrastructure and levels o f service to all users including people with disabilities at an affordable cost; and 0 Promotingrailway safety and environmental protection. 5.4.2 Sub-Theme Two: Information,Communicationand Technologies (a) Telecommunications The telecommunication sector plays an important role in economic growth and poverty reduction. Effective informationdissemination and communication systems i s cntical for private sector development and service delivery It benefits companies and the general public providing direct and fast access to information. MGDS recognises 55 Malawi Growth and Development Strategy the importance ofthe telecommunication andinformation sub-sector inthe creation of an enabling environment for pnvate sector led growth as well as improving the quality o f life. Currently telecommunications services are below regional standards. Statistics show that only about 4.0 percent o f the total population i s connected to ground telephone lines m the country Mobile phone networks have o f late improved the situation. Goals The long-term goal is to ensure universal access to, connectivity and affordable informationand communications technology Medium Term Expected Outcomes In the medium-term it is expected that Malawi shall have increased access to telecommunications services. Key Strategies The implementation o f an effective and efficient telecommunications strategy for Malawi will need to be in line with regional and international standards talung into account the issues of globalisation. Main strategies will include: 0 Creating a conducive environment to attract investment in telecommunications; 0 Enhancing the capacity o f the regulatory body Malawi Communications Regulatory Authonty (MACRA) to act as a competent referee in order to level the playing field; and 0 Developingmonitoring and penodically reviewing regulations. (b) InformationTechnology(IT) The use o f modern techniques o f information technology (IT) i s important and necessary for the acceleration o f economic growth and development. The dynamics and demands of the modem world call for active adoption and use o f modem IT Malawi has made stndes in the investment and use o f IT. Nevertheless, there are a number o f constraints and challenges that need to be addressed to effectively improve service delivery These include high costs o f IT equipment, inadequate trained IT personnel, and poor IT support infrastructure. Goal The long-term goal is to improve service delivery in both public and pnvate sector institutions through the use o f IT. Medium Term Expected Outcomes The medium term expected outcome is a well developed IT infrastructure and improved e-governance. In addition, there will be increased IT skills in both public and pnvate sector institutions, and increased tele-density Key Strategies The implementation o f an efficient IT strategy should take mto account emerging needs o f the industry at large in, particular, the hgh growth sectors such as tounsm and manufactunng. Main strategies include: 0 Developing a reliable, fast, adaptive and robust national IT infrastructure; 56 Malawi Growth and Development Strategy 0 Enacting an appropnate legislation that promotes and facilitates the country's participation inthe informationage; Facilitating the establishment o f an efficient intra and inter-departmental, inter-sectoral, national and sub-national system o f communication, for the necessary feedback in policy formulation, programme implementation, monitonng and review; IntensifyingIT education and training inall sectors; and 0 Improving IT access by all communities. (c) Broadcasting Informationdissemination through radio and television (TV) continues to be the main form o f communication in Malawi. Development o f these modes o f communication will remain vital inthe medium-term to ensure that the population both UI urban and rural areas i s actively involved in the development process. Currently, radio communication i s on the increase due to active participation o f private radio stations. Television communication is still in its infancy but rapidly growing owing to its high message retention rate estimated at 93.0 percent. TV communication has proved to be the best mode o f disseminating information on vanous topical issues such as education, democracy, good governance, human nghts, and health. As such it i s an important tool that will contribute significantly to economic growth and development for Malawi. Goal The long-term goal is to improve the dissemination o f accurate, unbiased and timely information to the general public for informed decision-malung. Medium-termexpectedoutcomes In the medium-term it is expected that the country shall have a developed broadcastinginfrastructure usingmodern telecommunication technologies. Key Strategies 0 Developing and rehabilitating broadcasting transmitting stations; 0 Improving broadcasting distribution and coverage; 0 Developing local capacity to generate reliable and accurate news and programmes; 0 Improving quality and unbiasedness o f local-content programme production; 0 Promotingthe participation o f pnvate broadcasting stations; and 0 Promotingcommunity broadcastingservices. 5.4.3 Sub Theme Three: Research, Science, and Technology Development Government recognizes the importance o f research, science and technology in national socio-economic development. In this context, it has established national institutional structures that support the development o f science and technology such as the National Research Council (NRC), MalawiIndustnal Research and Technology Development Centre (MIRTDC) and a fully-fledged Department responsible for science and technology Technology is generated through continuous research and development hence it calls for investment in research, technology development and 57 Malawi Growth and Development Strategy transfer. However, despite these efforts, Malawi i s extremely weak not only in scientific and technological development but also in its utilization. This weakness affects many aspects o f the socio-economic development. Integration o f science and technology in the national development planning process continues to face a number o f constraints. Some o f these key constraints are; poor coordination o f research, science and technology generation, weak institutional capacity, and inadequate fundingto the relevant institutions. Goal The long-term goal is to enhance development through the application o f science and technology Expectedmediumtermoutcomes Inthe mediumterm, it is expectedthat the following outcomes willbe attamed: Well coordinated science and technology generation and dissemination; Effective and efficient operation o f the science and technology institutions; Increased uptake on productivity and enhancement o f technologies; and Pnontised andfocused research and development. Key Strategies Establishng a National Science and Technology Commission as the apex body to coordinate all activities relating to research, science and technology; Strengthening the capacity o f research, science and technology institutions; Generating and dissemmating appropnate technology through public-pnvate partnerships; 0 Developingand commercialising science and technology in areas identifiedto contribute significantly to socio-economic development; Promoting the development and utilization o f indigenous technology through the re-introduction o f the "Malawi Award for Scientific and Technological Achievement (MASTA) and the Most Innovative Technology Stand (MITS)" at the Malawi International Trade Fair; Establishmg research funding mechanisms to promote research by individuals and institutions, including formulation o f legislation for pnvate sector investment inlocal research, science and technology development; and Designing syllabi that achieve a balance o f science and technology, arts and humanities in basic, secondary, hgher and technical education levels. 58 Malawi Growth and Development Strategy 5.5 THEMEFIVE: IMPROVEDGOVERNANCE The success of the strategies suggested in the first four themes depends much to the prevalence o f good governance. The main tenets o f good governance are issues to deal with good public sector management, absence o f corruption and fraud, decentralization, justice and rule o f law, secunty, good corporate governance, and respect o f human nghts.Inaddition, the need for political will and change o f mindset within a democratic political environment is also envisaged to contribute positively towards the attainment o f economic prospenty and poverty reduction. Malawi will, therefore, endeavour to address concerns in these areas as they underpin the achievement o f all economic growth and social development objectives in the medium term. :rnance A favourable macroeconomic environment Growth dependency on foreign aid and having low inflation rates at 5.0 %, lower generate investor confidence. interest rates, stable exchange rates, reduced Government borrowing and sustainable debts. Public Policy Free flow o f information to Public well informed to participate in Formulation consolidate democracy national development. Fiscal Eliminate distortions in Improve budget implementation Management macroeconomic fundamentals Corruption Improve donor confidence Corruption and fraud will be reduced. Public Sector Affordable, highly motivated, results Improve the delivery of quality public Management oriented and productive civil service. goods and sernces. Decentralization Improve the efficiency and Local assemblies in full control of effectiveness o f the public sector in development planning and implementation service delivery to the communities Justice and rule of Increase access to justice and More responsive, efficient and effective law entrenched rule o f law judicial authonty. Security Safe, secure and crime free nation Reducedcrime levels Corporate Increasedprivate sector investment Increased domestic and foreign investment. Governance Human Rights To increase awareness and upholding enhanced awareness and practice of human o f human nghts among all rights and responsibilities among all Malawians, particularly the most Malawians, particularly the most vulnerable through the promotion vulnerable groups. and protectiono f human rights. 60 Malawi Growth and Development Strategy The need to address concerns in all these sub themes cannot be over emphasised, as it i s evident that the achievement o f the long-term national goals i s dependent on good governance from all angles within the economy As such, it i s imperative that good governance creates a conducive environment for the implementation o f both economic and social activities. However, the deliverance o f good governance calls for collaborative efforts from all stakeholders because o f the cross cutting nature o f the issues at hand. Again, political will and change o f mindset within a democratic political environment i s also cntical if anything is to be achieved. The country will, nevertheless, endeavour to address concerns m these areas through the vanous strategies put forward and thereby contribute towards the achievement o f all economic growth and social development goals. 5.5.1 Sub Theme One: Macroeconomic Growth Macroeconomic growth in a stable political and economic envlronment is a prerequisite for sustainable economic growth and wealth creation. In the past few years, the country expenenced unstable macroeconomic environment mainly due to fiscal indiscipline. The macroeconomic fundamentals such as inflation, interest rates and exchange rates have not been suitable for economic growth and development. Interest rates still remain highto generate real investment. Inflation rates are highand fluctuating, while the Malawi Kwacha exchange rate against major currencies has been unstable and depreciating. Major challenges include the reduction o f the unsustainable Government debt, pnvatisation o f parastatals that continue to draw down on public resources, maintaining a sustainable fiscal deficit, unpredictable donor financing and external shocks such as increasingpetroleum prices. Goal The long-term goal is the attainment o f sustamable macroeconomic growth and development. MediumTerm ExpectedOutcomes In the medium term, it is expected that Malawi shall achieve a favourable macroeconomic environment with low inflation (below 5.0 percent), lower interest rates, non-volatile exchange rates, reduced Government borrowing and sustainable debts. Key Strategies 0 Improving public finance management by adhenng to the budget and good financial management systems as prescribed inthe relevant Acts; 0 Improving Government budgetmonitonng andevaluation; 0 Improving the predictability o f donor financing and holding donors accountable to their commitments; 0 Improving the environment for pnvate sector participation by reducing the crowding-out effects for pnvate sector borrowing and the introduction o f favourable tax reforms; and 61 Malawi Growth and Development Strategy 0 Improving donor-aid coordination. 5.5.2 Sub Theme Two: PublicPolicyFormulation,Fiscal Management,Public Sector Management and Corruption In Malawi, the public sector has been charactenzed by poor management that has generated inefficiencies m the delivery o f public goods and services. Government and its development partners are already addressing these challenges in the sector such as wage policy reform, civil service structure reform, capacity constraints and corruption. Despite these efforts, poor civil service incentive structures, inadequate financial and matenal resources, poor implementation structures, inadequate capacity, political interference, transparency and accountability, fraud and corruption still remain major obstacles in the medium term. In light o f this, the focus inthe medium term will be on strengthening public policy formulation, fiscal management and eliminating corruption in addition to the on going reforms in the public sector. This will be premised on strong political will andmanagement. 5.5.2.1 PublicPolicyFormulation Effective public policy formulation i s important for proper decision-malung. This requires involvement o f all key stakeholders. It i s also important that the general public has access to mformation to enhance effective participation in policy formulation. Goal The long-term goal is to promote free flow o f information to allow the public to participate effectively indecision-malung processes. Medium-TermExpectedOutcomes Inthe mediumterm it is expected that the public willbewell informedto participate innationaldevelopmentactivities. Key Strategies 0 Improving public access to timely and accurate information by establishmg community information centres; 0 Strengthening information collection, processmg, storage, retneval and publication infrastructure. This will require the procurement o f equipment for public news agencies, establish record management systems in the public sector, and introduce wire news subscnption to public institutions; 0 Enacting access to information legislation; 0 Engaging pnvate sector and other key stakeholders in policy formulation and evaluation; 0 Engaging Parliament more in constructive discussion on the national development process as outlined inthe Malawiconstitution. 5.5.2.2 Fiscal Management Good fiscal management i s important to ensure that public resources are allocated and spentonpnonty areas. This will be fundamental to achieve the targets and aspirations outlined in the MGDS. The central tool in fiscal management is the budgeting 62 Malawi Growth and Development Strategy process, which since 1995 has been based on medium term expenditure framework (MTEF). The MTEF entails an output-focused approach based on costing o f pnonty activities and projections o f available resources. However, implementation o f the MTEFhas not been satisfactory There have beenhuge vanations interms o fplanned (approved) expenditures and actual expenditures. Unbudgeted expenditures have exerted unnecessary pressures on the budget undermming the set pnonties. Sector policies have remained unaffordable and resources have ended up being spread too thinly across so many activities thereby mahng little or no impact. This only shows lack o f appreciation o f resource constraints both at political and technical levels. It i s imperative that the situation be correctedto achieve the long-term goal. Goal The long-term goal is to adhere to sound fiscal management practices by spending withinthe available financial resources. Medium-TermExpectedOutcome Inthe mediumterm, it is expected that budget implementation will be improved. Key Strategies 0 Ensunngthat resources are spent onpnonty areas; 0 Eliminating extra budgetary expenditures; 0 Adhenng to the Public Finance Management Act, Public Audit Act and Public Procurement Act; 0 Improving Integrated Financial and Management Information System (IFMIS); and 0 Linlungthe output-based budgetto the Government accounting system. 5.5.2.3 Corruption Corruption retards economic growth and development by diverting resources from socio-economic development activities into coffers o f a few It discourages legitimate business investment, and reduces the public resources available for the delivery o f public goods and services especially to the poor. Despite efforts to curb corruption, cases o f corruptionare still on the nse. The Anti-Corruption Bureau's effectiveness i s hampered by inadequate human and financial capacity in addition to the need for reviewing other related laws. One o f the main challenges in the medium term is, therefore, to ensure that corruption and fraud prevention i s improved while offenders face the law Goal The long-term goal IS to make Malawia corruption-free country Medium-TermExpectedOutcomes Inthe mediumterm, it is expected that corruption and fraud will be reduced. This will be achieved through improved transparency and accountability o f goods and service delivery and zero tolerance to corrupt practices. Key Strategies 0 Training specialised personnel in the field o f corruption and fraud to improve human capacity in such institutions o f the Anti Corruption Bureau (ACB), Auditor General and Accountant General; 63 Malawi Growth and Development Strategy 0 Promoting the accountability o f the ACB and the Auditor General to Parliament; 0 Reducing political interference in the public sector by redefining and separating roles between Cabinet Ministers and Pnncipal Secretanes; 0 Promotingtransparency and accountability inthe procurement and delivery o f goods and services by enforcing the relevant rules and regulations; and 0 Deepening the process o f devolution o f authonty and resources to local Governments in order to improve transparency and accountability 5.5.2.4 PublicSector Management Public sector management i s important to ensure effective delivery o f public goods and services. However, the public sector inMalawi i s characterised by low motivation due to inadequate remuneration, lack o f proper incentives, inadequate matenal resources, and political mterference among others. Goal The long-term goal i s that Malawi should have a highly motivated, results onented and productive civil service. Medium-TermExpectedOutcome In the medium-term, it is expected that Malawi will have a highly motivated civil service leading to improvedperformance and services delivery Key Strategies 0 Building capacity through appropnate training in the public sector for effective service delivery; 0 Appointing and promoting staffbased on ment and performance; 0 Continuing with wage policy reforms in order to raise incentives in the civil service; 0 Rationalising the civil service to ensure cost effectiveness o f the delivery o f public goods and services; and 0 Implementingnon-salary incentives performance management systems. 5.5.3 Sub Theme Three:Decentralization Malawi recognizes local Governments as key to national development and good governance. The objective is to devolve central Government powers, functions and resources to Malawians through their local authorities known as assemblies. This approach i s enshned in the Decentralisation Policy (1998) and is backed by the Local Government Act (1998). The implementation o f the programme since 2001 has met a number of constraints, which have slowed down the progress. These include weak, poor and ineffective linkages between decentralization policy and other public policy reforms, persistent power struggle and conflicts o f roles between elected members such as Members o f Parliament, Councillors and Traditional Authonties; weak institutional capacity, high turn over o f key staff like accountants, economists and other specialists, ineffective participation o f the local communities due to lack of information, knowledge and skills, and inadequate financial resources among others. However, with the advent o f popular democracy and the fact that over 80.0 percent o f the population resides in rural areas, it i s still necessary that empowerment o f people 64 Malawi Growth and Development Strategy through democracy for effective popular participation and decision malung in the development process should continue. Goal The long-term goal is to enhance decision-malung and participation o f local communities in development planning and implementation. Medium-TermExpectedOutcomes Inthe medium term, it is expected that local assemblies will have full control o f the process o f development planning. It i s also expected that there will be improvement in community participation, efficient accountability, good governance systems, vibrant monitonng and evaluation (M&E) systems, clear and strengthened linkages o f vanous policy reforms, and reduced conflicts o f roles among vanous stakeholders at the distnct level. Key Strategies Implementingfull and complete sector devolution; 0 Redefining roles o f vanous local Government players to reduce operational conflicts and promote effective contribution to the development process; 0 Establishmg a vibrant M&E system which will ensure transparency and accountability; and 0 Building capacity through training o f vanous stakeholders to enhance their participation indevelopment planning. 5.5.4 Sub Theme Four: Developinga StrongJustice System and Rule of Law The creation o f a strong legal system that safeguards the interest o f the nation and promotes the rule o f law is also a fundamental factor for achieving sustainable economic growth and development. This, among others, i s envisaged to create an enabling legal and regulatory framework that provides incentives for economic activities. The dynamics o f the modem world that brought about multi-party democracy, globalisation, regional integration, and human nghts calls for a coordinated approach to delivenng justice and respect for the rule o f law It i s with this background that all stakeholder institutions in the sector have a role to play if Malawi i s to attain its mediumterm goals. There are a number o f constraints that need to be addressed in order to develop and enforce the rule o f law in Malawi. These include shortage o f legal experts to effectively and timely handle legal cases, lack o f local capacity to train legal personnel, and high costs o f legal services. In addition, hgh cnme rates, lack o f adequate access tojustice, commitment to human nghts and lack o f respect o f the rule o f law are also cntical issues that need to be tackled. However, there are also other cross-cutting constraints that affect delivery o fjustice and respect for rule o f the law like institutional capacity, inadequate systems and procedures, HIV and AIDS pandemic, slow adoption o f ICT and poor infrastructure. 65 Malawi Growth and Development Strategy Goal The long-term goal i s to mcrease access tojustice and entrenched rule o f law Medium-Term Expected Outcomes In the medium-term, it is expected that Malawi shall have a more responsive and effective judicial authority with sustained administration of justice, increased public confidence in the judicial system and improved ability o f the pnvate sector to obtain equitable and fair settlement o f disputes inreasonable time and cost. Key Strategies 0 Improving the local institutional capacities for traming legalpersonnel; 0 Providing more court centres; with the introduction o f traditional courts with appropnate junsdiction in order to reduce time and cost for handling legal cases; 0 Improving civil dispute settlement mechanism; 0 Aligning vanous relevant laws with the Malawi Constitutionand international laws; and 0 Developing an informal legal system that i s accessible, efficient, and equitable. 5.5.5 Sub Theme Five: Security Secunty i s important in the country to safeguard human resources, infrastructure, goods and services. This is critical for creating an enabling environment for economic and social activities. Major challenges include inadequate police officers, equipment, and infrastructure. These need to be addressed in the medium term if cnme prevention, detection, and investigation are to contribute effectively towards a safe and secure Malawi. Goal The long-term goal i s to make Malawi a safe, secure and cnme free nation. Medium Term Expected Outcomes The expected outcomes m the medium term include: reduced cnme levels; improved methods o f promoting public order; and improved partnership and participation o f members o f the public on all issues o f safety and secunty Key Strategies 0 Improving the responsiveness o f police to communities secunty needs by reducing the police population ratio through recruitment and training o f more officers; 0 Promotingeffective prosecution and punishment; 0 Enhancing effective cnme detection, investigation and prevention through the provision o f adequate technical and financial support to the police; 0 Strengtheningpartnership for nsk management betweenpnvate sector and the police for protection o f businessproperty; and 0 Enhancing community mtegration and participation in crime prevention, and detection through civic education. 66 Malawi Growth and Development Strategy 5.5.6 Sub Theme Six: Corporate Governance Good corporate governance is an lmportant factor within the creation o f an enabling environment for rapid and sustainable pnvate sector development. However, it i s a relatively new phenomenon within the pnvate sector context and as such, it requires support inorder to ensure greater transparency and accountability o f companies inthe country Strengthening good corporate governance will therefore be one o f the key tools o f addressing the problem of fraud and corruption within the pnvate sector. In the past, the major problem has been lack o f the code o f good practices that would govern the operations of the private sector. This problem is now being addressed with the development of the code of best practices by the pnvate sector. In addition, the Institute o f Directors has been established so that it plays a leading role in championing corporate governance issues in the country Efforts in the medium term will therefore emphasize on the implementation o f the best practices with particular emphasis on transparency and accountability This i s expected to contribute towards reduction o f fraud and corruption inthe private sector. Goal The long-term goal is to institute good corporate governance practices in the pnvate sector. Medium term expected outcomes Inthe medium-term, it is expected that there willbereducedcorruptionand fraud, and improved investor perceptions o f Malawi as an attractive investment destmation. Ths is expected to translate into increased levels o f domestic and foreign direct investment. Key Strategies 0 Promoting the adoption o f good corporate governance code o f best practices; 0 Populansing the role o f the Institute o f Directors to facilitate the adoption o f good corporate governance code o f best practices; and 0 Mobilizing the support of the pnvate sector to facilitate the sustainable operations o f the new institution. 5.5.7 Sub Theme Seven: Human Rights The MGDS recognises the importance o f human rights within the context o f good governance and democracy A nghts based approach to development is the basis o f equality and equity, both in the distribution o f development gains and in the level o f participation in the development process. Human nghts are an integral part o f the overall national development agenda. However, awareness o f human nghts is a concern among many people in Malawi. The key areas o f concern in human nghts awareness are the nghts o f vulnerable groups and how to exercise them, and roles o f governance institutions mpromotion and protection o f human nghts. Empowenngthe most vulnerable groups that form the larger part of the population can effectively contribute to social, economic and political development of the country Inthis regard the MGDS will therefore also focus on public awareness of human nghts and acknowledgement o f human rightsresponsibilities. 67 Malawi Growth and Development Strategy Goal The long-term goal is to increase awareness and upholding o f humannghts among all Malawians, particularly the most vulnerable through the promotion and protection o f human nghts. Medium-termExpectedOutcomes In the medium-term, the expected outcome is enhanced awareness and practice of human nghts and responsibilities among all Malawians, particularly the most vulnerable groups. Key Strategies 0 Raising awareness among the most vulnerable groups about their nghts and how to exercise them, and the roles o f the human nghts bodies in promoting and protecting people's nghts; 0 Effective prosecution o f human nghtsviolation; 0 Developing an appropnate legislation and administrative framework for the protection and promotion o f human nghts; 0 Institutinghuman nghtsregulations inworkplaces; 0 Institutingeffective monitonngand evaluation ofhumannghtsissues; and 0 Integrating humannghtsin school cumcula. 5.5.8 Implementation The successful implementation o f vanous strategies suggested under this theme relies mainly on political will among other factors. Government and Parliament will have to demonstrate that policies and legislations being implemented take into account the nation's pnonties. In addition, support from civil societies, donors and the public will be key for the achievement of the long-term goals and medium-term expected outcomes through the strategies suggested in this document. The maintenance o f macroeconomic growth will be acheved through pursuance o f prudent macroeconomic policies, tight fiscal and monetary policies and adherence to targets as outlined in the MGDS. Implementation o f the MGDS will be done in collaboration with donors and pnvate sector to contribute effectively to the overall goal of maintaining a conducive macroeconomic environment. Elimination o f corruption and fraud practices within the Government and Pnvate sector circles will largely depend on the effectiveness o f the Anti Corruption Bureau. The relevant Acts will have to be revised to ensure the autonomous nature of the institution and reduce political interference. The implementation o f public sector reforms will continue inthe medium term. Also unportant is the regular review o f the wage policy reformwhose implementationwill continue. The pnvate sector will play a leading role in entrenching o f good corporate governance in Malawi. However, the civil society and public sector are the other stakeholders that will help facilitate successful outcomes of good corporate governance in the medium term. The implementation o f the strategies under justice, rule o f law and secunty will require a collaborated approach among the vanous stakeholders inthe sector. These stakeholders include Government, Law Commission, Ombudsman, Anti Corruption Bureau, Civil Society, the public and donors. This i s 68 Malawi Growth and Development Strategy especially important because of the cross cutting nature of the issues that need to be addressed. 69 Malawi Growth and Development Strategy Chapter 6 IMPLEMENTATION, MONITORINGAND EVALUATION 6.1 ImplementationModalitiesof the MGDS The MGDS has been comprehensively developed such that it allows all stakeholders to participate in the development o f the country Its implementation will, therefore, involve all stakeholders, that is, the three arms o f Government: the Executive, Parliament, Judiciary, civil society organizations, private sector and the general public. Government will take a leading role inthe implementation process through its consolidated budget. It is expected that donors and co-operating partners will align their support and activities to the MGDS. The relationship between the MGDS and the budget is central to the successful implementation of t h s strategic document. The Ministry o f Economic Planning and Development and the Ministry o f Finance will ensure that all ministries and departments align their activities and prepare their budgets in accordance with the MGDS. Budget submissions that either include activities outside the MGDS or exclude activities inside it will be rejected. The MGDS was developed with active participation o f line mmistnes, pnvate sector, civil society and donors, hence it reflects the sector strategies and pnonties to achieve the long-term vision o f the country A summary operational table that is presented in Annex 1 has been developed to guide the implementation o f the MGDS. This table represents strategies, actions and expected outcomes o f the MGDS. As conditions change dunng implementation, progress made against the activities, outputs and medium term expected outcomes will be assessed to make necessary adjustments. Such assessment will be made based on informationcoming from sector ministnes as well as other stakeholders. To ensure that the MGDS is implemented in partnership, Government will facilitate thematic teams to review progress. These teams will be inter-ministenal and include members o f civil society, pnvate sector and donors. Some of these mechanisms are already established in some sectors such as Health. These approaches will serve as models on how to develop cross sector worlung groups for monitonng and adjusting implementation. The pnvate sector will be included as an active partner in all o f the worlung groups, and especially in building strong dialogue with Government on obstacles to pnvate sector led growth. A number o f specific implementation issues have been mentioned under the five themes. The following have been identified as cntical issues that must be pursuedto achieve the set targets of the MGDS: 0 Political-will and change o f mindset. Government and Parliament should play their constitutional roles in ensunng that the ultunate objective o f MGDS i s achieved there by talung the country towards achieving the long-term goals. 70 Malawi Growth and Development Strategy 0 Government should mprove donor coordination through the development and adherence to the Development Assistance Strategy (DAS). 0 Donors and co-operating partners should align their support and activities to the MGDS. Government will lead the dialogue with donors on this alignment and seek to ensure that aid flows are predictable. On its part, it will seek to ensure that resources are disbursed ina timely manner. 0 The MGDS highlights important issues such as social protection, economic empowerment and HIV and AIDS. These issues are cross cutting and would therefore require effective coordination to avoid duplications and overlaps. In this regard, the Government will create a National Economic Committee to oversee implementation o f such cross cutting issues. 0 There is need to develop a strong and motivated civil service that will ensure that Government remains committed to its policies, targets and obligations. 0 There is need to put in place mechanisms and modalities for implementing activities that require heavy financial investments. These include development o f public-pnvate partnerships and build, operate and transfer. 6.2 Prioritization and CostingofMGDS activities Pnontization o f the MGDS activities was done in two main stages. Firstly, by the sector ministnes, departments and other implementing stakeholders. At this stage activities were ranked into three pnonty categones. Category one comprised pnonty activities that should be implemented first. Category two comprised second pnonty activities while category three the last pnonty activities. At t h s stage, all activities were costed. These costs represent a realistic estmate o f the total input cost required to implement that particular activity Secondly, activities were pnontised based on key focus areas o f the MGDS. This pnontisation isolated particular activities that would contribute to the attainment o f immediate economic benefits that would translate into the well being o f Malawians in the medium term. In addition, it also pnontisedthose activities that would accelerate the attainment o f the MDGs. Costlng o f MGDS activities was done in Malawi Kwacha at 2005/06 fiscal year prices. Some o f the activities are currently already being implemented and will continue to be implemented as they are not only necessary, but that financial resources were already committed to them. Other activities are totally new and require identificationo f financial resources to implement them. The total cost o f all activities inthe MGDS over the five years penodis estimated at K633.8 billion. Out o fthis, the total cost o f the key pnonty areas activities is estimated at K133.7 billion. However, the costs o f the Shire-Zambezi waterway project and the prevention and management o f HIV and AIDS are quite substantial hence it i s assumed that Government will contribute 10 percent to these particular interventions. The overall pnontisation o f the MGDS emphasizes Government's commitments to achieving immediate economic benefits for the well being o f Malawians. This i s reflectedby a substantial allocation o f resources towards themes on infrastructure and sustainable economic growth. The combination o f these two themes i s estimated to 71 Malawi Growth and Development Strategy get 63.9 percent o f the MGDS resources over the five years penod. This i s followed by Social development that is estimated to get 25.0 percent o f the resources. Ths emphasizes Malawi's commitment to achieving the MDGs. Improving governance and social protection themes are estimated to get 5.8 percent and 5.4 percent o f the resources over the five years penod, respectively As regards pnontisation o f the key pnonty areas, transport infrastructure development takes the largest share o f resources estimated at 54.1 percent over the five years penod. This i s mainly a reflection o f the high costs o f such infrastructure coupled with the development o f the Shire Zambezi waterway This i s followed by agnculture and food secunty at 12.2 percent. The combmation o f agnculture and food secunty, and imgation and water development yields a total allocation o f 21.O percent thus emphasizing the need for increased agncultural output through imgation development to make Malawi food self sufficient. The prevention and management o f nutntion disorders, HIV and AIDS takes 11.2 percent o f the resources. Integrated rural development and energy generation and supply are estimated to be allocated 10.lpercent and 3.6 percent respectively 6.3 Roles of key stakeholdersin the implementationof the MGDS Government: The main responsibility o f Government shall be to provide public goods and services as well as regulatory framework. These include roads, railways, airports, education, health services, and social services among others. It shall also provide the necessary environment and incentives to promote pnvate sector activities. Government shall safeguard the interests o f all Malawians by correcting market failures through policy, legal andregulatory framework reviews. Parliament: The role o f Parliament shall be to enhance Parliamentary oversight, transparency and accountability in the implementation o f the MGDS. This will be done through MPs involvement in the scrutinization, consideration and approval of Government budgets, reviewing and makmg laws. It shall ensure that the budget is being used to provide resources for the pnoritised activities in the MGDS. In this regard, the interests and pnonties o f Malawians shall be protected. Private Sector: The main role o f the pnvate sector is to invest inboth economic and social sectors to generate economic growth and create wealth. In this context, the pnvate sector shall be expected to take up opportunities outlined in the MGDS. The scope o f the pnvate sector will be widened to involve them in the provision o f other public goods and services through public-pnvate sector partnerships. Civil Society: The role o f the Civil Society in the implementation o f the MGDS i s two fold; first, to implement some specific activities particularly within the context of the Governance theme, and second, to provide oversight and accountability functions inorder to safeguard the interests ofMalawians. Donors and co-operating Partners: The main role o f donors and co- operating partners shall be to assist across the board with financial and technical resources to implementthe activities inthe MGDS. Indoing so, they will be expected to support and align their activities inline with the pnonties o f the MGDS. 72 Malawi Growth and Development Strategy 6.4 Monitoring and Evaluation The monitonng o f MGDS will be in accordance with monitonng and evaluation master plan developed by the Ministry o f Economic Planning and Development, the Ministry of Finance, the Ministryo f Local Government and Rural Development and the National Statistical Office. The stakeholders will align indicators in accordance with the MGDS themes and sub themes. A set o f impact level monitonng indicators has been developed and is presented inAnnex 5. The summary operational matnx in Annex 1 provides a summary o f objectives that can also be monitored by line ministnes and will be used in the budget discussion processes and reviews o f the MGDS to track progress toward the mpact indicators dunng implementation. The implementation framework for MGDS has taken into account all players who participate inthe decision makmg for the development o f the country NATIONAL M&E FRAMEWORK Parliament chaired by Speaker Cabinet - Chaired by President haired by CS t chaired by Director District System Cnmmittee System Committee At the Cabinet level the MGDS will be chaired by the President. The Cabmet will review the annual progress in the implementation o f the MGDS. It i s expected that vanous ministers will bnef the Cabinet based on reports on the actual outputs and outcomes o f the mplementation o f the strategy Meanwhile the Minister of Economic Planning and Development will have a detailed report on the progress o f the implementationthat will act as a back upto sectoral presentations. Pnor to the budget session of Parliament, all parliamentanans will comment on the progress o f the implementation o f the strategy The Parliament will base their debates from the mid-year development reports as well as annual development reports produced by Ministry of Economic Plamng and Development. The development report will articulate all issues outlined inthe budget that are inline with the MGDS. The Secretary for Economic Planning will present the progress report of the implementation to the entire meeting o f the Pnncipal Secretanes chaired by Chief Secretary The Pnncipal Secretanes as Controlling Officers are supposed to take necessary measures as regards to issues raised in the mid-year and annual development reports. 1 3 Malawi Growth and Development Strategy The technical committee will consist o f development partners, senior civil servants, Civil Society and pnvate sector. The technical committee will be chaired by Director o f Monitonng and Evaluation. The Chairman will prepare documentation for the Pnncipal Secretanes' meetings. The Secretary for Economic Planning and Development is expected to give an overview o f the status o f the MGDS dunng the Pnncipal Secretanes' meetings. The Monitonng and Evaluation o f Ministry o f Economic Plannmg and Development will be secretanat for the implementation o f the MGDS. In order to improve the implementation process o f the MGDS, the Government i s in a process o f developing vibrant monitonng and evaluation system. The Government i s developing capacity buildingat distnct levelto monitor all aspects o f MGDS and public sector investment plan. The Government will continue to develop capacity at sector level to monitor specific issues o f the sector. The Government will also strengthen monitonng and evaluation capacity at the Distnct and Town Assembly levels and enforce regular maintenance o f infrastructure. The annual and mid-year developments reports will be the mainproduct o fthe Mand Eofthe MGDS. Some o fthe aspects o fmonitonngwill be economic developments, infrastructure and all specific activities outlined inthe MGDS. All monitonng o f the MGDS will be coordinated by Ministryo f Economic Planningand Development. The monitonng reports will be circulated widely for information shanng as well as part o f advocacy Ministry o f Information will disseminate some o f the mformation usingdifferent methods. 6.5 NeedsAssessment Government recognize that the vanous public institutions have inadequate human and capital resource requirements necessary for the successful implementation o f the MGDS activities. As such, Government plans to build this capacity in order to mitigate their impact on the outcomes o f the MGDS. A Needs Assessment (NA) exercise for the MGDS was, therefore, undertakento determine the humanand capital resources required to successfully implement the MGDS activities. This was done in consultation with the sector ministnes and departments as well as other key stakeholders. The summary o f the Needs Assessment i s presented in Annex 4A and 4B. It is evident that both humanand capital requirements are enormous and cannot be addressed at once. Government i s committed to addressing these requirements annually through its budget. Other stakeholders such as donors and co-operating partners are expected to complement Government efforts int h s area. The human and capital resource requirements have been denved using the Needs Assessment (NA) approach which i s a goal-based planning tool developed with the objective o f determining the resource requirements in terms o f infrastructure, human and financial in order to realise successful implementation o f any goal-based strategy The resource requirements represent an ideal case scenano that would be pursued to achieve the set goals inthe MGDS. The human resource requirements take into consideration the existing; attntion; incremental number o f staff to be recruited; and additional staff to be recruited. The number o f existing staff is the stock in that year: the baseline i s the actual number in 74 Malawi Growth and Development Strategy place while the subsequent year i s a sum o f the previous year plus the attntion and the incremental staff to be recruited. Attntion i s the number o f human resources that are lost in the system either through death, dismissal, resignation and retirement. These losses need to be replaced. The incremental number o f staff to be recruited i s generated inthe model based on coverage indicators. Now, the total number o f staffto be recruited is a sum o f the attntion and the incremental number o f staff. This represents additional human resource requirement to the preceding year. The NA approach i s a medium-term to long-term and as such it has both strengths and weakness. The major strength o f this tool is that it can form the basis o f scenano based planning in terms o f malung the coverage indicators either more ambitious or less ambitious. On the other hand, the weakness o f the NA approach i s that it i s difficult to estmate the future resource requirements with certainty; the unit costs and the exchange rate are bound to change. Secondly, the NA approach is unable to estimate human resource requirementsby cadre. 75 MalawiGrowthandDevelopment Strategy MGDSCOSTINGSUMMARY SUMMARY TABLES IntegratedRuralDevelopment 1,412,750,000 1,630,500,000 2,041,625,OOC 1,986,916,667 1,521,083,333 8,592,875,000 Preventionand Managementof NutritionDisorders, HIV and AIDS'S 2,006,982,544 2,053,817,559 1,852,383,499 1,824,925,059 1,750,136,161 9,488,244,820 TOTAL ALL K NPRIORITIES 16,685,989,852 17,727,712,339 17,701,006,19e, 17,794,494,356 15,370,701 205 85,359,984,029 IntegratedRuralDevelopment 8.5% 9.2% 115% 11.2% 9.9% 10.1% Preventionand Managementof NutritionDisorders, HIV and AIDS 12.0% 11.6% 10.4% 10.3% 11.4% 11.1% TOTAL ALL KEY PRIORITIES l00.00/, 100.O~q 100.0% 100.0% 100.0% lOO.P/~ Table 6.2A: MGDSOverall Prioritizationand Costing by themes l5ThisIS10percentGovernmentContribution. 76 MalawiGrowthandDevelopmentStrategy Table 6.2B: MGDS Overall Prioritizationand Costing by themes (YO) 77 5 .- - U .b BI e! 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