Malawi Socio Economic Forum showcases growth prospects

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The Malawi Socio Economic Forum, hosted by Standard Bank in partnership with the Government of Malawi, the United Nations International Children’s Emergency Fund (UNICEF) and A4AY, a Malawian youth development agency, presented an upbeat view of Malawian growth prospects.

Policy certainty and an increasingly benign interest rate and macro-economic environment, “presented the best opportunity in decades to deal with the country’s now well documented youth challenges,” said Andrew Mashanda, Standard Bank Limited Malawi Chief Executive Officer.

With 90% of the Malawian economy based on agriculture, food production, processing, marketing, distribution and export,  Mashanda said this presented a huge opportunity to, “develop value chains and innovate youth-driven digital services and solutions harnessing agriculture for national development, skills creation, employment and global earnings.”

Dr Saulos Klaus Chilima, Vice President of the Republic of Malawi believed that “everything was now in place – from a policy and legislative perspective – to leverage Malawi’s natural agricultural advantages for domestic growth and global export.”

Despite being a relatively small, landlocked and under-developed market, Malawi’s potential market was one of the biggest in the world. Malawi has unfettered access to SADC and COMESA, as well as access to the United States market through the African Growth and Opportunity Act (AGOA). It could also access the European Union through the Economic Partnership Agreement (EAP). Other bi-lateral agreements also mean that Malawi has the potential to export to China and India.

The size of this opportunity presented a strong business case for investment in Malawi’s huge agricultural potential,” said Vice President Chilima.

Land reform, title and ownership legislation are now in place allowing investment in agriculture – along with the consolidation of small holder titles into larger commercial and mechanised farms. Responding to the impact of climate change, both the recently published National Agricultural policy  and National Irrigation policy (were aimed at, accelerating production through planned irrigation and the optimal use of Malawi’s abundant water resources. These would create, “a vibrant, year-round, domestic agricultural market augmented by regional cross-border and global trade and export,” said Vice President Chilima.

Despite this potential, however, only 1% of Malawi’s youth were considering a career in agriculture.

The recently released Malawi Youth Status Report, presented by Judith Msusa, Principal Secretary of the Ministry of Labour, Youth, Sports and Manpower Development (MoLSYSMD) also reported that 52% of Malawi’s approximately 17 million citizens were below the age of 18. Only 35% of children reached the end of primary school, and only 46% of these went on to graduate from secondary school. 53.5% of children between the ages of five and 17 were working in agriculture in rural areas, without pay. 29% of child labourers never attended school at all. Over 10% of girls were married by the age of 15, with nearly 50% married by 18. Adolescent fertility was one of the highest in the region with 177 births per 1000 girls between the ages of 15 and 19.

The report went on to recommend that the best way to deal with these challenges was to, “keep children, especially girls, in school longer, re-introduce technical subjects at secondary schools, teach entrepreneurship at community and technical colleges, provide start-up grants for new graduates and promote internship programs within businesses,” reported Msusa.

“The fact that agriculture is not seen as the answer to so many of the youth’s challenges – even though so many were already involved in agriculture – is an important perception gap that Malawi needed to address,” said Dr Joseph Yossie Shevel, President of the Galilee Institute of Management.

Dr. Shevel who has worked extensively across Africa, introducing high-tech solutions and efficiency processes in the continent’s agricultural sector, believes that, once Malawi youth realisethe huge potential of agriculture – especially its need for high tech innovation presenting opportunity for global exports – young people would flock to the sector. “The future of agriculture is in high tech innovation in an increasingly complex yet exciting global market place,” he asserted. With the right skills and infrastructure Malawi’s youth could set the country on a path to world leadership in agricultural innovation, production, financing, processing, transport, export and trade.

Rachel Sibande, founder of mHub, Malawi’s first technology incubator, added that designing, creating and building technology and digital solutions that combined Malawi’s huge agricultural advantages with its youth dividend, “required a generation of young people that were not job seekers, but rather job creators.” This requires schools to teach design and network building skills, preparing youth for a digital age.

Sibande believes that banks have a vital role to play in supporting innovation though the provision of capital. The banking sector should be looking to partner with fintech start-ups, deepening financial inclusion in Malawi where only 6% of the population had a bank account,” she added.

Mashanda concurred. “Malawi is ripe for digital disruption in a number of sectors, including financial services.”

Standard Bank had a number of platforms ready and waiting to bring to Malawi.  SHYFT, for example, a global digital wallet for Android and iOS allowed the buying, spending and sending of funds in foreign currencies, could empower Malawian farmers with cross-border multi-currency trading ability – all from their mobile devices. Other obvious opportunities for technology driven disruption, growth and new job creation are Malawi’s food distribution, agricultural advice and training and seed accessing spaces.

Government services, once digitised, also present opportunities for efficiency and growth. The payment of fines, registration of businesses, application for licences and even the electronic payment of government salaries or United Nations assistance grants – enabled on mobile – would, “reduce time and paperwork, and transport and shrinkage costs. This would have significant knock-on gains for efficiency, investment and growth,” added Mashanda.

None of this, however, can be achieved without investment in digital and ITC infrastructure. 

Malawi’s vast agricultural beneficiation and supply chain development potential is being supported by the rehabilitation of the country’s two hydro-power stations, the management of siltation in the Shire river system that powers these stations, and the maintenance and expansion of the country’s distribution grid.

Combined with one of the youngest populations in Africa this presented an opportunity for Malawi to develop a globally competitive export-led economy, “through mass youth employment in coordinated, high tech and globally competitive agricultural production,” said Andrew Mashanda, Chief Executive, Standard Bank Limited, Malawi.

In a separate interview at The Malawi Socio Economic Forum, hosted by Standard Bank in partnership with the Government of Malawi, the United Nations International Children’s Emergency Fund (UNICEF) and A4AY, a Malawian youth development agency, Dr. Saulos Klaus Chilima, Vice President of the Republic of Malawi, added that, “in addition to recently passed land reform, the legislation was now in place to allow independent power producers (IPPs) to sell power to the Electricity Supply Commission of Malawi (ESCOM).” This is expected to diversify energy supply, adding more capacity while also lessening the country’s reliance on hydro-power which proved challenging in periods of drought. While tariff structures were, arguably, currently set too low (at USD 0.8 per megawatt in a region where USD 0.11 per megawatt was the norm), “the fact that over 30 memoranda of understanding had already been signed with IPPs bodes well for increased power generation, diversity and supply,” said Mashanda.

Equally important in unlocking the country’s agricultural potential is a well maintained and efficient road and rail network linked to ports. Rehabilitation of the country’s road network is receiving attention. VALE, the global miner developing Mozambique’s Moatize coal reserves, had allocated a third of the capacity of Mozambique’s newly renovated Ncala Port to Malawian freight. Given that Lake Malawi provides a navigable waterway across two thirds of Malawi, “integrating road, rail and water transport through the rapidly developing Malawian lake port of Luwanda has the potential to link Malawi, cross-lake, to Ncala. This provided a natural gateway to the Indian Ocean for Malawi while also presenting Zambia with new access to global markets via Malawi,” explained Vice President Chilima.

Furthermore, Malawi is surrounded by three of East Africa’s fastest growing economies – Tanzania, Mozambique and Zambia – all with rapidly growing middle classes. This bodes well for the development of Malawi’s agricultural sector while also presenting potential as a services, logistics and transport hub, “once enabling legislation is in place, government efficiencies are improved, and market-oriented skills and infrastructure developed,” added Mashanda.

Tourism, mining, services and industrial production – servicing the needs of a large domestic and much larger regional market – all presented opportunities for youth in a growing economy. Growth, however, remains  key. Mashanda believed that the, “next five years are critical for developing the skills that will allow Malawi’s youth to meaningfully add to the dynamism of a growing agricultural, services and even manufacturing economy.” If, however, youth are not sufficiently engaged within the next decade, by achieving a growth rate in the region of 8 – 10%, “what is a clear demographic dividend today, might become a burden to the country,” he cautioned.

Vice President Chilima echoed this urgency, warning  that the post-drought benign interest rate and inflation environment would not last forever, “unless government acted quickly to implement its progressive economic and human development legislation.”

Implementation is key to reaching and sustaining the kind of accelerated growth levels that would turn Malawi’s youth into a development asset. To this end, “it is critical that Malawi quickly equip and enable its youth to maximise advances in technology, irrigation, beneficiation, energy, infrastructure and global access to leverage Malawian agriculture for broader economic growth,” concluded Chilima.

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Thabo Mphahlele is the BizNis Africa Head of Sales and Marketing. Mphahlele was previously MultiChoice Production Support Analyst responsible for developing and monitoring applications. In addition, Mphahlele develops and automates batch scripts and is responsible for the daily infrastructure maintenance at MultiChoice. As a Production Support Analyst, he is responsible for incident analysis solving , developing and constructing business reports for SQL and Oracle and implement change controls for the business. Additional responsibility includes monitoring system performance via SOA, Kibaba (Elasticsearch), H.P BSM, HP Sitescope. Mphahlele is responsible for creating infrastructure performance reports through HP Ops Analytics, monitoring payments via Splunk and in-house built-in tool and disaster recovery simulation and testing. At Nashua Mobile, he was responsible for application development and enhancing the web sites At South West Gauteng College, he was the IT Technician and Network Administrator. During his tenure at Double Digit Media, he was he focused on application and web site development for new and existing clients Mphahlele contributes as a Content Manager for BizNis Africa.

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