“Malawi has a 22-year infrastructure master plan - we need roads, railways and airports, and the creation of the New Development Bank will make it easier for us to access funds in future for infrastructure development,” Mutharika told Independent Media.
Malawi is one of the poorest countries on the continent, and it sees the NDB as a potential way to leverage loans with lower concessional interest rates, and without the onerous conditionalities of the World Bank. “South Africa has done well to bring African countries on board with regards to BRICS. Africa has a voice and South Africa must speak for us,” Mutharika said. For countries like Malawi, it is important to have a body that represents the interests of the developing south. Over half of Malawi’s exports are raw tobacco, and it relies heavily on it for foreign exchange. The government’s plans to beneficiate their tobacco locally has met with serious resistance from tobacco buyers who want to continue determining tobacco prices through the auction process. Tobacco is one of the few commodities not regulated internationally, and buyers decide what they are going to pay, which ends up an exploitative process.
“If Malawi can leverage financing from the NDB to process our own tobacco, we could set higher prices and export a value-added product within three to five years,” Mutharika insists.
As with tobacco, Malawi wants to beneficiate its own cotton so that instead of just exporting the raw product it can turn it into yarn, thereby developing its manufacturing sector.
“Our biggest challenge is to turn our country around from being a consuming to a producing economy so that we have value-added products to export.”
A similar refrain could be heard from many of the African leaders who attended the BRICS Plus Outreach with African leaders on Friday. For them the NDB presents an opportunity in the future to leverage loans from an institution that stands as an alternative to the Western-dominated international financial institutions.
With CNN declaring Malawi as one of the top 15 tourist destinations in the world, Malawi desperately needs development financing to improve its infrastructure for tourism purposes. “We would like to attract high-end tourists, and to accomplish that we need to build five-star hotels, improve our lake, and establish hospitality schools.” The hope is that such a vision can be achieved with the assistance of the BRICS partners through serious investment.
Under Mutharika’s leadership, Malawi has gone from a country which was virtually bankrupt four years ago when he entered office, with its deficit equalling its annual budget, and 40% of its budget coming from donor financing. Today the country is managing to finance 90% of its own budget and inflation has been reduced from 42% to 8%.
Mutharika has strictly enforced good governance, reducing his cabinet from 40 to 18 ministers.
With so many opportunities to capitalise on and a responsible government in place, the prospects for investors in Malawi are enormous. The message just needs to get out there that Malawi is one of Africa’s good news stories.