How can Malawi Prevent External Debt and sustain its economic base?
By Twinkspurge Jones Gadama……..
Honourable Members of Parliament are currently meeting in the august house as the duty has called.
As tradition during the parliamentary session the house okays the government to borrow hefty sums of money from international Money lending institutions.
This heavy reliance on borrowing has adverse effects on the social economic development of the country.
However, Malawi can adopt several strategies that can prevent her from borrowing and the following in this extract if implemented can work wonders
Initially Export Diversification is one of the strategy that can help Malawi to avoid unnecessary borrowing.
Encouraging diversification of export products can reduce reliance on a narrow range of commodities, thus decreasing vulnerability to price volatility and market fluctuations. Malawi could invest in sectors with higher value-added potential, such as manufacturing and services, while also exploring new markets for its existing exports.
Additionally agricultural Transformation is also an important factor which should be considered with objectivity.Agriculture plays a crucial role in Malawi’s economy, promoting agricultural transformation can enhance productivity and reduce food insecurity. Investing in modern farming techniques, irrigation systems, and access to credit for smallholder farmers can boost yields, create employment opportunities, and reduce the need for food imports.
Adequate infrastructure facilitates economic growth and reduces production costs. Malawi should prioritize investments in transportation networks (roads, railways, and ports), energy generation, and telecommunications. Attracting private sector involvement through public-private partnerships can help finance these projects.
Not only that but also Establishing transparent governance structures and effective anti-corruption mechanisms are essential to ensure proper allocation of resources and attract foreign direct investment (FDI). Implementing reforms that promote accountability, rule of law, and efficient public financial management can foster investor confidence. It’s unfortunate that we have institutions like ACB which are politically compromised and do not serve the purpose to which they were formed.
There is also a need in enhancing domestic revenue collection which is crucial in reducing reliance on external funding sources. Malawi can achieve this by broadening the tax base, improving tax administration systems, tackling tax evasion, and promoting the formalization of the informal sector.
Another important factor which is of crucial importance is Human capital development which is vital for sustainable economic growth. Allocating adequate resources to education and skills training programs equips the workforce with relevant knowledge and abilities, enabling them to engage in higher-value economic activities and innovation.
Enhancing financial inclusion and access to credit can empower small and medium-sized enterprises (SMEs) and stimulate entrepreneurship. Establishing inclusive financial systems, microfinance initiatives, and venture capital support can foster business growth and reduce the need for external borrowing.
In conclusion, Malawi can mitigate its reliance on external debt by promoting export diversification, agricultural transformation, infrastructure development, good governance, domestic revenue mobilization, human capital investment, and improved access to finance. Implementing these measures requires comprehensive planning, policy coherence, and collaboration among various stakeholders, including government, private sector, civil society, and development partners.
The unfortunate part is that Malawi has leaders who do prioritize on their personal enrichment and this makes the country’s purse be depleted now and then.
Feedback: Jonesgadama@gmail.com
