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DOCUMENT OF INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENTiN iERI1¶JATIOINAL DEVELOPME1N AISSOCiATiON
Not For ft-bficU
Report No. 67a-MAI
RECENT ECONOMIC DEVELOPMENTS
AND PROSPECTS
OF
MALAWI
March 30, 1973
Eastern Africa Regional Office
| This report was prepared for official use only by the Bank Group. It may not be published, quoted |.cited wAithou Ban.. k ro-- authorizatin. Th. Bar.k, Grop. d ,not 1 .a n,, r i .fo th
accuracy or completeness of the report.
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EQUIVALfN-TS
Currency
Kwacha 1 = 1 sterling 0.50Kwacha 1 = US$1.23 -(Kwacha 1,000 = US$1,230 1
Weights and Measures/2
tons = metric tons1 metric ton = 1.102 short ton1,000 kg = 1 metric ton1 kilometer = 0.621 mile1 square kilometer = 0.3861 square mile1 hectare - 2.47 acresl cubic meter = 35.3145 cubic feet
Fiscal Year
Up to 1969 government's fiscal year identical to calendar year.From April 1, 1970 fiscal year runs fran April 1 to March 31.
1h nmf iA..dhw.^h 1071 'Ihft M1- J.- L. a .i-.
i - .- '-- .- I..* 4 104& 10jI-UIL#~ U
floating pound sterling.
/2 All weights and measures in this report are given in metric
This report is based on the findings of a mission whichvisited Malawi in August, i972. The mission consisted of thefollowing members:
Hans Reichelt (Chief)Shawki Farag (Deputy Chief)Stanley Hayden (Transport Engineer)Helimuth Seidenfus (Transport Economist, Consultant)
Mr. K.G.V. Krishna participated in the mission for ashort period in an advisory capacity.
RECENT ECONOMIC DEVELOPMENTSAND PROSPECTS OF MALAWI
TABLE OF CONTFNTS
Page No.
COUNTRY DATA
SUMMARY AND CONCLUSIONS ............ .. ................ i-iv
I. THE COUNTRY AND ITS PEOPLE ..... ...................... 1
II. RECENT ECONOMIC DEVELOPMENTS ..... ............ 2
1. The Growth of the Economy . . ..................... 2Output ...... ........................ 2Savings and Investment ..................... 3Employment, Wages and Prices ............... 3
2. Public Finance ...... ............................ 53. Foreign Trade and Balance of Payments ........ ... 10
Overall View ..... .......................... 10Foreign Trade ..... ......................... 10Services, Transfers and Capital Inflows .... 11
III. DEVELOPMENT OBJECTIVES AND PROSPECTS ............. .... 12
1. Planning Machinery ............. .. ............... 122. Overall Obiectives ....................... . 133. Public Savings and Investment .......... ......... 16
Recurrent Budget .......... ................. 16Public Investment ........... .. ............. 18
IV. TRE SECTORS.... .. 24
1. Agriculture ..... 242. Manufacturing . ... .... .c-- -- 2R..... 28
3. Power ....... .................................... 334. Tonrism ............. 34
5. Transport ......... . .............................. 35
Railways .. ................................. 35Lake Transport-. .36
Civil Aviation ...... ....................... 36Transportation. Planning .......... o 37
6. Social Services ................................ 38Education and Manpower ........... 38.........
Localization ............................... 39Health ........ .............................
Housing ................................... 40
Page No.
V. BALANCE OF PAYMENTS AND EXTERNAL DEBT ........ ........ 42
1. Balance of Payments Projections .... ............. 42Exports .................................... 43Imports .................................... 45Transfers and Capital inflows .............. 46
2. External Public Debt ............................ 46Projection of Debt Service .... ............. 47
ANNEX: Major Feasibility and Preinvestment Studies
STATISTICAL APPENDIX
MAPS:
GeneralAgricultural Project AreasTransportation: Present System and Projects.
COUNTRY DATA Page 1 of 2
AREA POPULATION DENSITY.500 eq. km 4.7 million (de facto, mid-1972) 50 per sq. knm
Rate of Growth: 2.6 (from 1.966 to 1972) 100 per sq. km of arable land-
POPULATION CHARACTERISTICS HEALTH (1972)Crude 3irth Rate (per 1,000) .. Population per physician 40,000Crude Death Rate (per 1,000) .. Population per hospital bed 700Infant Mortality (per 1,000 live births)
INCOME DISTRIBUTION DISTRIBUTION OF LAND OWNIERSHIP.D of national income, lowest quintile %.. owned by top 0I of owners
highest quintile .. X owned by smallest 10A of owners
ACGGiSS 1n PIPFn WATR. ACCESS TO ETECTRICTTY% o population - urban .. % of population - urban
- rural .. -rrural
NUTRITION EDUCATION (972Calorie intake as % of requirementB .. Adult literacy ratePer capita protein intake .. Primary school enrollment 34a
u;P PMn CAPITA inr 1971: US $903 -
GROSS NATIONAL PRODUCT IN 1971 ANNUAL RATE OF GROWTH (%, constant prices)
US $ Mln. 1960-65 1965-7i.i 1971
GNP at Market Prices 399.24 100.0 7.4 15.LGroas Dooestic Investment 75.96 19.0 .. 21.0 1.6Gross National Saving 44.40 11.1 *- 10.1 23.6Urosa Dcmeatic Saving 33.36 8.4 52.0 22.5Cua-.r.ennt Ac,cont Balance -31 -. -?.. 0Exports of Goods, NFS 83.88 21.0 9.8 13.9Imports of Goods, NFS 126.48 31.7 12.6 9.9
OUTPUT, LABOR FORCE ANDPIDIICTTVITY TN 1971
Value Added Labor Force V. A. Per Wor1-e.ruS $ Nmn. 7 min. ,__ us a
Agriculture 191.72 51.2 ..Industry 76.18 20.3 .*
Services 106.85 28.5 ..Una'JA-loc a t-d = -
Total/Average 374.77 l. ...
OOVERNMZNT FINANCE
General Government Centmral C,overnmpnt.
(MX Pln.) % of GDP (MK Mln.) X of,GDP1971/72 Z197172 1968/71 1971/72 1971/72 L/ 196d/71
Current Receipts 4.. .. .. L7.0 14.7 13.9Current Expenditur .. 50.5 1.8 175Current Surplus (Defig,t) (3.5) (1.1) T,7Capital Expenditures 2 .. .. .. 31.2 9.8 9.0
te.,.alO Ass'st -.ceLC (net) .2 .. .. 24. 7 10.2
/ Land area onlyof n.ludina land classified as nrrNnaaln"1The Per Capita GNP estimate is at 1970 market prices, calculated by the sane conversiontechnique as the 1972 World Atlas. All other conversions to dollars in this table areat the average exchange rate prevailing during the period covered.
i Average compound growth rates, GDP deflator except for trade figuresIncludas debt serviceIncludes some recu.-rent expenditures of a developmental nature financed underfc,eiva aid
A/ Financial year April to March
not availablenot applicable
COUNTRY DATA Page 2 of 2
Sept. Sept.MONEY. CREDIT and PRTIC. 1965 1969 1970 1971 1971 1972
(Million Kwacha outstanding end of period)Money and Quasi Money 25.3 41.7 48.1 57.7 57.0 64.5Bank Credit to Public Sector (net) -2.2 6.5 2.7 3.2 7.1 9.0Bank Credit to Private Sector 10.2 22.4 26.9 36.7 36.6 39,3
(Percentages or Index Numbers)
Mo,ney an'. tuasi Money as 0% of GDPJ 1.1 1.3 16.8 167Oeneral Price Index (1964 = 100) 102.9 120.4 130.4 138.9
Annual percentage changes in:General Price Index +2.9 +2.1 +8.3 +6.5Bank Credit to Public Sector .. +22.2 -57.7 +15 .4' +294.4 - +26.8Bank Credit to Private Sector .. +14.9 +20.0 +36.3 + 36.6 +8.2
BALANCE OF PAYKFNTS MERCHANDISE EXPORTS (AVERAGE 1969 - 1971)-^9 97 1971
(Millions of US $) US $ Mln IL
Exports of Goods, NFS 61.0 68.6 83.9 Tobacco 20.5 40.4Imports of Goods, NFS 102.2 113.3 126.5 Tea 12.9 25.4Rnsnoure flan (dAeficit -) - 2 } Groundnuts 6.3 12.4
Cotton 2.8 5.5Interest Payments (net) -2.3 ) Others 8.2 16.3'workers: Remittances 7.6) -7.2 -1.4 Total t 100.0Other Factor Payments (net) -12.2 )Net Transfers 18.7 15.2 12.4 EXTERNAI DEBT, DEGEMBER 31, 1971Balance on Current Account -29-. -36.7 -31.6
US $ MlnDirect Foreign. Investment (-et) 50
Net M1T Borrowing ) Public Debt, incl. guaranteed 140.4Disbursements 4.8 ) Non-Guaranteed Private DebtAmortization - ; 31.7 28.6 a r,d -- .
Subtotal 4.8Capital Grants - ) DEBT SERVICE RATIO for 1971 t/Other Capital (net) 18.7Other items, n.e.i. 0.5 13.1 4.2Tncrease in Reserves (+) ..°-
Public Debt, incl. guaranteed 7.8Gross Reserves (end year) 21.6 30.0 31.6 Non-Guaranteed Private DebtNet Reserves (end year) 18.0 26.2 27.3 Total Outstanding and Disbursed
RATE OF EXCHANGE IBRD/IDA LENDING. January 31, 1973 (Million US $):
Through December 1971 IBRD IDAUS 'P i.L W - 11K U .03
MK 1.00 - US $ 1.20 Outstanding & Disbursed - 34.3Undisbursed - 14.6
Fron December 1971 to June 1972 Outstanding incl. Undisbursed - 0.9US $ 1.00 - MX 0.77MK 1 ^0 = l!S $ 1 30
Fra^ July 1972Floating with I SterlingFebruary 1972:
US $ 1.00 - MK 0.81MX 1.00 - US $ 1.23
1/ Fluctuations in Government' s indebtedness to banking system madnly due to short-term bridging finance.Ratio of Debt Service to Exports of Goods and Non-Factor Services
not availablenot applicable
February, 1973
SUMMARY AND CONCLUSIONS
i. When Malawi attained political independence in 1964. it was thepoorest of the three territories of the former Central African Federation.Unlike Zambia and Southern Rhodesia it does not possess any substantial mineralresources and, for this reason, had attracted the least interest. Infrastruc-ture had been nealected and the country did not have enough revenues to supporteven a rudimentary type of administration. Consequently, its prospects foreronomic development were generally regarded as bleak.
ii. Against this background nrogress achieved during the subseauentperiod should be considered quite remarkable. With an average annual GNP peronnitn nf lPcE thnn TTCQr) Mnlnwiti 1c ct-ill nnp nf thp nnnrect couintries in thp
world. Its recent record of economic development has, however, been impressive.This has been largely due to a dyAnmric, but nrueAnt- mn-nAoment of the economyin which both the public and the private sectors have played an important part.
iii. Agriculture for which the country is well suited dominates theeconomy, direc ly con.trib.u-r-, erefl ------ t aF (nP nA a n nr,nnt-
of export. It provides a livelihood to about 90 percent of the population.As a resultA of thIe rap"d growth ir. agricultural exportls ar.5d stm a.
GDP increased by an average of 6 percent a year between 1964 and 1971. Animportant fctor in `h grwt ofariutua -eprts was th",e cons4-deralble
AUIMJLJWL CLILL. J.L L L ±1 L.14~ 754JW LII %JL 05L6 UL~ LU.01 ~j~J L OFu .fA4.SLL 4
increase in the output of tobacco which, in turn, was the result of the appli-catiLons of sancItLions Lo RhodCesiar. UCO.U to.bacc eo .
LV. GoverLi-u,ent policies 1have concentrateu on increasing thLi'e production
of small farmers as a method of achieving broad-based growth and of upliftingthe pUULoebt partL of he population. Thle principal irnstrumient 'in this regardhas been the establishment of a number of projects in various parts of thecounitry. Most of these proJects represent an integrated approach to ruraL
development comprising elements such as bush clearing, roads, soil conserva-tion measures, agricultural credit for inputs sucn as improved seed, fertlli-zer and other chemicals, marketing, as well as education and health. Theseschemes are gradually maturing and are expected to provide the bulk of theincrease in agricultural output in the coming years. They have provedremarkably successful and the lessons drawn from them are used in similarnew schemes not only in Malawi but elsewhere in Africa.
v. The expansion of agriculture has in recent years provided the rawmaterials for processing industries and through the generation and diffusionof incomes has created a market for import substituting consumer goodsindustries. It has thus allowed manufacturing to grow rapidly, indeed at ahigher rate than agriculture, although starting from a very small base.
vi. While raising the standard of living of small farmers has been thegovernment's foremost objective, the largest portion of public sector invest-ment since 1964 has been for transportation. However, the expansion of thetransport system has been a prerequisite for raising agricultural productionand exports. Mialawi started out with a grossly inadequate transportationsystem, but massive investments in all transport modes have since eliminatedthe most serious bottlenecks.
- ii -
vii. In spite of the difficult financial situation at independence, and
the steady increase in expenditure since, the government's financial position
has improved considerably. In 1964, local revenue was sufficient to cover
only about half of the recurrent expenditures, the rest having to be ,,de up
through grants-in-aid. The scope for domestic borrowing was equally small
and nearly all of the development expenditures had to De financed Lrom abroad.
By 1972, the recurrent deficit was nearly eliminated, and rising incomes and
savings permitted a considerable proportion of the government's vastly
increased development expenditures to be financed by domestic borrowing.
viii. Most of the development budget (which includes some recurrent
expenditure items as well) still depends, however, on foreign aid. An
important aim of the government has been to diversify its foreign sources of
capital assistance. While the United Kingdom remains the most important
single source of funds, other bilateral and multilateral agencies now provide
about 70 percent of foreign aid for the development budget.
ix. During recent years, government established an effective planning
mechanism for the public sector. Since 1970, all government ministries have
operated with predetermined three-year ceilings on their recurrent expendi-
tures (net of departmental revenues) which facilitate forward planning of
their recurrent budgets independently of the annual budgets. In addition,
three-year rolling development programs provide an operational basis for the
executive ministries' development budget with estimates of expenditures and
sources of finance. This system has allowed the government to use foreign
capital to the maximum possible extent.
x. In order to lay a general framework for long-term public and
private policy, the government published in 1971 a Statement of Development
Policies - 1971 to 1980 (DEVPOL). The statement sets out the government's
policies and obiectives in the various sectors and indicates the direction
in which the economy is likely to move in the 1970s. DEVPOL is not a binding
plan and the proiections it contains are indicative planning figures rather
than specific targets.
xi. DEVPOL anticipates an accelerated growth of the economy during the
present decade without departing significantly from the past strategy of
development. The cornerstone of development will continue to be agriculture,
the notential of which is expected to be more fully utilized when present
programs mature and new ones are implemented. In the context both of past
performance and the potential of the economy DEVPOL's proiections appear,
on the whole, realistic.
xii. The accelerated development is, however, likely to be constrained
bya number of factors in the coming years. Among these are the shortage
of skilled manpower, the inadequacy of domestic savings and balance of
paymentls probl-ems.
xi. Anm port'ant constraint -n developnment is the anticinated shortage
of skilled manpower. The present system of education and training has been
slow in producing a sufficient number of skilled personnel to mnn development
projects both in the public and the private sectors. This problem is likelyto -ecome more acute as development gatheerr5s m sorent-urf, aLL the rrfUent
is required to devote more resources for education and training. AlthoughMalawi has been willing to make use of expatriate personnel, the growingshortage of the kinds of skills which Malawi will require in increasing numbersin the coming years (particularly in agricultural projects) underlines theimportance of stepped-up training of Malawian nationals. The shortage ofskilled manpower in the public sector will become even more serious if theproliferation of parastatal bodies (sometimes with overlapping responsibilities)continues unchecked. The availability of skilled manpower will also have amarked effect on the continuing ability of the government to prepare andimplement projects.
xiv. Development in the coming years could also be constrained by ashortage of investible resources, particularly of domestic savings. In 1971domestic savings financed 40 percent of total investment, and the governmentexpects that, by the end of the decade, the resource gap could be reduced to30 percent. However, the financial situation of the government will continueto be difficult since it will be called upon to finance substantially higherrecurrent expenditures, some of which have hitherto been financed by foreignaid. In the absence of recurrent budget surpluses, the principal meansavailable to the government for financing local costs of projects is domesticborrowing. While the government expects to be able to step up its domesticborrowing, this can only be done within certain limits since such borrowingwill have a decisive influence on the role of the private sector which thegovernment actively seeks to encourage.
xv. The scarcity of resources for development also highlights theimportance of proper resource allocation in the coming years. It is vitalthat investment decisions within a given sector are properly coordinatedso that they are complementary to one another. Some difficulties haverecently arisen with regard to projects in the transportation sector.Unless efforts are made to ensure that the proposed projects are in step,it would be difficult to develop a modally balanced program for the sector.
xvi. Malawi could also encounter problems with regard to its balance ofpayments. DEVPOL assumes that imports will grow at an average annual rateof 6.8 percent in constant prices during the 1970s. This rate is considerablylower than the rate, in current prices, of 14.9 percent (approximately 12percent in constant prices) during the period 1964-1971. There is still someunutilized capacity in import substituting industries which have been set upin recent years, and some scope exists for creating additional capacity eitherthrough expansion of present industries or the establishment of new ones.However, the accelerated growth of GDP and the accrual of a significant shareof the increase in GDP to income groups with a high marginal propensity toconsume are likely to lead to a large increase in imports, particularly ofconsumer eoods. Since imnorts of eanital and intermediate eooda will neces-sarily be high owing to the large projected investment, it is important toensure that the tntal vnliTm-e nf lmnnrt rcan be upnnorted by available re-sources, thereby avoiding problems on the balance of payments front.
- iv -
xvii. The constraints wnich Malawi is likely to face are not insurmountable
if the government continues its prudent management of the economy which ledto such a remarkable development since 1964. A good basis has been createdfor future growth, and the prospects for achieving such growth are now much
better than at any time in the past.
1. TkiE COUNTRY AND ITS PEOPLE
1. Malawi is a land-locked country in south eastern Africa on thewestern shore of Lake,Malawi-.--,With a land area of about 94,000 sq. km. anda population of about\4.7 million\Malawi is one of the most densely populatedcountries in Africa. It cd-nsists largely ot plateaux of about 1,500 metersin height, but the north is mountainous with altitudes up to about 2,500 meterswhile the Shire Valley in the extreme south is a low-lying flat of about 500meters above sea level.
2. Malawi has few mineral resources, and agriculture for which it iswell suited, is the basis of the economy. Agriculture contributes over 50percent of GDP and about 90 percent of the pepend directly on it.Influence'bi'y-__we-ather agric-itiural production fluctuates considerably fromyear to year thus introducing an element of instability in the economy. Mostof the agricultural crops are produced by small farmers. Smallholder pro-duction accounted for 88 percent of total agricultural output and for 64 per-cent of monetary agirictultural output in 1971.
3. Since the last population census in 1966, the population has grownby between 2.5 and 3 percent a year. 1/ Most of the people live in thesouthern and central regions which are the most fertile parts of the country.The population in the southern region and in certain areas of the centralregion have gained in number through internal migration dyJx,Sg the past de-cades. In 1966, the population density in the south was(6 S pgrsons per sq.km, in the center 42 persons per sq. km. and in the north m 4ersons per sq.km. The uneven distribution of the population partly reflects differencesin land fertility, but is also the result of historical factors which madefor an early start in economic development in the South, and the relativeneglect of the center, and particularly the north.
4. Malawi became an independent country in 1964 after the break-up ofthe Federation of Rhodesia and Nvasaland. The rulin2 Malawi Coneress Partvywhich is the sole political party, has been in power since and its machineryreaches down to the village level. Decision making is centralized and Presi-dent Kamuzu Banda exercises a strong personal influence on the life of thecountry. In 1970, the party's annual convention elected Dr. Banda LifePresident of the Republic. Parliament comprises 60 elected and 15 nominatedmembers .
5, Tn itq external rFlatinnq- the govprnment acrpnts the realitiepof the country's geographic position and the scarcity of natural and finan-cinl rvpn,,rrpc- CnncqPnuintt1v it- hnc rnI1tfivntpi fripntilv rplntinnc ith its
1/ While government, in recent years, has assumed for planning purposesa growth rate of 2.5 percent a year the UN Demographic Yearbook uses2.6 percent and a population change sample survey undertaken recentlyby the National Statistical Office arrived at a growth rate of closeto 3 percent.
neighbors-including those in southern Africa-and has been able to obtain a
considerable amount of financial and technical assistance from abroad.
II. RECENT ECONOMIC DEVELOPMENTS
1. The Growth of the Economy
Output
6. Over the period 1964-1971, there has been a continuous rise in
Malawi's gross domestic product with the exception of 1968. GDP at constant
market prices grew by an average of 6 percent per year. The annual growth
rates, however, fluctuated over a wide range reflecting the dependence of
the economy on agricultural production and consequently its sensitivity to
weather. For example, in 1968 poor weather caused a decline in real GDP, and
again in 1970, GDP increased by less than 2 percent while in 1971 it grew by
over 10 percent.
7. The growth rate of 6 percent compares favorably with that of other
African countries at a similar stage of development, and is mainly attributable
to Malawi's success in expanding and diversifying agricultural production and
exports, establishing some manufacturing industries and securing external aid
to finance an increasing volume of investment.
8. During the period 1964 to 1971, the composition of GDP has undergone
some changes resulting from a rapid monetization of the economy. Agriculture
remains the principal sector accounting for over half of the total output and
for most of its growth. The share of manufacturing in GDP rose from 8.3
percent in 1964 to 12.5 percent in 1971 mainly because of import substitution.
The construction sector has also experienced a more than proportionate growth
rate reflecting the upward trend in economic activity as well as the imple-
mentation of large infrastructure projects, particularly in the transport
sector The share of the services sector is relatively small and has been
remarkablv steady during the period reflecting restraint in expenditures on
public administration and defense, whose combined share in GDP declined from
9.4 to 7.2 percent.
Table 1: COMTPOSITION OF GDP AT CUJRRENT FACTOR COST BY SECTOR(Percent)
Sector 1964 1971
Agriculture 57.8 '52.3')
Manufacturing and Mining 8.3 12.5
Transport and Communication 3.8 5.0
Construction 3.8 4.1
Electricity 0.8 1.2
Services 25.5 24.8
Total 100.0 100.0
Source: Appendix Table 2.1
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Savings and Investment
9. At the time of independence in 1964, Malawi's total consumptionabsorbed nearly all of its GDP, and thus domestic savings were negligible.The Government had for many years incurred a deficit on its recurrent budgetwhich was financed by British budgetary support. These fr iferpaymentscaused national savings to considerably exceed domestic savings. In the qub-sequent years, Malawi has improved its savings position. Gross domesticsavings increased at an average annual rate of 14.2 Dercent from less than1 percent of GDP in 1964 to 7.2 percent in 1971. While the growth of domesticsavings is to be welcomed, the mareinal nronensitv to save of about 13 percentis still quite low. National savings increased more slowly as the fiscalposition improved and UK budgetarv sunnnrt derlinpd
10. Gross domestic investment rose at an average annuail rate of 25 per-cent; as a percentage of GDP it increased from 7.9 percent in 1964 to 18.2nercent in 1971= The share of the public sector in gross fixed capital form-ation averaged a little over 50 percent during this period. While a breakdownof anitAl formation hu sertnr i not avaIlable, there has clearly been a hIgconcentration in transport and agriculture. Because of dominance of small-cr:llr :AcyrSripitli-irr 4n thas g3nnr^mxr th1o m-n;elr4 4-1.1.@ 1- ito be relatively low (about 2.5).
11. As a result of the rapidly rising level of investment since 1964which was not accompanied by a corresponding increas in savings, Malawi'sresource gap widened rapidly in absolute terms. It should be noted, however,that -while tLhe resource gap aioune to over 90 percent of gross domesticinvestment in 1964, it declined to 60 percent in 1971.
Table 2: SAVINGS AND INVESTMENT(K Mi-llion, in Current Prices)
1964 I971 Growth Rate
(1) Gross '4vestrtlent 12.0 58.0 25.0(2) Gross domestic savings 0.9 22.9 14.2(3) (2) as percent of (1) 7.5 39.5(4) Resource gap 11.1 35.1 17.9(5) (4) as percent of (1) 92.5 60.5(6) GDP at market prices 151.4 319.2 11.2(7) (1) as percent of (6) 7.9 18.2
Source: Malawi Government, Economic Report 1972
Employment, Wages and Prices
12. Complete information on the size and distribution of Malawi's totallabor force is not available. It is estimated that about 90 percent of thepopulation derives its livelihood from agriculture and allied activities. Asystematic collection of statistics pertaining to wage employment was not
- 4 -
started until 1968. According to these statistics, wage employment 1/ rose
by about 9 percent per year between 1968 and 1971. The private sector em-
ploys about two thirds of the total wage labor force, and since 1968, its
share in total employment has been rising. The relatively slow growth of
public sector employment, in contrast to the expanding level of its activi-
ties, may be explained by efforts to ensure a more efficient utilization of
available manpower.
13. The employment of Malawi nationals is not limited to its national
boundaries. Malawians have traditionally found employment in neighboring
countries, mainly South Africa, Southern Rhodesia and Zambia. Comprehensive
statistics pertaining to Malawians working in neighboring countries are not
available, but it is estimated that there are about 300,000 of them working
abroad, that is nearly twice the total number of wage employees in Malawi
itself.
14. At present two organizations recruit labor under group contract
schemes, the Mines Labor Organization Limited (WENELA) and the Rhodesian-
A-7! -a--n Labor SupDlv Scheme. WENELA is the largest organization and
recruits labor for work in South Africa, largely for the mines. It provides
employment contracts for a period of two years at a time, which may be
renewed for another two-year period after the workers have returned to and
spent at least six months in Malawi. Under the WENELA scheme employers with-
hold 60 percent of the workers' pay. This is remitted to WENELA and trans-
ferred to the Reserve Bank of Malawi which, in turn, invests these funds
until the workers return and claim their earnings. A similar arrangement for
deferred payment is in effect under the Rhodesian-African Labor Supply Scheme.
15. The group contract schemes have provided valuable employment oppor-
tunities abroad for Malawian labor at a time when similar opportunities withinMalawi were very limited. The system of deferred navments involves compulsory
savings and results in an accrual of foreign exchange. Migrant workers' remit-
tances have been increasing, from about K4 Millinn in 1964 to K11.5 million in
1971. While employment opportunities in South Africa could well continue atthe present level, there are indi-cations that fewer Malawians would find work
in Southern Rhodesia and Zambia owing to less favorable employment conditions
i.n Southern Rodesia and nrising difficulties for f0reign workers in Zambia.
Moreover, attractive self-employment opportunities are growing within Malawi
particularly in the small farming sector. Consequently, more recently, a net
reflow of Malawian workers from Southern Rhodesia and Zambia appears to have
occurred. This is, however, a slow process and, in the foreseeable future,
a major proportion of Malawian workers (mainly unskilled and semi-skilled)will continue to be employed in neighboring countries.
1/ This data, however, being based on returns from establishments employing
20 or more workers, significantly understates the actual employment
situation. It is estimated that for 1971, more than 30,000 wage earners
were excluded from coverage.
- 5 -
16. Since 1968, the national statistical office has collected retailprice dAta for high and 1.o inco.e 4o-sebolds 4. Blantyre. TI, 4i.A4
hi.. a d8 --. n -..1lt.tJ-_~ s-. sj XA.,aI Jk--- --
which are the only price indices available, cannot be considered to becost of 1livirg indicators aicetey do not include certain exper.aes such,n ~-V *l -F, s-.OLJ .L,LL%= 4L l I4Y LI i.. I L..L '.u 6L."sA D.df
as housing, medical care, dowry and marriage settlements and personal taxes.I, thle low income index, foodstuffs hLaVe a W.-weLiLhL of 48 percent an.d .o.nse=
quently it is very sensitive to price movements of staple food items sucha mAie mea 4AnJ _d Al__ J ___I___J_1 sh _Acrn to t_es _ c__es,_ ter _ _ee _a_asu llulxCows Illt=<lL &LU l a11. t>Xt,LtL;6 LU LlUbC ±IIUU±C5 LI1ULC 1b en=L anaverage increase in prices of about 8 percent a year in the last three years.
17. Minimum wage rates are guaranteed by law to all workers. The lastgenLveraL increase in botn minimum rates and basic saiaries for civil servantstook place in 1966, when the minimum daily rates were set between K 0.325 -
^ -r r tn r l0.375 Lor thfe urban areas and K 0.233 ror the rest of the country. Since 196O,wage increases have been selective rather than general and have been grantedessentially to workers with scarce skills in specific industries, and mainlyin the private sector. The general objectives of the national wage policyare:
(i) to minimize the gap in incomes between the rural andurban sectors and consequently to reduce the drift tothe cities;
(ii) to encourage employers to use labor intensive techniques;and
(iii) to check the tendency to cost-push inflation.
The wage policy has had some success in achieving the first of these objectives.However, while wage stability has kept the cost of labor constant, it has notbeen a sufficient condition to induce employers to utilize more labor, and addi-tional measures may be required to increase employment (para. 75). As forthe fight against inflation, the rapid increase in consumer prices duringrecent years appears to have been caused mainly by temporary shortfalls inlocal production of food and the effect of worldwide increases in prices ofimported goods. While the restraint in wage increases has averted a furtherfanning of inflation, its somewhat rigid application may have reduced thereal income of a large segment of wage earners. It is, however, important tobear in mind that wage earners as a whole represent only a small section ofthe labor force.
2. Public Finance
18. The public sector consists of the central government and local au-thorities, and a number of government-owned corporations, the most importantof which are the Agricultural Development and Marketing Corporation (ADMARC),Malawi Railways, Air Malawi, the Eleussion ofal(ESCOM), the Capital City Development Corporation (CCDC), and the MalawiDevelopment Corporation (MDC). While the local authorities receive most oftheir funds from the central government, either as personal taxes collectedon their behalf or outright grants. most of the public corporations operate
- 6 -
on a commercial basis. They generally finance their recurrent expendituresthrough income from the services they provide; they meet their capital re-
atiirements through overdraft facilities from the commercial banks, loans and,
sometimes grants from the central government and their own retained profits.
19. While an up-to-date series of consolidated public sector accounts
does not exist, the arrounts of the central government reflect not only itsown financial position but also provide a fairly good picture of the finances
of the public sector as a whole,
20. At irnendence, the Malawi government inherited a very difficultfinancial position from the former Central African Federation government(table 3). A narrow tax base and a low leve1 of taxation enabled only iustover half of the recurrent expenditures to be financed from local resources,t1-, e bDalan.e being met through -rants and loans from the U.K. However, a signi-
ficant financial improvement was achieved in the subsequent years. The recur-
rent deficit, which stood at K14.6 million in 1964, declined to K3.5 million
in 1971/72 1/ when over 90 percent of recurrent expenditures were financed
from local resources. s.he reason for the im-rovement was that, while revenue
grew quickly at an average 15 percent per year, recurrent expenditures were
not allowed to increase at a corresponding rate (they rose at an averaop 7
percent per year) and thereby absorb the higher revenues. Tax income, which
'Lncreased -y over 20 percent a year, accounted for most of the increased
revenue. In turn, higher tax proceeds resulted from a broadening of the tax
base, the introduction of new taxes and improvement in tax administration
and collection. Consequently, recurrent revenue grew faster than GDP and its
share in monetary GDP at market prices 'rLcreased from 22 percent in 1964 to
over 25 percent in 1971.
21. The composition of recurrent expenditures shows a rapid increase
in outlay on social services, particularly education between 1964 and 1969
indicating the strong demand for such services during the first years of
independence. The share of social services in total recurrent expenditure
rose from 18 to 30 percent during this period while the share of public debtcharges decreased from 20 to 12 percent reflecting Lhe softening of aid to
Malawi (para 139). During the past two years the share of expenditures on
social services has stabilized at about 18 percent of total recurrent expendi=ture but the share of public debt clharges has increased rapidly to 16 percent
in 1971 and is expected to rise further to 21 percent in the present fLinarcal
year reflecting the upsurge in borrowing to finance public investment, partic-
ularly in transport (Nacala rail link), since 1969. The shares of expendi-
tures on administration and security and on economic infrastructure have re-
mained nearly constant throughout the period at about 26 percent and 20
percent respectively.
1/ As of April 1, 1970, the fiscal year changed from the calendar year to
the period ApriL.L 1. to MarchL 1.I
22. Concurrently with the improvements in the recurrent budget thegoverrnmient substan.tially inrcreased its outla for develoepmnt 1/. frnm K5.4
million in 1964 to over K30 million in 1971. The share of economic infra-structure, mainly transp tation and ag-i-1ture, in-crased Nf4-67_njEr_nt
rn-TM64-68 tor75-fe-rceq in 1969-71 but the share of social infrastructure,mainly educatiWi heanU 11,lth, dropped from 23 to 13 percent 2_. The change
in the composition of the development budget during 1969-71 is heavily in-fluenced by the outlay on a sm,all numrber of large projects, particularlythe Nacala railway link, some roads, a few large agricultural projects, andthe first phase of the new capital city.
23. Prior to and since Malawi''s independence, Blantyre, whiCh is lo-
cated in the southernmost part of the country, served as the principal fi-
nancial, commercial, transport and administrative center of the country.Some of the administrative activities were located in Zomba, some 65 km north
of Blantyre. The concentration of economic activity in the south had led tothe relative neglect of the central and northern areas. Soon after indepen-dence, the government decided to build a new capital city at Lilorgwe in theheart of the central region to serve as an instrument of national integrationand as an initial measure in correcting the regional imbalance in Malawi' seconomic development. The start of construction was, however, delayed byseveral years mainly because of protracted financial negotiations. In 1969,
South Africa agreed to finance the first phase of the construction of the
government buildings and most of the basic infrastructure. Other countriesand institutions are assisting in financing projects mainly in agriculture,
education and health in Lilongwe and its surroundings. The Capital City
Development Corporation was established in 1968 as the government's agent
to administer and supervise the construction, development and maintenance of
the city. Three ministries have already moved to Lilongwe (Works, Agriculture
and Education). The remaining ministries will move from Zomba and Blantyre in
a program phased over the next five years (para. 55). As a result, the popu-
lation of Lilongwe (the designated capital city area) is estimated to grow
from about 60,000 in 1970 to about 180,000 in 1980.
24. In the absence of any budgetary savings most of the development
outlay during 1964-71 was financed by external assistance. Throughout the
period, the United Kingdom remained the single main source of foreign aid,
both in absolute and relative terms, although of diminishing importance.
Aid from the U.K. to Malawi has gradually changed from grants to soft loans,
and from contributions to the recurrent budget to aid to the developmentbudget (table 3). In this process, total aid disbursements from the U.K.
decreased from K17 million (70 percent grants) in 1964 to K12 million (10
percent grant) in 1971/72. In the same period, aid to the recurrent budget
decreased from K14 million to K4 million and aid to the development budget
increased from K3 million to K8 million. While the U.K. reduced its aid,
Malawi was able gradually to mobilize finance from other foreign sources,
1/ In addition to capital expenditures this includes some developmentexpenditures of a recurrent nature, see para. 49.
2./ Annendix table 5.4.
both bilhater-al (mainlyn Sout-h Afrir- G(ermany and U.S.A.) and multilateral(mainly World Bank Group), so that sources other than the U.K. now provideabout 70 percent of Mala-i's external f4nance for development.
25. Domestic borrowing remained relativeplv emall throughout; but im-
portant enough to provide a local contribution to externally financed projectsa.nd to fi4 rance prects -Anich generailly do not attract edternnul financ-e The
main instrument for government's domestic borrowing are securities withmaturities ranging bet-ween t,.,o and tw>ently years (loc-aIIy registepredi sQtokI)=
The Reserve Bank issues these securities and provides a market for them,itsel holin ar. unsuscrib-eA b-alances. Th-e bankir.g-system hasc beer. hold-
.LL~. L.L LIU.LU.LLLr, iLLy UL&S~ULJL. LLuL A. nk-e-I * *1
ing about 20 percent of the local registered stock during recent years.__1] __ t _ - 1 \.._ I-1,4-- @ 1F1- A OF-# -mWl*t.1-I;appeuUix table U6.I) *utsiide LaU. UUULLr.Ll UAA .rL.A* * A} sub-_
scribers are local financial institutions such as the Post Office SavingsBank, insurance companies, anu a buildin6g siety.
-9-
Table 3: SUISU4RY OF CENTRAL GOVERNMENT FINANCES/1(K million)
1964 1968 1971/72
Recurrent Budget Revenue 17.4 29.7 47.0
Recurrent Budget Expenditure 32.0 40.3 50.5
Recurrent Budget Deficit 14.6 10.6 3.5
Development Budget Expenditure 5.4 14.0 31.2
Overall Deficit 20.0 24.6 34.7
Financed by:
External Funds 17.4 17.9 26.o
U.K. Total 17.3 14.9 11.9
Grants-in-Aid 10.0 6.4 o.6
Other Contributions to Rec. Budget 4.4 4.o 3.3
Grants to Dev. Budget 2.2 - o.6
Loans to Dev. Budget 0.7 4.5 7.4
Other Bilateral 0.1 1.2 5.7
Multilateral - 1.8 8.4
Domestic Borrowing (gross) 0.1 6.1 6.2
Other Miscellaneous and Change in Reserves(+ = decrease in reserves) ++ 7
/1 As of Apil-- 1 1970 he f'iscal year charted from wIe caleiendar year
to the period April 1 to March 31.
Source: Appendix table 5.1
- 10 -
3. Foreign Trade and Balance oI Payments
Overall View
26. Over the period 1964-1971, Malawi's merchandise exports (inc. re-exports) and imports rose at the annual rates of 13.2 and 14.9 percent res-pectively. The negative balance on the services account has almost doubledand net transfers have declined owing to the phasing out of the Britishbudgetary aid. Hence the deficit on the current account has increased,averaging about K28 million annually in the last three years. Capital in-flows have, however, been more than adequate to cover this deficit and topermit a build up of reserves.
Table 4: BALANCE OF PAYMENTS SUMMARY, 1964-1971
(K million)
1964 1965 1966 1967 1968 1969 1970 1971
Exports 24.4 28.5 34.6 40.4 40.0 43.2 47.5 58.0Imports 28.6 40.9 54.1 50.2 57.0 61.0 68.4 75.6Trade Balance -4.2 -12.4 -19.5 -9.7 -17.0 -17.8 -20.9 -17.6Net Services -13.0 -13.3 -15.3 -18.8 -21.5 -22.2 -20.5 -24.1Net Transfers 18.1 27.2 16.9 17.7 16.5 15.5 13.0 11.1Balance on Current Account 0.9 1.5 -17.9 -10.8 -22.0 -24.5 -28.4 -30.6Capital Account (Net) /1 2.4 6.1 13.4 10.3 23.6 24.2 35.2 31.6Change in Reserve -3.4 -7.6 4.5 0.5 -1.6 0.3 -6.8 -1.0
(- = Increase)
/1 Including short-term capital, errors and omissions and allocation ofSDR's.
Source: Appendix table 3.11
Foreign Trade
27. Over the period 1964-1971. domestic merchandise exnorts rose at theannual rate of 11.4 percent. The main exports were tobacco, tea groundnutsand rotton; arTnl-nt rt her for ahniot AS perre nt-4"v F tn _ i=
export-7 -clude cassava, rice, pulses, tung oil and maize. Re-exports in-crPeasPd rqnid1v frnm 8 nprcpnt to 16 nperpnt nf tntal Ponnrts hbtwppn 1964and 1971 or at an annual rate of 25 percent. The principal re-exports areZambian. tobacco, w.hich 4 c prgoccs 4in MalTai fo-r sale overseas ntrr,lp,mproducts for Zambia, road construction and transport equipment, and migrantworkers' vehicles and effects re-exported to South Africa. The UnitedKingdom purchases about one half of total domestic exports. The UnitedKingdom is a'so t..e most Xr.pr.n source* _o. 4...por. ,n.o- Uw-4 -- pp-4-
about one quarter of its requirements, another quarter being met fromSouthern LRxhlodLLesiLa an autLLL AILLc.La.
- 11 -
f.; im-r.rr whIch rose at the annuinl ratp nf 14.4 npropnt over thpe--iod shovaed important structural changes. The share of consumer goods
ci4ned frorn 1AO npe-ront in 1964 to 97 n,rnont in 1971. Thi- tfl-ts the
c tabl.ishment of e number of local industries replacing goods previouslyi-!r--tad. M.o!t cf the new consumer -oods 4nAri,aft 4 .ar basdA p-Ae ina-ntly.O imported rau materials. Some important exceptions are the manufacture ofsuga a. and b. ea resir. 4- w.,4 the n-ure or volum le cf 1-l r -aw. nti 4 s-1 --
pro-rides a localtion in Malawi with a comparative advantage, and textilesM.'_ 1. Vl- 1Le lJo.zly 6 UWULA LIjL L Ao.to-- Impos LUL - or nusral raw Umter-Lals
inc:eased by an average 20 percent per year between 1964 and 1971, and theirs1 ±-1-e 'ni tiLtal pi Lrts increased LroUL 29 toU 40 jJ percentL
.F she! FVUcL~on of intermaediaLt- U goodsU paicL L aLUULLy cet!L aLLU oLherbijilding materials, increased even faster than that of consumer goods althoughkLom a lower base. iLtermeUedate goods productLon also sluustituteu for importsbut, as rising demand outstripped local supply, imports of the former itemcontiLuej to grow rapidly during this period. Tne share of intermediate goodsindustries which, in 1964, represented 9 percent of the net output of the manu-facturing sector increased to 19 percent by 1969.
Seriricej '_ra.srers and Capital Inflows
3tSo The deficit on the services account increased from K13 million in1964 to K24 million in 1971. It is worth noting that over the period 1964-1970,out ol the total receipts on account of Malawi's migrant workers amounting toK34 million, 89% was absorbed by remittances overseas of expatriates in Malawiand payments for pensions and gratuities. The British Government's decisionin 1971 to take over the full costs of pensions to its nationals who servedin its former dependencies will have, therefore, some positive effect onMalaywi s services account. Payments of profits, dividends and interestamounted to about K54 million over the period 1964-1970 or about 48% of totalshort and long-term capital inflows during that period.
31. Net transfers have declined by 40 percent over the last seven yearsmainly as a result of the phasing out of the British budgetary aid. The bal-ance on current account has been negative since 1966 and the deficit increased,reaching about 40 percent of exports of goods and services in 1971. Net capi-tal inflows rose rapidly, however, from K2.4 million in 1964 to K31.6 millionin 1971 and were thus sufficient to cover the deficit on the current accountand to permit the maintenance of an adequate level of foreign exchange reserves.
32. Despite the decline in foreign exchange reserves in 1966 and 1967resulting from monetary expansion unaccompanied by adequate measures toprotect the balance of payments, Malawi has managed to increase its holdingsof foreign exchange between 1964 and 1971. At the end of September 1972,foreign exchange reserves amounted to K24 million or the equivalent of 2.5months' imports of goods and services. The government considers that foreignreserves are not an end in itself, but that the maintenance of reserves equiv-alent to about 3 months' imports is necessary for maintaining a satisfactorylevel of investment. given the possibility of reduced export earnings result-ing from adverse weather.
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III. DEVELOPMENT OBJECTIVES AND PROSPECTS
1. Planning Machinery
33. The private sector plays a relatively important role in the Maiawi
economy. The government affects its activities only indirectly and in a very
general way by setting the broad economic framework through its fiscal and
other policies. Within this framework, the private sector plans its activities
independently. Government plans relate, therefore, to the public sector only.
34. The highest authority for economic planning in Malawi is the National
Development Council (NDC). NDC is chaired by the President and has the ulost
important cabinet minis-ers as its members. It sets broad policy guidelines
and plays a coordinating role, but has delegated the functions of sectoral
planning and of preparation and implementation of government projects to the
Economic Planning Division (EPD) and the Development Division in the Office
oYf the President and Cabinet. Both cooperate closely with planning units in
the ministries and in parastatal bodies, and with the Treasury.
35. The EPD is responsible for advice on national economic policy,
national development planning and strategy, economic research and intelligence,
and statistical priorities. The economic appraisal of development projects
is the function of the executing agencies - ministries or parastatal bodies -
which propose them in the first instance. EPD must ensure that projects fit
into the general development strategy. Some agencies are not, however, ade-
quately staffed to handle project appraisal, in which case the EPD also ap-
praises development projects on behalf of the agencies concerned. The chief
economist in the EPD supervises the economists in the planning units of
ministries professionally. The responsibility for deciding on the projects
to be incorporated in the three-year development program (para. 61) is shared
by EPD, the execuuIve ministries and the Treasury, and is subject to final
approval by the President.
36. The Develonment Division is an administrative unit. It puts Lo-
gether approved projects and monitors their execution. The three-year devel-
opment program is a "rolling" plan, the first year of which becomes, after
approval by the President and Parliament, the following year's development
budget. The Treasury is involved at all stages in the preparation of the
government's development program to ensure that it is consistent with avail-
a-ble finar.cial resources.
37. T'he sharing of responsibilit fnr economic Dlanning among the EPD
and the Development Division in the Office of the President and Cabinet, the
planning urits in, the ministries nd t-he Treasurv has generally worked well
in the past. The separation of the largely administrative function of pro-
ject implementation from the planning and proect prepnrntinn fuinetions has
proved an efficient way of economizing scarce professional manpower. The
eLLectiveness of the planning mechanismm rests critically, hoer ournn a
thin layer of experienced officials and on the quality of the planning units
in executing agencles. Some of the ministries, such as the Min4istry of Works
13 -
and Supplies, havye beenr. thout pla,,ino units for some t4me and consequentlysome of the development projects in the government program have not been
2. rOverall Objectives
38 0. A &t, te end3 of 1971, the gover.-mer.t published a e't,,a!t-emen o' Deve'lop-.J~~~~~.J. ~~~~~L L I A LU IL. 1 7/ 1 LLJ ,VLUI 1L. JUU±LZA. LALLJULL U JV± j
ment Policies (DEVPOL) setting out its economic policies and objectives&i'n''the-a.LWOS 0=%c-3M LI..- LmUZILc.O.AL15 JL.UJ=UL-LULb uJp L 17J anUd 179u L0 L fo .L. allU pLt-
ant economic indicators and shows the direction in which the economy is likelyLto move iL t.he 17t '7s. *JJLVr%JL is nIUt iLrter.LdeU to bUe a L'LLU UdevCeloenL JLU-
gram. Its objective is to serve as a guide and general framework for govern-ment adl prLivate pouc±y UeUtb]LUu5. Vl L[ILa uasib, ailu cU1ns±uL±iLY, its p4aL
performance and the potential of the economy, the projections appear, on the-whole, reasonable.
39. Given Maiawi's resource endowment, the government's developmentstrategy would continue to concentrate on raising the productivity of smallfarmers. As in the past tne maln empnasis woula De on clearly aerinea agri-c1?TMal schemes which show the highest potential for increasing the produc-tion of cash crops. At the same time, more attention would be given toimproving the lot of farmers outside the project areas. As a result of thesepolicies, both smailholder and total agricultural production and exports areexpected to increase rapidly during the decade. Much of the expected growthin the rest of the economy would be induced by the expansion of agriculturalproduction. DEVPOL expects an average annual rrowth rate of 7.9percent 1/of the economy as a whole and 10.4 percent of the monetary economy. The non-monetary economy is assumed to grow at 2.7 percent per year, slightly fasterthan the assumed growth in population.
40. On the basis of these assumptions, per capita GNP in constant priceswould rise from about K60 in 1970 to K100 in 1980 or by about 5.3 percentper year. This projected rate is substantially higher than the averageachieved in the past (between 1964 and 1971 the average per capita growth rateof GNP was about 3.5 percent); however, if account is taken of the govern-ment's past investment in projects with a long gestation period, some of whichare now beginning to bear fruit, it does not appear to be unattainable.
41. The projections of GDP by industrial origin (table 5) show a fairlyeven growth of all sectors of the monetary economy, with little changes inthe sectoral distribution of monetary GDP. Net output of estate agricultureand public administration is expected to rise less than proportionate andtheir share in monetary GDP is likely to decrease. However, the net output of
1/ All projections are in constant 1970 prices, that is excluding the effectsof interr,al and external infdlatiL.'Lon.. Tlhey Ud, LUWeVL , take LcIhIr.ge iL
export prices into account if those are the result of changing marketconduit..ions.
- 14 -
smallholder agricul ture -ublic utilities, transpoArt AaL. rnmmminations is
expected to increase faster than the average resulting in gradual increasesln teir shares in mon.etary GPT'
A.&1 L.LLLL 1IL~ 1 rJLLa
I"ts_ c. noUt %hXIV'rADV rnD fv TMfTTCTPTT T nT2Tr. /1lau s e J) En ravz TECTIO X vOF rLVLIsAs%4 _V nlT-TM.w ...
(K million)
Average CompoundActual Projected Growth rate p.a. (7O)
1970 1975 1980 1970-80
Smallholder Agriculture 26.6 46 78 11.4
Estates incl. Government 14.5 22 28 6.841.1 68 1 9.941.1 'D 'o IUD ~ 7. ;
Mining and Quarrying 0.2 1/2 /t 26.0
Manufacturing 25.8 40 73 1.
Construction 8.5 12 19 8.4
Electricity, Sanitation and Water 2.9 5 11 14.3
Public Administration and Defense 19.1 28 40 7.7
Education 5.7 9 14 9.4
Health 1.9 3 6 12.2
Distribution, Banking 24.9 41 72 11.2
Transport and Communications 12.0 21 42 13.3
Other Services 10.1 15 24 9.0
Total Monetary GDP at Factor Cost 152.2 243 409 10.4
/1 At constant (1970) prices/2 Not including bauxite project
Source: Statement of Development Policies 1971-1980.
42. The anticipated growth in the economy will require considerableinvestment and saving efforts both by the public and the private sectors.Between 1970 and 1980, DEVPOL anticipates a doubling of domestic investmentand a more than fourfold increase in domestic savings (table 6).
- 15 -
Table 6: PROJECTED SAVINGS AND INVESTMENT 1970-1980(K million)
Annual1970 1980 Growth Rate (%)
(1) Gross domestic investment 54.6 109.0 7.2(2) Gross domestic savings 18.1 77.0 15.6(3) (2) as percent of (1) 33.2 70.6(4) Resource gap 36.5 32.0 -2.4(5) (4) as percent of (1) 66.8 29.4(6) GDP at market prices 270.9 596.0 8.2(7) (1) as percent of (6) 20.2 18.3
Source: Statement of Development Policies 1971-1980
Investment is expected to grow somewhat more slowly than GNP indicating aslight reduction in the investment ratio. This is a reasonable assumptionconsidering the unusually heavy investment in transport in 1969 and 1970.The investment ratio projected for 1980 would be about the same as the oneachieved in 1971 (18.2 percent). DEVPOL assumes that the public and privatesectors will continue to participate in total investment in about equal shares.Public sector investment in the 1970s would be mainly for infrastructure,such as transport, public utilities and the new capital city (paras. 53-56).
43. Few details on the areas of future private investment are given, buti t is likely to be concentrated in agriculture, manufacturine and housing.
I DEVPOL mentions that private companies and individuals would invest aboutl K22,million in agriculture or one fourth of the total investment in this
sector. This figure appears to be on the low side for two reasons. Itcovers only tea. tobacco and sugar, and it seems to exclude the nossibilityof any investment 'Seing undertaken by smallholders. For lack of informationa thorough assessment of the future size and distribution of private invest-
| ment is not possible. The prospects for its anticipated overall scale tomaterialize, however, are fairly good.
IL
44. BY the nature of the economyv the bulk of the private enterprise isnow concentrated in small farming. This is likely to continue since it willbe encouraged and supoorted by the nublic sector investment program. Outsideagriculture, local private capital is now found mainly in rural trade, trans-port and housing. However, loca1l entrepreneurs are gradually moving intomore sophisticated activities such as medium-scale manufacturing and urbantrade and transport, which in the past have been dominated b, foreign-o-nedcompanies.
45. An interesting example for the increasing local participation inthese tvnpe of activities is Press Holdings Ltd., a group of compari'es ow,nedby the Malawi Congress Party through a board of trustees under the chairman-ship of the President. Press Y.o1Aings starteA out n th early 196s as apublishing L* an nA. thn f I diver-publishing and printing company for the party newspaper. In 1968, it diver-
- 16 -
sified into farming (the group now owns, in partnership with ADMARC, 28estates on lease-hold land producing about 15 percent of the country's flue-cured tobacco crop), and later on into urban large-scale retail and wholesaletrade and transport. In addition, the group has important financial interestsin banking, insurance, property and processing industries. By the nature ofits ownership, Press Holdings is certainly not a typical example for an emerginglocal entrepreneurship, but its role in the economy is of growing importance.Information concerning Press Holdings Ltd., is not presently available insufficient detail to permit an evaluation of its overall performance, but itappears to have the potential for serving as a training ground for independentMalawian businessmen and managers.
46. The investments projected in DEVPOL will require a substantialamount of foreign capital. The government hopes that domestic savings wouldbecome increasingly important. Their share in total investment would in-crease from 33 percent in 1970 to 71 percent in 1980. Thus, the rescurce gap/investment ratio would decrease. but the resource gap would remain about con-stant in absolute terms.
47. The government expects that, in the coming years, the public sectorwil1 imnronup its savings nosition and contribute about 17 percent of domesticsavings by 1980. This would still entail a substantial savings effort bythe nrivate sector which, in turn, will necessitate that private consumptionwill not exceed the projected growth rate of 7.3 percent a year. Taking intoaccount the novert- of most of the ponulation and, consequently: the high
marginal propensity to consume, this will not be easy. The amount of privatesavin-s which can be mobilized depends,p however, to a large extent on the
availability of opportunities to invest, and the prospects for higher incomesin the future. Experience with aaricultural srhemes in Malawi has shown that
farmers do respond readily to opportunities offered by government in the formoce an.d input- cu,;rPled with ifmnerative cr-p pices I£ scimiT1ir
Sn O~~~~YJ ~ ~ -r----r opportunities continue to be offered not only in agriculture but also inother sectors, there ar6 reasor,ably good prospects that the amounrt of private
savings necessary to meet the anticipated share in domestic investment maylbe forth14coming.
3. P ublic SAavings and AIr.vestmenl.
RXecurrerit BIudget
408. S'lince iunepend'en1ce, ;,ie majn fLeature of' teLL pubL.c oL.seto' .L
cial position has been the inability of the government to finance its recur-rent expenditures from internal revenue. The budgetary situation is graduallyimproving. By agreement with the United Kingdom, the government has undertakento do without British budgetary aid after 1973/74, which will be the lastyear in which Malawi will receive a grant-in-aid for its recurrent budget.The prospects for reaching this target are good. In fact, in early 1972 thegovernment has announced that the current financial year would most likely bethe last one during which U.K. budgetary aid would be required.
- 17 -
49. This, however, would not mean that government wouild now be able tomeet all its recurrent expenditures with domestic recurrent revenue. In thepast, the development budget of some departments particularly the Ministriesof Agriculture and Works contained substantial amounts of expenditure of arecurrent nature connected with foreign-financed development projects andwere generally financed in part by foreign sources. Without such supportfor recurrent items the real overall recurrent deficit would have beenlarger than the deficit actually shown. With an improvement in its fiscalposition, the government expects in the future to finance a larger portionof this type of expenditure from domestic revenue and intends to shift suchexpendituize increasingly to the recurrent budget. Future improvements in thebudgetary position are, therefore, not likely to result in budgetary savingsas long as substantial amounts of these recurrent expenditures are shiftedfrom the development to the recurrent budget. In order to retain flexibilitythe government has not proiected the amounts of development expenditure to bereclassified as recurrent expenditure or the amounts of budgetary savings ithopes to 2chieve during the 1970s. It has stated in general terms that realbudgetary savings are expected only towards the end of the decade. An analysisof the development expenditures during recent years shows that about 10 Der-cent of the total development budget comprised items of a recurrent naturefor examnle extension services. To correct the Drevious accounting methodrecurrent - type expenditures have been moved from the development to therecurrent budget since 1971/72. K300-000 of such expenditures were shiftedto the recurrent budget in 1972/73.
50. The government expects recurrent revenue to continue to grow fasterthnan recurrent expenditurea wit-hn,ttt a rhangp in the pnreqpnt tax striuctu,re ortax rates. This implies a continued reliance on indirect taxation as the mainsource of revenue. Thisc is unike1rl, ton skew the tdisztributitoin of inc-me asbasic consumer goods such as staple foods are tax exempt. Revenue from in-direct taxesr m-4nlyr 4mpor-t- dutiesp ar.d a generarl sales ta,-q is expected to g-rowr
by an average of 12.3 percent a year during the 1970s suggesting an elasticityf 4i.4-1 ec tx r-e- -oF about- 1.2. Tndir.-,-t t- revenue in Maai 4i
very sensitive to changes in agricultural production. The main determinantof the buoyancy 4- recurrert reveue4 11w therefore, be the success in boost-ing agricultural production. The government does not consider an increasede.mpbhasis on direct taxation to be an appropriate t00l 4r: its fiscal policy.It considers high direct taxes a disincentive to private sector investment--- I, gi-ve, the importar. role of private invre-tment in the projections, hidSLiU A. 5.V 1i LA~ ±LU F L UL~L1L LUFL~ FA .jL.VLV L .L*L ~a tLl~*t L*- -*4~- tI ~.,. *~
imposition could thus jeopardize future economic growth.
51. In 1970, the government introduced three-year ceilings on recurrentexpL p ndLutures-f.i dU LviUual mJ nist s as a r.LW ULmIMLLU UA UUU6=LY con.ro
iandpianning. The present ceilings, which are net of income from depart-mentad.l servLces, allo-w anlU .' Eucree.s o'. Eu p----L n- 'or U'
Works and Agriculture, of 7.5 percent for the Ministries of Education andHeaLth, r percen or the university and o 4 perce or -uos oterministries and departments. The differences in increases in net expendituresallowed for the various ministries indicate the relative priorities which thegovernment attaches to the work of various government agencies. The Ministriesof Works and Agriculture are the key ministries in the government's develop-
ment effort and they will be responsible for the bulk of the developmentexpenditures ir. the future. The ooverrment is, therefore, Iiistified to allowthem higher than average increases in their recurrent expenditures. The indi-cat"ed rat"es a'-so t"ake into acodt<ditional recurrent exper.ditures resultingfrom the implementation of new projects.
Public Investment
52. DEVPOL provides a ten-year framework for public investment in thepresent decade. Tt assumes that the public sector would vest a total ofK374 million during the 1970s. On the whole, the structural composition oftbLAe p u b1ic s ec t or iL.-.ve s utme nt, p - vr-o-r&a r efe.ts g ov err.mer. t 's p rio ri4ti4e s zr.dis generally consistent with the anticipated growth pattern of the economy.
53. Agriculture as the main growth sector would receive directly about19 percent of total public sector in-vestment (table 7). ThIs share mayappear low, but as much of the outlay on transport (29 percent of publicinvestment) would be in support of agricultural activities this may still besufficient to help achieve the anticipated growth rates in crop productionprovided the investment outlay is accompanied by a sufficient expansion ofrecurrent expenditure to agriculture. As compared to the past, the patternof allocation to the other sectors snows some significant changes I/ the mostobvious of which is the relative reduction in investment in transportationand education and the relative increase in investment in the new capital cityand in health services.
1/ The public investment projections for the seventies are not strictlycomparable with the government's past development expenditures as thelatter exclude investment by parastatals financed outside the govern-ment budget mainly by reinvested profits, but include some expenditurewhich are not for investment in the national accounts terminology.
- 110
Table 8 : Public Investment, Sectoral Distribution1971-1980
Actual 1/1964-1970
K million % %
Transport 110 29 37
Roads (60) (16) (n.a.)
Other (50) (1 ) (n.a.)
Public Utilities 62 17 10
Electricity (28) (7) (3)
Water and Sewerage (14) (4) (3)
Telecommunications (20) (5) (3)
New Capital 50 11 4
Agriculture 72 19 22
Social Services 55 15 14
Education (20) (5) (10)
Housing _ (20) (5) (3)
Health (15) (4) (1)
Other 25 7 13
Total 374 100 100
C/ Central goverrLnent developm.ent expenditure2/ Excluding project housing and CCDC financed housing
Source: Statement of Development Policies 1971-1980, Malawi-GovernIment, P Ac M countl-us.
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54. As noted below (para. 94) Malawi's transport system at independencewas clearly inadequate to support the development of the other sectors of theeconomy, particularly agriculture. The government, therefore, had to devotean unusually high proportion of its development exnenditures to this sector.In addition, the government's decision to construct a second rail outlet tothe sea (the construction of the Nacala rail link)? added further to expendi-tures on transportation at the end of the 1960s. The transport sector isnow in better balan^e with the dA-lopmen.t of the rest of the Peonomy and areduced share of transportation in total public sector investment is certain-ly J ustifi.
55. The const"ruc"on of the new capital city at Lilonawe, which got
underway at the end of the sixties will require substantial investment through-out thLe present Aecade. In the process, Lilongwe is likely to become a second
growth center thus contributing to a more balanced regional growth in thecountry. Appreciable economic returns on this investment are, however, notlikely to emerge for many years to come. It is, therefore, essential to en-sure that the projected massive investment in the capitall ,ity does t lead
to a serious burden on the Malawi economy. Among the measures that appearparticularly important in thils connectLon are: (i) that domestic resourcesshould not be diverted from other pressing needs; (ii) that foreign assist-ance be obtained on the softest possible terms; and (iii) that construction
standards should be relatively unostentatious.
56. As for the investment in social services, the projected investmentin education is relatively lower than in the past while investment in healthservices is to increase substantially. Malawi, like most African countries,suffers from an acute shortage of skilled manpower and has to rely heavilyon expatriates, both within government afnd.in the private sector. The re-duced emphasis on education in the public sector investment program appears,therefore, not to be justified given the priorities of the economy althoughit would clearly be undesirable to permit investment in education to advancemore than the complementary recurrent expenditure (for teachers etc.). Thegovernment is now evaluating the results of a manpower survey which it under-took in 1971 to determine its educational policies for the current decade andtheir financial implications. On the other hand, the increased emphasis givenin the program on health shows that government recognizes the serious under-investment in health services since independence. This was caused mainly bythe government's awareness of the recurrent implications of any investment inhealth and the need to economize on recurrent expenditure. Government hasdecided on a more selective approach to health investment in the futureemphasizing expansion of preventive health measures and the provision ofhealth services to the economically active part of the population where suchservices are likely to yield direct economic benefits.
57. During the decade, the government would invest directly K224 mil-lion and an additional K100 million through on-lending to public enterprises.The balance of K50 million would be financed directly by public enterprises(table 8). The investment would be financed with about K244 million of foreigncapital and K130 million of locally borrowed funds and reinvested profits.
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58. The amount of domestic borrowing envisaged during the decade (K90million) assumes an annual increase of 12 percent in the sale of governmentmedium and long-term securities. If, as in the past, the public outside thebanking system continues to purchase the bulk of the securities, governmentlocal borrowing would largely be a transfer of savings from the private sectorand would be consistent with the aim of maintaining price stability. Whetheror not it will also be at least neutral in its effect on the balance of pay-ments will depend very much on the use to which the government puts the fundsso obtained. In addition to providing a local contribution to externallyfinanced projects domestic borrowing should mainly be used for directly pro-ductive projects with short gestation periods generating foreign exchangeearnings. Since DEVPLAN expects also a significant increase in private in-vestment this substantial transfers of savings from the private to the publicsector can only be achieved through a appreciable increase in the propensityto save. DEVPLAN's savings assumptions are, therefore, a critical elementin the overall projection model.
59. The financing plan for the public sector investment (table 8)assumes that the recurrent expenditures included in the government's develop-ment budget will be financed out of increased recurrent revenues. Thisassumption may be optimistic for the decade as a whole but it is obviouslyunrealistic for the first quinquennium. The present budgetary position andthe short-term outlook require that the increase in recurrent expenditure beheld to a relatively low level consistent with the achievement of the develop-ment oblectives and efficient administration. This would still mean thatforeign lenders should continue to finance a portion of recurrent cost arisingout of development proiects. In addition, it will be necessarv to designprojects in such a way that they become financially self-supporting as quicklyas possible. For example, for aircu-rtU-FAl Thiets this would imnlv that thefarmers benefitting from those projects be charged the full cost of the servicesprovided to them so that the additional recurrent exnpnditure is met hv Acorresponding increase in government revenue.
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'f11, . DTTflTrTV C!Vr'rA]P T70TUC1VTMTNT D~TV'
1971-1980
K Million %
Government 224 60
Local borrowing (90) (24)
External grants (10) (3)
External borrowing (124) (33)
Public Enterprises 150 40
Reinvested profits (40) (11)
Borrowing from government: 11
for new capital city (50) (13)
other purposes (50) (13)
External borrowing (10) _3)
Total 374 100
/1 Externally borrowed funds which government is on-lending to publicenterprises.
Source: Statement of Development Policies 1971-1980.
60. The total amount of about K244 million of foreign funds requiredis equivalent to about 65 percent of the public sector's investment program.This is likely to be considerably higher than the foreign exchange componentof projects suitable for external financing. External aid would, therefore,also cover a substantial portion of local cost. If government succeeds inpreparing suitable projects one can reasonably assume that bilateral sourcesmight finance about 60 percent and multilateral sources 40 percent of therequirements for external funds.
61. In its three-year rolling development programs government sets outin dptail nlanned exnpnditures on specific projects and the anticipatedsources of financing them. The current program 1972/73 to 1974/75 envisagesexpenditures of ahbout R32 millinn a year 1/ whirh is 15 nprsent higher thanthe level attained during the past three years. The sectoral composition
I. Apper.di tkabl 9.-
- 23 -
shows that the broad priorities remain largely unchanged although with thecompletion of the Nacala rail link expenditure on transportation will de-crease (from 41 percent to 15 percent of total development expenditure), whileexpenditure on agriculture and the new capital will increase (from 20 percentto 29 percent and from 9 percent to 16 percent, respectively of planned de-velopment expenditure). The heavy investment in agriculture reflects mainlyexpenditures on the large agrt-c-Itailral schemes in the L''lon'gwe, Shire andKaronga areas financed by the World Bank Group as well as Bi'tissotl2Ancedprograms with substantial technical assistance components. Nearly half ofthe planned expenditures on the new capital are allocated for the constructionof an international airport. the economic feasibility of which has yet to beestablished. The government expects to finance about 18 percent of the totalthree-year program through domestic borrowing. Of the remainder about 31percent would be financed through U.K. grants and loans, 46 percent from otherbilateral public and private funds and the balance from multilateral institu-tions, mainly the World Bank Group (appendix table 9.3). The prospects ofobtainlng funds from the sources indicated are fairly good although the for-eign capital assistance for some projects has yet to be negotiated and thenrnipFrr themselupv fully nrenared.
- 24 -
IV IHE SCT'I.ORS
1. Agriculture
62. Agriculture is the principal sector in the Malawi economy since
it accounts for over half of the total output and provides ruost of the employ~=ment. In addition agricultural commodities account for most of the country's
export earnings and provide raw materials for domestic inUustries, It is
estimated that about 5,3 Xllion_hectares (about half of the total land area)
are arable 1/ of which about 1.7 million are currently _utilized. The land
tenure system consists of three main classes: trust land, public land and
freehold land.
63. The cultivated trust lands totalled 1.4 million hectares in 1968,
and accommodated 92 percent of total population. Prior to 1967 the growth of
agricultural production was achieved by expansion of acreage. However, the
limited availability of suitable agricultural land and the large investment
which would be required to provide the necessary infrastructure for acreage
expansion, have necessitated a shift of emphasis towards achieving a rapid
increase in productivity of the areas now under cultivation. The basic ob-
jective of agricultural policy is to maintain long-term self-sufficiency in
food staples and to increase exports thirou9gha rapid rise in the agricultural
productivity of both food and cash crops.
64. The basic food crop is maize; other food crops are pulses, ground-
nuts, cassava, see, sugar and wheat. The principal export crops are
tobacco and tea', followed by groundnuts and cotton. There are also small
exports of pulses, cassava, tung oil, rice, sugar, coffee and, in years of
good harvest, maize. Smallholders account for about two-thirds of total
market production -rd 'estates for one-third. The principal estate grown
crops are tea, cerL:ain `Vari-eFties of tobacco, and sugar, while most other crops
are grown by peasant farmers.
65. Over the period 1964-1971, the subsistence component of agricultural
production declined and smallholder monetary output increased (table 9).
However, since estate output rose faster than smallholder production, the
share of smallholders in total monetary output decreased.
66. The increase in smallholder monetary output was achieved mainly
through some major development projects to increase farmers' productivity
by improved cultivation practices supported by credit for farm inputs and
more concentrated extension services. The government has carried out sev-
eral major projects of this tvDe. financed by the World Bank Group, the U.K.
and the Federal Republic of Germany. Credits from the World Bank Group cover
1/ Including land classified as "marginal".
- 25 -
the development of three areas of the country, near Karonga in the North,Lilongwe in the central region and Chikwawa in the Lower Shire Valley in theSouth. The U.K. government is financing the Dwangwa project in the Northand Palombe project in the South and the German government the Salima projectin the Central Region. Each project contains a package of services designedto meet the requirements of the particular region. For example, the Lilongweproject introduced a registration system to provide permanent ownership ofland to farmers, and helped finance land development and reorganization,marketing and storage facilities, extension services, credit for farm inputs,and administrative services and staff training on an integrated regionalbasis.
Table 9: AGRICULTURE SECTOR CONTRIBUTION TO GDP1964 - 1971 (K million - at current prices)
AverageAnnua l
1964 1965 1966 1967 1968 1969 1970 1971 % Change1964-1971
(1) Total a2ricul-ture output 84.8 99.2 107.6 110.0 110.0 118.5 129.3 145.5 8.0
(2) Non-monetaryoutnput 6L-0 71.1 78=8 78.4 79.1 R1. 88.?2 90.7 R v )
(3) (2) a % of (1) 74.3 71.7 73.2 71.3 71 9 68.7 68.2 66.7
(4) Total Monetary / AOutput 21.8 28.1 28.8 31.5 30.9 37.1 41.1 48.5 1 12.1 t
(5) SmallholdersIr,. ')1 17 ')I 0 Il.. 0 1 A ')M A q_') r £ '1 Aoutput* - I 2 . 2. 24 .2 21.9 2 2U.6 JI .V IV.0
(6) (5) as Z of (4) 72.9 77.2 75.7 76.8 70.9 70.1 64.7 63.9
7)Estates output 5.9 l 6.4 7.0 '7.3 . 11. t.,C 17.. 1.~~~ ~ ~ ~ ~ ~ *~ J* I W. I .J 2.'. 11.I1 St J I I..J' 100
( Q% f1 7 f as a _ A /A V17 .I ) 0 ). 2 A ) 1 ') 1IA I If%. n f It 4\W., %I/ O I LDA."/ -I .I LL 4.U L 9J J.L L:2. I 47 7 J.3) .). I
Source: National Statistical Office -'
67. Systematic estimates of crop production are generally not availableon a year to year basis. The Uoly reliable uata wnich do exist reiate tomarketed production of crops for both domestic consumption and exports.
Asidefrom the 'L-cUtUat i01b caused oy weatner, the production or mosE or tnecrops has, on the whole, increased steadily. However, between 1965 and 1969total marketed production of tobacco declined sharply from a record high of22.4 million kg, and the area under cultivation decreased from about 68,000nectares to 35,000 nectares. During this period the combined output ot
- 26 -
burley and flue-cured tobacco increased from 3.9 million kg to 6.2 million.kg. The expansion in production of flue-cured tobacco was in response to
a favorable market for this variety following the application of sanctions
to Southern Rhodesia, which had been a leading exporter. On the other hand,
the output of fire-cured and sun/air-cured tobacco declined fromu 18.5 million
kg to 5.8 million kg mainly as a result of sluggish world demand for these
varieties which compelled Malawi to curtail production through t-le use o'
producer quotas. With improved demand, total marketed production of tobacco
rose sharply in 1970 and 1971 reaching and then surpassing the 1965 level.
68. The Agricultural Development and Marketing Corporation (ADMARC) is
charged with the responsibility for purchasing, processing and disposing ofagricultural produce grown by smallholders on trust or customary land.
ADMARC was formed in 1970 succeeding the Farmers Marketing Board. Apart
from its marketing responsibility, ADMARC's broad purposes are to increase
the volume of exportable crops, to improve the quality of agricultural pro-
duce, and to provide and maintain an efficient system for supplying agricul-
tural requirements. In order to ensure an expanding level of agricultural
output, ADMARC provides farmers, at cost or below, with fertilizers, pesti-
cides, spraying equipment and other implements and selected seed from which
improved crops can be grown. It maintains 52 permanent markets and supplements
them with over 700 seasonal buying stations.
69. The prices paid to producers by ADMARC are fixed in consultation
with the Minis5try of Agriculture and Natural Resources before the planting
season and, in general, reflect anticipated trends in export prices. The
government's policy is to ensure that the strong fluctuations in export
prices are not reflected in the prices paid to the producers. ADMARC, there-
fore, uses part of its profits as a general price stabilization fund. While
no standard method for determining producer prices exists, it appears that
ADMARC's minimum -rices are fixed just above a level necessary to encourage
farmers to produce. The Corporation's trading account has registered a
surplus for the period 1965 - 1971 with the exception of 1967 when a loss
of K2.1 million was incurred mainly as a result of depressed world market
prices for tobacco and groundnuts. ADMARC invests its surplus profits in
development projects but there is no clear delineation of the spheres of
activity of ADMARC and the Malawi Development Corporation (para. 78).
70. DEVPOL sets specific projections for individual crops. It calls for
providing some focal growth points in the form of high productivity projects -
irrigation and settlement schemes - while attempting simultaneously to raise
the general level of productivity through extension and marketing operations.
The specific projects or growth centers are being sited at strategic points
throughout the country (map II) and they are designed not only to achieve a
high rate of direct return on the capital invested but also to have aratalvtic effect on the operations of peasant farmers in the surrounding
areas. While there could be shortfalls with regard to individual crops, onthe aogregatp the forecasts represent a reasonable target. A summary of
DEVPOL's projections of agricultural crops and the necessary investments to
realize them are shon in table 10
- 27 -
Table 10U AGRIC'ULWURAL PRODUCTION TikUMGETS DAri-j ilNVESLTME1Ai, 1970-1980
Production InvestmentCrop 1970 1975 1980 (K Million)
Tea (Million kg.):Estate 17.2 21.1 24.0 9.0Smallholder 0.4 0.5 2.0 2.0
Tobacco (Million kg.):Fire and Sun/Air Cured 11.8 15.9 18.1 1.0Flue Cured 4.5 7.7 9.1Burley 5.4 7.7 9.1 (
Maize ('000 tons) 1,153 1,257 1,599 (
Groundnuts ('000 tons) /1 27 65 100 ( 20.0
Cotton ('000 tons) 21.3 38 57 10.0
Rice ('000 tons) /1 10 33 109 16.0
Other Crops - - - 5.2
Livestock, Beef Production('000 tons) 7,120 9,433 12,335 2.0
Fisheries ('000 tons) 24 48 36 1.0
Forestry (govt. sales, in'000 cu. meters) 11.9 22.4 25.2 3.0 /2
TOTAL INVESTMENT 1971-1980 83.20
/1 Amounts marketed throueh ADMARC./2 Excluding processing.
Source: Statement of Development Policies 1971-1980
71. The realization of the production targets in the agriculturalsector w-11 denpnd nn the scires nf the cnuPrnmnPnt in se.uring external aid,the availability of domestic resources including trained manpower and theavailability of export mnarkets (nvarA. 130-iiiN. There aht-Aaae in allcategories of staff for the agricultural services in Malawi, and trainingfacilities are qui-te limited F 1072, the Burda College of the Mir.stryof Agriculture will produce about twelve degree level graduates in agricul-ture a year with t W. result thst most of tl hseni-or prr-ofessior.sl pWosts Wd' I I
continue to be held by expatriates during most of the 1970s. Technical
- 28 -
assistants are trained in the Colby College of Agriculture which has an annual
output of about 125; this is considered inadequate, and the Government is
planning the creation of a natural resources college to train more staff in
this category.
72. In addition to the financial and manpower considerations there is
the question of maintaining and increasing extension services. Until this
year, the British government financed general extension services as part of
the development budget in Malawi. However, the U.K. has now decided that
its development assistance should be in the form of capital aid for well-
defined projects. The mnlawi government is thus faced with the problems of
financing a greater portion of general extension services out of recurrent
revenue (para. 49).
73. T~Litle is knm-,n about the efficiency of investmnent in the integrated
rural development projects which Malawi has embarked on in the last few years,
and their im,.pact on the surrounding areas. The World Bank is currently under-
taking a survey on the performance of the Lilongwe rural development project
as part of a wider study on African rural developmeent which mav throw somelight on these issues. To investigate them more fully a comprehensive studywould be required. Thils should, for example, consider the income distribu-
tional aspects of these projects in which, until now, beneficiaries have not
been chargeA the full cost of the services provided. Tt should also investi-
gate possibilities of accelerating the eventual handover of these projects tro
l.ocal institutions a,d com-pare th.em mong them-elves in termeR of eost effec.-
tiveness.
2. Manufacturing
74. Although the share of manufacturing in. GDP is still small (12.5
percent in 1971) it is among the mlost rapidly growing sectors of the ec.uy.
Until a few years ago manufacturing industries served miainly to procass
agricultural commodities for local consum-ption arid export. Recent y, scveral
large new industries have been established producing consumer goods for the
domestic market. Tneir establishment was the miain factor res-Ponsi1ble for the
rapid growth of the sector averaging 12 percent p.a. in constant prices since
1964. Between 1964 and 1969, the net output of large consumer goods indus-
tries grew by an average 24 percent a year and their share in total manu-
facturing production increased from 19 percent in 1964 to 40 perceent in 1969,
(more recent figures are not available) replacing goods which were previously
imported, notably textiles, footwear, sugar and beverages. Export industries,
based on local supplies of agricultural products grew by an average 6.9 per-
cent a year between 1964 and. 1969, but their growth was not steady owing to
fluctuations in agricultural production caused by weather. The relative
importance of export industries within manufacturing decreased, however, as
expressed by their share in total net manufacturing output which cropped
from 23 percent in 1964 to 14 percent In 1969.
- 29 -
Table 11: NET OUTPUT OF MANUFACTURING INDUSTRIES(K million)
1964 1965 1966 1967 1968 1969 1970 1971
Large-Scale Industry
Consumer Goods Industries 2.3 2.9 4.6 5.9 9.0 10.9 )Intermediate Goods
Industries 0.5 0.9 1.8 1.9 2.8 3.6 )Tea Manufacturing 1_0 1.1 1.2 1.4L 1.7 1.6 )Tobacco Manufacturing 1.7 1.8 2.8 1.8 2.0 1.7 )n.a.Other Export Idustries 0.2 0.4 0.2 0.4 0.3 0.7 )Total Export Industries 2.8 3.3 4.2 3.6 4.0 4.0 )Total Large-Scale 5.6 7.1 10.7 11.5 15.7 18.4 )
)25.8Sm"all=1.Scale M4onetar,y 2.1 2,.n 9 .Q AX....... 1,.Q 14 I)I
ou.aJ, ot.,c rt,,u~Las., - .I ~ r. I. - * -' U
i IU1LL 4d.J. .5. 5 6 a .. J J..J. 6 .1_ J _ i
Total 12.1 15.3 1n 17 23. 0 27.6 3. 310 214.L. a.L IL J J U1L * i dJ..J V If I U ..J !.1 I
Sources: National Statistical Office, Annual Survey of Economic Activities(Larger Establishments) 1969; Economic Planning Division, EconomicReport 1972
75. The government has actively supported the past growth in manufacturingboth by promotion and direct financial participation. Incentives includethe granting of exclusive production licenses, tariff protection and, inrare cases, quantitative protection against imports. Import duties averagedabout 16 percent in 1971, with nominal rates of about 60 percent on fuels,30 to 40 percent on consumer goods and zero to 5 percent on capital andintermediate goods (appendix table 3.3). Customs duties rebates are offeredon dutiable industrial raw materials and special depreciation allowances oncapital expenditures. The role these incentives have played in attractingnew industries is difficult to assess. The natural protection providedby the transport cost on imported goods, the growing internal market andliberal regulations on profit remittances have been as important in attract-ing new import substituting industries as protection from foreign and localcompetition. The fiscal incentives offered in the form of depreciationallowances have probably only marginally influenced the pace of industrialdevelopment, quite apart from their possible undesirable side effect of en-couraging capital intensive techniques. An incentive system tying the grantingof fiscal relief to the use and the upgrading of local labor would be more inline with the country's resource endowment and would at the same time furtherthe government's declared goal of localization of high-level employment.The government, therefore, recognizes that it will have to review the questionof investment incentives in the near future.
- 30 -
'76. In 16,governm.'ent formed the Malawi D-velopm.ent -rpo-atiJ- (MrNC
to promote the development of industries through direct financial participation.
M)C, whilich Jis responsib.le Lto thL'Le President, finances pro4e.*S in agriculture,
manufacturing and services through equity and loan capital, generally jointlywith foreign- sponsors. If those are not forthcom,ing MDC may also establishventures on its own. MDC was originally founded as a statutory body butdn 17u'ts legal- status was ch-angedu to t1nat ofaL- limteWlibiit Fco-,pay£1 IY / U ± ~I d LLU W~~II~UL UL Ui i £LL .J.L 1m n
with the government as the sole shareholder. Its main investments are in thePortland Cement Company (Malawi) Ltd., Carlsberg Malawi Brewery Ltd., DavidWThitehead & Sons (Malawi) Ltd. (integrated cotton textile mill), Malawi HotelsLimited and the Import and Export Company of Malawi Ltd. (IEC) . IEC wasestablished in 1970 to provide rural areas with consumer goods thus replacing
Asian traders whc by legislation are noiw conifined to tow-ns anu traUding centers.
The take-over of rural retail business by IEC caused a temporary shortage ofconsumer goods in rural areas which is now being overcome. At the end o' 1971',}DC had an authorized share capital of K5 million about half of which was paid
in. In addition to equity and reserves the corporation is capitalized with
loans of about K3.6 million from various local and foreign public and private
sources. Although fDC is primarily participating in financially viable pro-jects, because of its public ownership social considerations are also important
in its investment decisions. For example, MDC takes into account the employ-
ment effect of projects and, if there is a choice, it favors investment in
regions which have hitherto lagged behind. MDC also undertakes pilot opera-
tions which may lay the ground for important full-scale projects in the future
but which may have a long leadtime and involve high risk factors. Tlis ex-
plains why the overall rate of return on its investments has been relatively
low. In addition, liquidity problems have prevented it from generating suf-
ficient funds to finance new ventures.
77. The government is presently reassessing the role of MDC which until
now has been the :.ain vehicle of direct state participation in the economy.
Even more than in the past, government expects MDC to concentrate in thefuture on socially desirable projects which may become commercially viableonly in the long run. For purely commercial projects a new development
finance corporation (INDEBANK) has recently been formed with an initialcapital of K4 million, held in equal shares by the Malawi government, andthe British, German and Dutch public aid corporations. INDEBANK is designedprimarily to finance joint ventures between foreign and local partners withemphasis on medium and large-scale manufacturing, but also in agriculture
and the services. The Agricultural Development and Marketing Corporation
(ADMARC) is representing the government's interest in INDEBANK.
78. In addition to its primary function of marketing smallholders'
crops, ADMARC is increasingly taking an interest in agricultural processing
industries. In this regard, there appears to be some overlapping with the
functions of MDC which, according to its redefined role, emphasises the
preparation of and investment in slowly maturing activities, including agri-
cultural processing. A clear delineation of the functions of both organiza-tions is missing and given the scarcity of skilled personnel and financialresources Malawi can ill afford the resulting duplication and competition
within the public sector.
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79. The obvious opportur.tie for establishir. import ubstitutirg
industries have now been taken up. Future growth of consumer goods indus-4i e s i. ll -ainly tla ke the k f.o U Jf expan.non anr.d so0m .e.. V, e r. -S Lfl -a.t*o n of
existing industries accompanying the growth of the domestic market. TheanL..tici pateJ.d gro-W.h iL.L 1n agr4culturall product.ion wll. require aAA ir pro=
cessing facilities which are thus likely to contribute the bulk of thelr,crease in ma,.ufacturir.g ir.vestment and outp-tJLS.L aa .Ln UJ1LLU.LCt%.LUJ.LJ.L15 LLV=~Li16 L. L LU JU jUL.JJA_
80.I Lt: l There are, ho-wevrer, Lwo pJ ctLs WLLhich h1aV beenU ULIU,L d ULLc.LUCLdeLIOLI
for some time and which, if found feasible, could eventually lead to verysubstantial investmIienL in manufacturing and radically change the structureof the sector. These are a wood utilization project in the Vipya highlandsof northern Malawi and a bauxite project in Lhe Mulanje mountains in the soutn.The Vipya project involves the utilization of forests which the governmenthas planted with U.K. assistance since 1964. A pre-investment study for tnisproject is now being carried out with finance from UNDP and the World Bankas Executing Agency (annex, p. 2). If the study proves that the projectis feasible a sizeable investment would be required to establish a woodprocessing industry which would be geared mainly to export markets.
8i. Tne Mulanje proJect would be based on the utilization ofthe vast bauxite deposits which have been known to exist. Preliminarystudies including smelting tests have indicated the technical feasibilityof processing the bauxite either to alumina or aluminum. The financialviabiiity, however, rests on the availability of cheap power and transport.Before a decision on this project can be taken, and after the results oftechnological tests presently being undertaken are known the governmentintends to carry out a comprehensive feasibility study for which it mayrequest UNDP financial assistance. Although this major investment wouldbe of an enclave nature with few linkages to the rest of the economy, therewould be important benefits accruing to Malawi mainly in the form of taxrevenue to government, the employment directly generated by the mining andprocessing facilities and the net foreign exchange earnings.
82. The anticipated rapid growth of supply-based industries willaffect the locational distribution of industries in the coming years. Atpresent, manufacturing industries are concentrated in the Blantyre-Limbearea, close to the main markets for consumer goods. Although southernMalawi is likely to remain the most important commercial and industrialcenter the increasing weight of supply-based industries as well as thegrowth of the new capital at Lilongwe may give rise to new centers ofindustrial activity further north. Government uses its licencing policyas a tool to induce new industries to locate in centers other than theBlantyre area, although so far without much success. It may be desirablefor the government to consider additional fiscal incentives to footlooseindustries to make a location in the central or northern regions moreattractive.
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83. The government's proiections assume that onlv one 1! of these twomajor projects will materialize in the second half of the decade. On thisbaAis, which is nrnhably realistic given the present state of information.the manufacturing sector is projected to grow at an average annual rate of10 nperrent until 1980- Tt is estimated that this would require a totalcapital investment, not including infrastructure, of K72 million or about10 nperpnt of thp total rnnital formation in the monetary sector, Bv the
end of the decade, the share of the manufacturing sector in GDP would haveincreased to 15 npvtrnt in 1980 (12.6 percent in 1970).
84. As in the past, the bulk of the inuvetment in manufacturing islikely to be financed from private sources. The government expects privatecap.tal for the expa-4- ar.-A Aj-ersf4catin of existinc entea0rprises =4iXl
from retained profits. Any large new venture would require a sizeable inflowof finance from overseas. In a recent statement the govern-ment has reAdf4nedits policy concerning state participation in foreign-owned companies. Ac-corLdLn 6 oJ tLLis Cs t atemen, tle gov rn mLentl S iSn-ACO Lt t+V-Ll*t . .L0 frit
policy of not participating in foreign-owned companies by purchasing sharespresently held by ex.pa.riate as th4s would involve a ilrect or 4inArectoutflow of existing capital. Thus, it would participate in any company onlybyI) ±UJeL± add'itiUonLUa.L cap'Lt±al.
LJJ . 110 rUV0 L&LUIROL L ==LLU bLJ 6AV= LUJL V - L.%.i&1L±LU1l L'J 16L.VC. L nF.L- "X&
indigenous entrepreneurial class. Locally owned businesses in manufacturingare nearly exclusLvel'-y operated or. a s -mall scaLe and ger.erally lackfinancial resources and advanced technical and managerial knowhow. Anannual sample survey of small companies undertaken by the statlstical officeshows that the role of small scale industries in manufacturing is neverthelessimportant contributing over 10 percent to monetary produccion oI manufacturinigand a much larger share to employment. The government is now preparing acountry wide inventory of small-scale business as a first step in setting upa program to promote small-scale local entrepreneurs. In the meantime, theExport Import Corporation is preparing for a first industrial estate atLiwonde. A successful program will eventually have to combine businessextension services with financial assistance, very similar in its approachto the promotion of smallholder farmers. However, the program to promotesmall-scale industries receives a low priority in the government's overalldevelopment efforts. This is reflected in the projections of DEVPOL. Be-tween 1970 and 1980, they anticipate a slower growth in net output otsmall-scale industries than of the sector as a whole so that their share intotal monetary manufacturing output would decrease from about 18 percent in1970 to less than 14 percent in 1980. Small-scale industries are generallyhighly labor-intensive and their promotion would be in line with the existingrelative opportunity cost for labor and capital in Malawi. Their developmentshould therefore, receive a higher priority in the government's program.
1/ DEVPOL assumes the Vipya project will materialize. The projectionsafter 1097 woulA I.ve toJ be -A4Ju.e if ner t-h of the tJwo large
projects were implemented.
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3. Power
86. Malawi s a country rich in water resources. The falls and rapidasof several rivers offer a source of power which can be harnessed to provideelectric4ty at low operational .osts and without dependerce upon costly 4ported fuel. Lake Malawi, the third largest lake in Africa, forms a giganticnatural- reserv-oir -wh1-ich. dischlarges at- 4ts southerr. enA into Malaw4'sprr~ J. ~ V 'LL WIL.I.flJ ~I .L J5LLL 1-11 %A4 A.L L. J JL.L~WJ. Z: JJL ±LL&
cipal river and major source of potential power, the Shire. In the centralaand northern regl1-ons soLie of tLie r'Lvers -whlich discharge into Ia1LaJLet Mala-wiare also known to possess hydro electric potential. The generation and dis-tribut-on of electricity i1n Malawi are the UonLopoLy OL f the Electricity SupplyCommission of Malawi (ESCOM), a statutory body.
87. The demand for electric power has grown at an annual rate of 20percer,t since Lindepenidence due largely to the growth of manufacturing indus-try and increased use of irrigation in agriculture. To meet the rising de-mand, one of the first major projects embarked upon by the Malawi government,was the Nkula Falls hydroelectric scheme. Its first stage had an initialcapacity of 16 MW which was later expanded by a further 8 MW. A 66 KV trans-mission line connecting the southern power system to Lilongwe is carryingelectricity from the NKula Falls to this town during "off-peakt" hours.Another scheme at Tedzani designed for an initial capacity of 16 MW is underconstruction and ESCUM is preparing its extension to 40 MW.
88. Tnere are no definite plans to develop power in the northern regionduring this decade. The provision of electricity in the northern region maynot appear economical at present, but its justification may,form part of theoverall case ,for rural electrif-ication; and the availability of power couldincrease the scope for irrigation particularly on the lakeshore plains andhence facilitate hi'ghr.gricultural production. The question deserves,therefore, thorough investigation as to its costs and benefits.
Table 12: PAST AND FUTURE POWER CONSUMPTION
1965 1970 1975 1980
Units generated (Kwh mn.) 52.4 131.7 227 373Annual average growth rate - percent 10.5 20.5 11.6 10.5
Source: Appendix table 7.1 and Statement of Development Policies 1971-1980.
89. DEVPOL projects a 10 percent growth rate in the demand for powerover the 1970s. However, the demand would increase sharply if the proposedVipya pulp and paper scheme and the Mulanje bauxite scheme (para. 80) ma-terialize. For the Vipya scheme, additional supplies of power can be madeavailable by exploiting the considerable potential of the rivers in thenorthern region. For the bauxite project a multiple of the existing capacity
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will be neded if 4t is decided to nrodune refined aluminum. This could be
provided either by major extensions to the hydro electric plants of theShire river, which has a potential of about 500 MW. or by purchases from the
Cabora Bassa scheme in Mozambique, which is now under construction about 250km west of Zomba. Since both the Vipva and Mulanie nroiects are still in an
exploratory stage questions concerning the specific methods of meeting their
power req uirements have not yet been considered in final form
4. Tourism
90. In the past, touri-m has played a very crnll rnle in Malawdi The
country lacks any of the spectacular attractions, such as abundant wildlifeor sea beaches, which have made some of its neighbours populamong inter-
national tourists. Nevertheless, the lake, two game parks and a pleasant
scenery provilue some assets ar.d potential fot
91. The Departmer.t of Touris in th4 e Min.istry of Trade, Industry arA~~ I * 1LL~ L'.d U7LLiJ ILLLLL.~ .J ~ *
Tourism sets guidelines and is responsible for the promotion of tourism in
Malawi. To carry out its promotional activities it establis a wholly
owned corporation, Hotels and Tourism Limited (HTL), in 1970. HTL operates
a handicraft center in Blantyre and Ha-s recerLtly acquired a beach hotel atSalima. Since January 1972, the Ministry directly administers a chain of
goverrLwieILt resthouses .1n the centraL and norl Llern region.s. A other hotels
are privately owned. The Malawi Development Corporation has a minority in-terest in Malawi Hotels Limited (MHL) -which owns a numuber of hotels mainlyfor business visitors.
92. Available statistics do not give a clear picture of the develop-ment of tourism in recent years. Data on international tra-vel are collected
since 1970 and show that about 205000 visitors from abroad come to the coun-
try each year, of whom only about half can be regarded as vacationing tourists.
The capacity of hotels suitable for tourists totals about 800 bees. Because
of strong seasonal fluctuations average bed occupancy rates nave been below
50 percent. Nearly half of the hotel visitors have been Malawi residents
and another 40 percent originated from surrounding countries in southern
and central Africa.
93. A group of consultants financed by the U.K. recently conducted a
survey of the tourism sector. The survey anticipates a rapid expanision in
the number of visitors to over 70,000 by 1976 if the capacity of the industry,
including supporting infrastructures, can be adequately increased. The
g&veroment has accepted the main recommendations of the study, namely tocontinue to gear tourism to the regional markets of southern and centralAfrica and to concentrate initially on the Nankumba Peninsula at the south
end of Lake Malawi as area of greatest potential. Whilst it originally
allocated K2 million for this purpose in its proposed development expendi-tures for 1973/74 and 1974/75 to finance part of the infrastructure required,
the subsequent review led to a reduction of this figure.
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5. Transport
94. Malawi's transport sector at independence was inadequate for thecountry's needs. Developments of other sectors since that time have increasedthe demands on the system. Government had, therefore, to give the transportsector high priority in its investment program. Consequently between 1964and 1971 it devoted K50 million, or over one-third of its development budgetto transportation.
95. Rail, lake and air transport is provided by semi-autonomous publiccorporations, and road transport by both private and public undertakings.There are no legal restrictions on entry into the road transport business.
Roads
96. The total road system consists of some 12,000 km of which 810 km arebitumen-surfaced. The condition of the roads and the design standards aregenerally adequate. The Ministry of Works and Supplies (MOW) plans andmaintains the classified roads but some maintenance is also undertaken bydistrict administrations. The Economic Planning Division (EPD) (para. 35)reviews major road projects for their economic viability. Where outsidefinancing is involved the government normally engages consultants to preparetechnical and economic feasibility studies.
97. Road construction in the past concentrated on the extension andimprovement of the two main north-south arteries, the central road and thelakeshore road. The government's future road investment program includes theconstruction of missing road links and the improvement of inadequate sectionsin the southern and central parts of the country. In addition, it providesfor extensions of the central road and the lakeshore road to the north. Afeasibility study of the central road from Lilongwe to Kasungu and Mzimba ispresently being prepared with financial assistance from UNDP with the WorldBank as Executing A2encv. The Rame studv will alsn invuetigate the feasihilit-vof constructing a road from Lilongwe to the Zambia border near Mchinji.
Railways
98. The railway system operated by Malawi Railways is the main carrierof external trade. Until recently Malawi'A only rail ontlet to the sea wasthe line from Salima in the central region via Blantyre to the MozambiqueDort of Beira. A new rail link from Balaka to Nova Freixo rnmnleted in 1970,is now providing an alternative route, to the port of Nacala in Mozambique.The traffic on this line is graduallv inrrepaing hand in hand with the ex-
tension of the port facilities.
99. The government plans in the near future to rehabilitate thenorthern sectinn nf the onutt-h-north line hetwee P.o B rala ar.d n al 4 ma wh4ch atpresent permits an average speed of only 25 km per hour. This rehabilitationwas the subject of a recent study finan Ic, by t- 4 fe4sh Overseas DevelopmentAdministration (ODA) which concluded that the extension should be rehabilitateddespite the parata.llel lakeshore road betweer. BaJlaka and Suall,iAa. The ODA teamis to review its original findings in the near future.
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inn. Long term consid'era-ions inclule an extensior. fro,uL Sa'i-at* w 'J. L.L ii L LUC -J.JL~ L i ALi~UL IL -L aL .~iLI LU
Lilongwe and eventually up to the Zambia border and a branch from Nyaka tothe Mozambique bUorduer fLor conr.ectio with a u"rect route to Tete. Presentand foreseeable future traffic flows are far too small to justify the imple-mentati'on of any of these plans during this decade. The Salima-Lilongweextension may be a possible exception but even that is thrown into doubt bythe exiLsterce of a first-class road from Lilongwe to the South that offers ashorter route to Liwonde and Blantyre than via Salima. The ODA study willalso investigate in some detail the proposed Salima-Lilongwe raii extensionincluding a comparison between the costs and benefits of a possible railextension with those of improving the existing highway link.
Lake Transport
101. The freight and passenger services on Lake Malawi are operated byMalawi Railways. Their principal role is to serve the northern areas ofMalawi, especially the Karonga District for which overland connection to theSouth is restricted by a range of mountains.
102. The port facilities are inadequate and inefficiently operated. Asa result, the vessels spend much of their time at the terminals, and the lakeservice has operated at a financial deficit for some time. Certain improve-ments are now being introduced in connection withl the implementation of theKaronga Rural Development Project. They include a new jetty and relatedterminal facilities at Chilumba and the rehabilitation of Chipoka as the mainsouthern terminal. Further investments are, however, required if the lakeservice is to operate efficiently and its transport potential to be utilized.These include for example improvements of the other ports and of the main-tenance facilities.
Civil Aviat½X.n
103. Civil aviation services are under the jurisdiction of the Directorof Civil Aviation in the Ministry of Tranpsort and Communications. Air MalawiLimited provides scheduled international and domestic services. In addition,a number of foreign carriers serve Malawi with scheduled international flightsand some local companies operate domestic charter flights. Both WENELA (para.14) and Air Malawi transport contract labor to and from the South African mines.
104. The two main airports are at Chileka (Blantyre) and Lilongwe with allinternational flights operating from Chileka. In addition, there are abouttwenty air strips throughout the country of which Air Malawi uses six forscheduled services. The government, with financial assistance from theBritish government, is about to embark on a study of the country's inter-national civil aviation infrastructure requirements. This study is expectedto determine the extent of improvement reauired to permit Malawi tn hp ndp-quately served on intercontinental and African regional routes by its owncarrier and those of other countries.
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Transportation Planning
105. Responsibility for transportation lies with two ministries; theMinistry of Transportation & Communications (rail, lake and air plus roadtransport regulations) and the Ministry of Works & Supplies (highway androad planning, design, construction and maintenance). In addition, theMinistry of ARriculture, through its maior aaricultural development nroiects;constructs considerable mileage of project roads some of which later becomethe responsibility of MOW for maintenance. Similarlvt local authnritiesconstruct some roads at district level. The Economic Planning Division isgenerally resnonsible for coordinating transnortationn needs of the variousagencies, for supervising development planning by the two principal ministriesan well an for revipw1ng or preparing necnn-mi analyses of the proposed projects.
106. 1iahway nlanlnn-fno h hboon hamperedA by t-h lackl of a p7-4-
in MOW, but planning for the other sub-sectors has been relatively adequate.Future suirfacp trnfflc is mnTiIT related to-ra gc ltu--a production goals.Projections ar'e mad 'for individual projects as they enter the feasibilitystudv stage bit there ic a Iac-lk of ri
4eqite c- -r-a- ir. the ov-
projection of transportation requirements. Nevertheless, in spite of sub-stantiAl inD4octmor4tca 4n t- o opW - M.- 4f verwhlLing eh_At a J LagesVz me tm n s .. inWV; W-h~-&z *_ _ CEL>- _--EG,O
have in the past helped to reduce the risk of allocating resources to un-J -stifLab f pJ -J
107. T.he government hMas reecognize - ha mre detailed -planln . s b-e* *Cfl~- C~~Sfl~ ~I~a i. LL*~ 4, L. LUIJ LL=La.L.LCU jA.L4LL1.LLr, LUUZ:L.u~
carried out in the future to avoid a possible costly misallocation of re-source__s. qnhis requires a better coorudination of 'nvestment dmong --- ui-ferent transport modes, particularly between road and rail, and between roadar.dJ lake transport.
108. To er.sure a continued orderly development of the sector a nationaitransportation sector plan is urgently needed in which intermodal relation-ships should be a priLme factor in establisning priorities witnin and betweenmodes. Basic prerequisites for such planning are compilations of internaland external oriLg,Ln andu UestLiratLIon uemnus For transportation (essentiallyin the agricultural area) and the establishment of a full time qualified trans-portation sector planning teamiL. T'n-ie National Statistical Ourice, in coopera-tion with the EPD is gradually moving into the data compilation area andEPD offers a suitable agency within which the transportation planning teamcould be established. The development of the overall transportation sectorplan, including establishment or appropriate priorities for each element,should be done in close collaboration with all ministries and agencies con-cerneu. un completion of the plan the appropriate ministries should assumeresponsibility for execution of programmed work but the plan itself shouldbe under continual review in order to accommodate changes in emphasis,budgetary constraints and shifts in demand.
109. The British government has agreed to provide two specialists fora period of six months who may be able to assist the EPD in establishing abasis for a more detailed analysis of the transportation requirements. The
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lack o'L solL'd input dlata, however, mvake it appear do..btful that this initial
undertaking can come up with a useable program for future development in all
modes.
110. Malawi's dependence on outside financial assistance fnr all its
development, including transportation, should not preclude coordinated system
planning. External assistance for the development of the transportatinn s_e
tor should be sought or accepted in accordance with a sector plan which
includes a coordinated list of projects with appropriately established prior-
ities developed by the Malawi planners, and not necessarily to accommodate
the preferences of foreign agerLc±es.
6. Social Services
Education and Manpower
111. Between 1964 and 1971, expenditures on education averaged about 16
percent of the central government's recurrent budget and about 9 percent of
the development budget. These percentages are not hlgh by international
comparison. Priority was given to secondary and post-secondary education.
With assistance from the World Bank Group antd the U.K. 48 secoluary schools
were expanded and improved. The university, which opened in 1965, provides
post-secondary education in agriculture, technology, teaching, law and public
administration and general studies. The largest college is the Malawi Poly-
technic (1,000 places), while the remaining colleges together accomLodate
slightly over another 1,000 students.
Table 13: SCHOOL ENROLLMENT, 1964-1980
1964 1971No. Percent of Age Population
Primary School Enrollment 359,800 333,100 34.0
Secondary School Enrollment 5,800 12,400 2.7
Source: Ministry of Education.
112. The emphasis on secondary and post-secondary education has estab-
lished a strong base for the increase in the supply of middle and high-level
manpower in the country. However, because of the limited employment oppor-
tunities in middle and high level positions, further expansion of secondary
and post-secondary education should be based on manpower demands.
113. Standards in primary education need much improvement. The syllabus
so far has been oriented towards higher levels of formal education, without
identifying primary education as a terminal stage on its own although only 10
percent of primary school leavers can be admitted to secondary schools. Con-
sequentliv; most school leavers are ill-prepared for productive life and a
major reform of primary education is needed if the system is to contribute to
economic and social development.
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I I4. The~ goV~L-vernment educationi policy for the 1970s emphasizes educationfor rural development embracing primary education and vocational and farmertraininga, as a-meials of providing knowledge and skills relevant to rural
-development needs. This would require engaging the whole family in theeducational process and at the same time integrating all training institutionsin the rural areas into rural development centers.
115. DEVPOL projects that by 1980, 50 percent of the primary school agepopulation will be enrolled in the system. in addition, emphasis will begiven to the expansion of technical and vocational training at all levels.
116. The absence of a national economic plan in the 1960s handicappedefforts to forecast manpower needs and requirements. The formulation of theStatement of Development Policies for the 1970s has provided an economicframework within which manpower projections could be set. The government iscompleting a comprehensive manpower survey which will set the priorities inthe education sector for the next 10 years and which may lead to an increasein the share of education in the public sector's development expenditure.
117. A team from the University of Manchester is currently completinga study of Malawi education which includes the identification of projectssuitable for external financing. The report will place major emphasis onthe need for expansion, reform and improvement of the primary school system.In addition, it will contain proposals for non-formal rural training, adulteducation, correspondence courses, teacher training and some extension tosecondary education.
Localization
118. Malawi's policy on localization has always been pragmatic and hasbeen tempered by the desire to maintain efficiency. At present the degreeof localization of high level manpower is about 80 percent but it is sig-nificantly higher in the public than in the private sector and is alsohigher in the lower than in the higher job categories. It is expected thatsubstantial localization will be achieved in the 1970s except for technicaland agricultural occupations at middle and upper levels. Therefore, whilethe rate of localization will definitely improve during this decade, thedemand for expatriates with relatively high-level technical skills will in-crease. If the expected high growth rate of GDP materializes, the questionof the feasibility of recruiting enough expatriates with the required skillswill become critical. This implies that external sources will have to con-tinue to provide the necessary technical assistance to complement their fi-nancial contributions to Malawi's development program.
Health
119. Since independence, health has had a low priority in the govern-ment's program. The Ministry of Health has suffered from a shortage of ner-sonnel as well as inadequate funds. Only 8 among the 114 physicians in thecountry are Malawians. There is only one phvsician ner 40A000 inhabitants
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and 1,-L hospi tal bedsc per 1,000 noersonn. T.hose ratiosc An not b4g1hlight the,relative concentration of health facilities in the urban centers and theirvirtuanl absence -in the rualaras
120. Health activities are undertaken by the government as well as anumber of religious mission institutions. The activities of the missioninstitutions are coordinated by t he Private Hospital's rAssociation of Mala-wri(PHAM) representing 29 agencies and 2 associated units which together provideover 401 percent of thle ava4illablle bed4 capacity in Malawi. Both goverrju-ent andmission medical facilities concentrate their resources heavily on curativeser v Lce 6TVh IveAUeLLL%. prov.Lids. serViLcs largL LLy 01. LLrU WLLeLchr LLIe
missions generally levy some charge on patients. Despite the increases inthLe recurrent budget on L.--alth, t1he per capita Ilevel of aLIual expeni -ures
of K 0.70 (US$0.86) is still very low, and allocations for health in thedevelopment budget accounted For less than onle percent over the last 7 years.
121. alawi nas adopted a long-term plan for development of health serv-ices covering the period 1973-1988 on the basis of a WHO survey mission. The15 year plan establishes the foliowing priorities: (a) the repiacement ofexisting antiquated district hospitals and the provision of new hospitalsin certain areas; (b) the development into full health units with strongpreventive as well as curative functions of existing dispensaries which areat present almost exclusively curative; (c) the development of expanded healthfacilities in the areas of major agricultural projects; (d) the establisbuhentand expansion of training facilities for medical assistants and clinical ot-ficers to permit the realization of the objectives of the program.
122. The additional expenditures required to impleimienti the health planare estimated at K25 million. How much of this program will be i7nplementeadwill depend on the government's abilitv to attract foreign sources to financehealth projects and also to contribute towards their recurrent expendiLures.
123. Since the government does not consider the time ripe tc: adopt anofficial policy of active population control, the health developmient plandoes not include provisions for family planning. With the present age andse;> structure of the population at-d the likely decrease in thle death ratethe annaial population grow-th rate is likely to increase further. This isundesirable for a country in Malawi's stage of development and resourceendowment.
Q24. A c*ontinuous drift of population to the Blantyre/Limbe area andto the new capital at Lilongwe is creating a serious housing shortage in themain urban centers. It is estimated that the urban growth rate of about 8percent will continue over this decade and consequently the total urban pop-ulation will increase from its 1970 size of 275,000 to about 600,000 by 1980.Assuming an occupancy rate of five persons per housing unit, about 65,000 newdwelling units will be needed over the 1970s.
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125. The supply of financial resources to the housing sector is inade-quate. The only building society in Malawi has a maximum capacity of finan-cing the construction of about 150 houses per year. The Malawi HousingCornoration (MHC) a self-financing government body, constructs small andmedium sized houses for sale or rental, and provides site and service schemesfor thoqp who crnnnot afford housing of nermanent materials. MHC's financialresources consist of an interest free loan from the government and some loansfrom commer4nal banks, the Cnnital rity Devlnopment Cornoration and theCommonwealth Development Corporation. The resources of MHC over the nextthree years ill am11 ount to K3.6 million whicrh will enahle the r'onntrurtion of500 units a year. This is clearly insufficient in view of the waiting listnf 5 nnn peopl at rv nt q4nra t-hr MTTC rh:aragc whnt ic rnlled n viahle
'rent' which permits the Corporation to cover its cost, but is below theecor.omic rer.t, the nrumber of tenants who pnnlu for tihe n,rrhna of their
houses is quite small, despite the fact that the building society can lendup to 95 percen.t of the cost of a house. The reluctance of tenants to buytheir houses may also be attributable to a great extent to the government'ses Lta14 eA Po 1J.J Of SUkStA4Zj_ _h LOUSt- f^_ civi oe rv ants whi4h i 0 nit a t
of pre-independance days. The government has decided to abandon this policyafter most of the c.ivil servar.ts hve -oved to the new ---- ita' si te at
A. L.L JL. JL. LI ~ ..LV.L.L O_L VCL.LLO 11"Ve 111V~' .i ..ll 0L_a
Lilongwe.
126. A site and service scheme has exisced in Blantyre/Limbe for someyears a.nU anoth Ler one 'Ls bLeng dueveLopeu in Lilongwe. Both schemes ae
provided some 8,500 individual plots. Basic amenities such as roads, waterandu p't latrlnes are pro-v'deU andU tenants 'UU.LLU' LiI%L UWLL o UU5L hous. A hLaLrg
based on the size and complexity of the house and ranging between K2 and K24a year is levied. * ne collection rate of these rentaL chllarges, h0wev--ver, Lhas
been no more than 60 percent.
127. The government is giving special attention to the development andexpansion of site and service schemes as the only reasibie and relativelyinexpensive way of solving the urban housing problem. Accelerated effortswill, however, be required to avert the kind of social problems which haveappeared in some other African countries in the absence of proper attentionto the housing needs of the low-income urban popuiation. In view of thetightness of the government's own resources this will require increased ex-ternal financial assistance.
- 42 -
V. RATANCE OF PAYMENTS AND EXTERNAL DEBT
1. Balance of Payments Projections"i
128. DEVPOL estimates that, over the period 1970-1980, Malawi's exportsand imports of goods and n0n-factor servi7ces aen 1 o af t auvrago anniiul ?rateP
of 10.0 and 6.8 percent, respectively. As exports will grow at a higher rateth-,.an impor t-s 4-1.- A-f4-4 -, the-de fi.itn t cre 1 1 de c mewhat. In
order to enable Malawi to finance its resource gap and maintain a comfortablelevel of f4 oreign exclange reser-ves, capital inflows in the- order of R400
million (K125 million private and K275 million public) would be required.
Table 14: SUMMARY OF BALANCE OF PAYMENTS PROJECTIONS /1
(K million)
Actual Projections1970 ~ 19V75 _8
I. Miercnandise TradeExports 47.5 79.0 123.0imports 68.4 95.0 135.0
Trade Balance -20.9 -16.0 -12.0
II. ServicesNon-factor Receipts 8.1 13.0 2.Non-factor Payments 23.7 28.C 42.0Factor Income Receipts 9.8 9.0 B.OFactor Income Payments 14.7 17.6 22,9
Balance on Services -20.5 -23.6 -^34.9
III. Net Transfers 13.1 10.9 11.8
IV. Balance on Current Account -28.3 -28.7 -35.1
V. Balance on Capital Account 35.1 30.7 38.1
VI. Change in Reserves -6.8 -2.0 -3.0
(- = Increase)
/1 Projections are in constant 1970 prices, but take changes in exportprices into account.
Source: Table 3.10, Statistical Appendix
- 43 -
Exports
129. Merchandise exports (including re-exports) are projected to growat the annual. rate of 19 percent. Agriculture crops will continue to dominateMalawi's exports but their relative share is expected to decline from about80 percent to 73 percent by 1980. Exports of manufactured goods, on theother hand. are Droiected to erow at the rate of 24 nercent; thus raisingtheir share in commodity exports from 6 percent to 19 percent. This higherowth rate of manufa tured gonds assimes that the Vinvn Pulp/Paper projectwill materialize during this period, but the Mulanje bauxite project willnnt. Shniild thp VinvA nrnioprt hp delpayepd Ponnrte nf mannif::irt-irael onnocwould increase only at 15 percent annually. Should both projects material-ize, the growth rate of m-nufmcrt,ra would be correspondirgly higher.
Table 15: CO(IAPOSITION OF MFPRCHANDISE EXPODTC
1070 1975 190QA Annua
K Million % K Million % K Million % GrowthI -ate
Domestic Exports 1970-80
Crops 37.5 79.0 63.7 80.5 89.3 72.7 9.0-Mnufactures ~ ~ ~ 1 2.6 5., 6. IC.0 23. 19. If4.0 n
Miscellaneous 0.3 0.6 0.3 0.4 0.4 0.3 -
40.4 85.1 70.3 88.9 113.3 92.2 11.0
Re-exports 6.3 13.3 7.4 9.4 7.4 6.0 1.7
46.7 98.4 77.7 98.3 120.7 98.2 10.0
Balance of PaymentsAdjustments 0.8 1.6 1.4 1.7 2.2 1.8 -
TOTAL EXrORTS 47.5 100.0 79.1 100.0 122.9 100.0 10.0
Source: Statement of Development Policies 1971-1980.
130. The projected quantities of each agricultural export take account ofcurrent projects to increase their production, known trends in domestic con-sumption and availability of land for future projects. These volume forecastshave been used in conjunction with projected prices to arrive at the projectedvalues of merchandise exports. The basic assumption underlying the proiectedprices is that world prices for most of Malawi's export crops have reached apeak around 1970/71 and that, on balance, the trend over the next ten yearscan be expected to be in a downward direction. Therefore, while the projec-tion of the volume of each export commodity may not materialize, and annualdeviation from the trend are likely to occur because of the weather, the priceassumptions appear realistic on the whole and the forecast of future exportsin the aggregate may be viewed as plausible.
- 44 -
131. Imnlied in these forecasts is the further assumption that trading
conditions will not materially change after the U.K.'s entry into the European
Ecrnnmicr' Grommtinitv (EEC) with which Malawi is most likely to become associated
in some way. The government has recently submitted a position paper to EEC on
its rltionhip with the enlarged EEC. Its two main aims are to secure free
entry into the EEC for its principal exports and to gain access to the capital
assistance provided hv the European Development Fund. Critical among the
exports is tobacco which accounts for over 40 percent of Malawi's domestic
exports and of which over one-third is now sold to the U.K. under a Commonwealth
preference price of 7.7 pence per lb. Malawi hopes to be able to enjoy a
preferential treatment- for 4ts tnhocco in the enlarged EEC.
132. T[jo significant changesn nrniarcted to occur in the production and
the composition of export crops. On the production side, smallholders' share
of total expor-tcrops wri171 4ncreasc from AR percent in 1970 to 60 percent by
1980, while the share of estates will decline correspondingly. This is the
rLaturaL result of thle governmert's efforts to enxnnd the nutip-ut of smallholders
through investment in intensive integrated projects and improved extensionand mar-let'ng faci ities. A.n the composition of oxvnort crnnc the nresent
dependence on tobacco and tea for over 70 percent of their total is expected
to decline to 50 -er.er.t y.. 1O98. Thic nproposd divuersifiAtion of crop
exports is consistent with Malawi's past performance and will be an important
ingredient in the achievement of a high export g
133. The projected expansion of most crops seems feasible, wdth theexception of ;gg. While agronomically, it is thought that Malawi is probably
capable of producing 180,000 tons of paddy a year through the widespread use
of irrigation and high yielding varieties, the world export market for rice
may shrink over th1e next several years. Moreover, Malawi's present relatively
small rice exports have benefitted from exceptionally high prices, particularly
in the South Arri-n market, -where Malawi enjoys both a quota and a price
preference 1/. A somewhat bigger quota in South Africa is not unlikely.
IHowever, in order to acnieve a substantial increase in exports of rice from
2,830 tons in 1970 to 67,000 tons by 1980, Malawi will have to compete with
other producers in Africa, the Far East and the ULiT ted States. This Uay be
difficult considering that world trade is not expected to grow and world
prices are forecast to remain low, quite apart from Malawi's problems orn the
supply side, particularly in view of the large investment required. The
government is aware of the uncertainty concerning its rice projections, but
assumes that alternative crops may be substituted, if necessary, in place of
rice.
1/ As from 1970 Malawi's rice quota increased from 1,000 short tons to
2,000 short tons nf nnlichpd rice and the rebate is 125 South African
cents per 100 lb of the polished rice. In the same year a new quota
of 8,000 short tons of paddy (unmilled rire) including narboiled rice
was granted at a rebate duty of 20 South African cents per 100 lb.
In each of the above cases, tbhe agreement is tn he reviewed after three
years.
- 45 -
Table 16: COMMODITY EXPORTS BY MAJOR CROPS
(K million)
1970 % 1975 % 1980 %
Tea 10.9 29.1 11.2 17.6 13.3 14.9
Tobacco (all kinds) 16.6 44.2 27.6 43.3 32.0 35.8
Groundnuts 4.2 11.2 10.7 16.8 15.0 16.8
Cotton 2.8 7.5 4.2 6.6 6.1 6.8
Rice 0.6 1.6 2.5 3.9 8.1 9.1
Other 2.4 6.4 7.5 11.8 14.8 16.6
TOTAL 37.5 100.0 63.7 100.0 89.3 100.0
Source: Statement of Development Policies 1971-1980
134. Exports of non-factor services are projected to grow at the samerate as exports of goods. Earnings from tourism are projected to increasefrom K1.1 million in 1970 to K4.4 million in 1980, but it is recognized thatthis is a medium projection which depends on Malawi's success in attractingtourists from the southern African market. Moreover, it is estimated thatthe net value of tourism to the economy is probably less than one half of thegross receipts due to the additional imports needed to cater for visitors'demands. Factor income receipts, consisting mainly of migrant workers remit-tances are projected to decline on the assumption that as more work oppor-tunities would be available in Malawi, less workers will have to seek employ-ment abroad.
Imports
135. Merchandise imports are projected to increase at the annual rate of6.6 percent over the period 1970-1980, compared with the average rate ofabout twice the size in the period 1964-1970. While imports of capital goodsare calculated in relation to the projected level of investment, it is assumedthat the share of consumer and intermediate goods imports will not be higherthan at present. Since monetary GDP is projected to increase at the rate of10.6 percent, and since the scope for new import substituting industries isnarrow, it will be necessary to restrain the growth in imports through fiscalor other measures. If measures to contain imports are not resorted to on asufficient scale and if, by implication, imports are allowed to grow at ahigher than projected rate, there would obviously be a larger deficit in thecurrent account of the balance of payments, thus requiring an increase ingross capital inflow. Imports of non-factor services are proiected to increase
- 46 -
at an annual rate of 10.5 percent mainly because of increased freight rates.Factor income payments, on the other hand, are projected to rise from K15million in 1970 to K23 million in 19R8 reflecting increased nayments of interestand dividends on foreign capital.
Table 17: IMPORT PROJECTIONS
(K million)
Growth Rate1970 %. 107* I 1980 1970-1980
Consumer Goods 15.6 212.8 20. 21.1 3022- 6
Capital Goods 25.0 35.0 35.0 36.8 38.0 35.6 6.7
Intermediate Goods 29.4 41.2 38.0 40.0 55.0 40.7 6.5
Miscellaneous 1.4 2.0 2.0 2.1 2.0 l 3.7
71.4 100.0 95.0 100.0 135.0 100.0 6.6
Source: Statement of Development Policies 1971-1980.
Transfers and Capital Inflows
136. Net transfers are projected to decline from K13.1 million in 1970to K11.3 million in 1980 reflecting the phasing out of the Briti-h budgetary
grant-in-aid. The projected capital inflow of K275 million on public accountseems to be a reasonable estimate in the light of past dlsbursements anc theavailable indications of future commitments. The estimated private capi-alinflow of K125 million represent a 50 percent increase over the average inflowduring the period 1964-1971, but this may be considered plausible in the lightof Malawi's efforts of maintaining favorable conditions for foreign privateinvestment, especially as the estimates include reinvestment of the retainedprofits of existing enterprises.
137. While the export projections arLd the assumed capital inf,ows seem,on the whole, to be reasonable, the critical variable will be the growthof imports. If imports, Darticularly of consumer goods, rise at afasLer rate than the one assumed, capital inflows will have to increasecorresDondinvlv. Otherwise Malawi would not be able to attain the projected
level of investrrent without encountering balance of payments problems.
2. External Public Debt
138. At the end of 1971 Malawi's external public debt was US$175.9millIon equivalent, including i srbuhrsed rommitments of USS35.5 million.
Interest and amortization payments in 1971 amounted to US$6.3 million or 7.8percent of the value of exports of goods and non-factor services The dis-tribution of external debt is as follows.
- 47 -
Table 18: TOTAL EXTERNAL PUBLIC DEBT BY SOURCE, 1971
Source Amount PercentUS$
IDA 40.0 22.7
Bilateral
U.K. 66.3 37.7
South Africa 22.9 13=0
Federal Renublir of Germany 10.8 6.1
Denmark 7Q
U.SA- 7A.2 4.1
Sunnliers, Private Bsnk& Others 20.8 11.9
TOTAL 175.9 100.0
Source: Table 4.1, Statistical Appendix.
139. T.he analysis of the t-e rs of loar.s whi4ch Malaw1 ha --- ntrac--tedU Lin- . .**. .7-- -. ~ ,. W&AL.L LIr L W.L. L I.D -ULLLlfdL LU 1
the last six years show that there has been a gradual softening in theaggregate structure ofP the total debt~ as a reul of -the -E.wo D
credits and a softer blend of bilateral assistance.
Table 19: AVERAGE TERMS OF EXISTING DEBT, 1966-1971(ErnU oL PerL ou'j
Average Terrus 196 1968 1970 1971
TInerestRate 3.7 3.3 3.0.8
Grace eri.8 .0 6.1 6.1
Miaturity Period 25.6 30.2 30.3 30.9
Grant Element of Loans (Z) 47.0 53.0 56.0 58.0
Source: World Bank..
Projection of Debt Service
140. The Government projection of the debt service over the 1970s assumesthat over half of the recuired nublic capital inflow wll bhe auailahle onthe softest terms available and the rest on increasingly harder terms, with10 percent on full commercial terms. On these assum.ptinnc the tontal dlebt-
- 48 -
service will aTnount to K11.5 milllon in 1975 and K20 million in 1980. The
debt service ratio will rise to 13.7 percent in 1975, peaking at 15.9 percent
in 1978 and easing to 14.6 percent in 1980. Any shortfall in exports or an
increase in the rate of growth of imports resulting, for example, from short-
falls 4n doestic savings w.ould neressit-ate higher canital inflows and raise
the debt service ratio.
ANNEXPage 1
MAJOR FEASIBLITY AND PRE-INVESTMENT STUDIES
A: Completed
Lockwood Survey Corporation (Consultants), FAO/UNDP Project on
Lower _qhire Vallev. Kasinthula Trri2ation Project. 1970. Technical and
EconomrcE arFfTifi{ty Reports with Annexes on:
a) Landform, Soils and Land Classificationb) AgriciuThural Aspects and Economic Appraisal
c) Engineering
Irrigation Development Plan with Annexes on:
a) Landform, Soils and Land Classification
c) Development Projects and Appendices
CDC and Sir William Halcrow & Partners, Kasinthula Irrigationp J fl. Pre-appral4sal Report ----- ,..r.A -- -r._rer0 1971.
.UoJ * .17 1T-'L * U-n" U .S.S D.r + (E Iq
oLr ;V.. T flI.I. -LIa aIL c .r.aw .D. a n c r r -r t n _p S.I afor the Kasinthula Irrigation Project.
Mr. R. L. Raikes, consulting hydrologist provided through UNOTC,
Report on Malaw. Water Resou-rces and Proposed M-""easures too te - to A
Them, 1970.
IBRD Appraisal Report of Lilongwe Land Development Project,
Stage II, 1969.
IBRD Appraisal Report on Karonga Rural Develojiyent Project, 1971.
uNDP/FAO Appraisai Report on Promotion of Ditegrated FisheriesDevelopment, 1971.
African Development Bank, M.D.C. Trawling Project, 1972.
Brown & Root Inc., Preliminary Study on a Pulp and Paper Project,
A. Sundelin AB, Sweden, 1BR±U/U'NDP rPui1p ariu Paper marknetHung Survey
in Vipya Highlands, 1971.
Lonrho Limited, Mount Mlanje Bauxite Project Feasbility Ctudy,
December 1969. The study assessed prodaction costs of al-w-mina and aluM±nair-kat the optimum plant location, the capital cost of such plants and the
financial viability of the project. Tne capital costs are estimatted atK62 million for a 250,000 tons alumina plant or K170 million for a 125,000 tons
aluminium plant. Employment would be 600 or 1,600 respectively.
AiNNEX
Watermeyer, Legge, Piesold & Urarnarin and Kennedy & Donkin,
March, 1972 Feasibility Report on the Mazamba Hydro-Electric Development
(Action postponed pending decision on Pulp Project).
Watermeyer, Legge, Piesold & Uhlmann and Kennedy & Donlkin,
August, 1972 Survey of the Power Potential of the Shire River.
Watermeyer, Legge, Piesold & Uhlmann and Kennedy & Donkin, 1972
Tedzani Stage II Hydro-Electric Scheme - Project Report.
Brian Colquhoun, Hugh O0Donnell and Partners (Consultants),
Feasibility Study on Proposed Rail Link Between the Tete Railway System
and Malawi Railways, 1969.
Economist Intelligence Unit (Consultants), Malawi Road Transport
Regulation Study, 1970.
Kampsax (Consultants), Northern Extension Balaka - Salima
Rehabilitation Report, 1970.
Kampsax (Consultants), Lilongwe Railway Extension - Appraisal of
Routes, 1970.
Ministry of Transport and Communications and Malawi Railways,
Proposals on the Future Operations of Lake Service, 1970.
British Appraisal Mission, Rehabilitation of the Northern
Extension Balaka-Salima, 1972.
Howard Humphreys and Sons (M) (Consultants), Lake Harbour
Development Project - Provision of Northern and Southern Terminal Jetties
and Port Facilities, 1972.
Dr. Maurice King, WHO Consultant, The Development of Health Center
Services in Malawi: 1970-1985, 1970.
WHO Consultant Panel, National Health Planning Malawi, February,
1=972.
Sir William Halerow and Partners, Transport Development Unit,
Malawi Tourism, ODA-financed survey of the potential of tourism in Malawi,
London, June, 1971. The study appraises the market prospects until 1976
and outlines a five-year investment program. In addition, it recommends
institutional, organizational, administrative and financial arrangements for
implementation of the proposed development program.
B: Under Way
Jaako p!oyry & Co., Finland, IBRD/UNDP Pulp and Paper Preinvestment
Study, 1973. This study is investigating forest resources at Vipya, transport
and locational alternatives, markets and technical processes for anyone or a
mix of three possible proressing industries: a medium-sized kraft pulp and
ANNEXPaae 3
paper mill serving the regional, southern and eastern African market, alarge-scale kraft pulp and paper mill exporting mainly to overseasmarkets and a mechanical wood industrv producing sawnwood and plvwood fordomestic and export markets. The reporb of the consultants is expected byMay. 197 .
T.nnrho Mmitned_ Moulnt .lanje Bailnite Prniet Feasibility StdvSecond Stage.
UNDP/IBRD Feasibility Study on roads from Lilongwe west to theZambina bordr, and from TLions- north to Wnannrn ard M.Amha
TTQA TrIfinn-rcA Feasibility- r ot-n,yn onc,+ast B-', R-A (TLowe qV>4roValley).
USAID-financed Feasibility Study on West Bank Road (Lower ShireVnol 1 c.ir\
RerkX----ew of rec0-,u,.end,%at,4i;oLn ofr INTr+I,,- 'M-ens-ion ofr ranway.
TTniversity o' Manchester mTean-4r, Review r - 4ion lnn,r
C:~ ~ ~ ~ ~~I Plrue or A. duc on--se1.4~~~~~~~~~~~~~~~~~~~~ I .LOLUICU 14± LJUg~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C0 UOU ~ ~ ~ ~ ~ ~~~~~~~~~~" vie f 'OL .
-1 n e d o C 44...-A fl-3
rle-Ve-w of agricultural duvelopment strategy.
Comprehensive Feasibility Soadcy under goverrimern auspices ofMulanje Bauxite Project.
Potential for agricultural processing indistries.
Promotion of small-scale industries.
Extension of the supply of power to the Northern Region andlake shore plains.
B'lantyre water supply extension of system.
Comprehensive transport sector review.
Study of Chiweta-Rumpni road.
Study of road traffic census system.
Study of proposed Salima-Lilongwe rail link and related studyof improvement of Salima-Lilongwe highway link.
International civil aviation requirements.
STATISTICAL APPENDIX
Index
Table No.
PoDulation
lel Podulation by Regions, Age and Sex, 19661n2 Nu&ber and Monthly Earnings of Paid Enpoyees by Industry,
1968-1971
National Accounts
2 1 Industrial Origin of Gross Dcmestic Product, 1964-19712 ., wnMt-.4r~ t11VAS on flv8 flnot .tr~ Prvntiiit at Garreint Mnzateat
Prices, 1964-1971
lkteral- Tade, rn1 ont.c o%? Pavnir%t
3.^1 fliiports by End-Use, 19614-19713.2 Percentage Distribution of Imports by EFd-Use, 19614-19712 2 Twnm,-F Tl+4gaa nwA Tmv%.+ T)n+4mm Pae+- 4 -. MmATT.T.a 10AL-1 071
3.4 Composition of Ecports by Mirn Commodities, 1964-1971
3.6 Quantity of Exports of Main Agricultural Products, 1964-1971I 7 T+ 4 s of 'P-A I, 0A).-1071
3.8 Remittances by Malavians Working Abroad, 1965-19711"a F^ 4gn Echange Rewserv.........es, 104cf-10970.411 45J.5~LL Aa AAICUU V~U &.L7W."?.L
5? I '-
3.10 Estimated Balance of Payments, 1964-1971I j - Wpv 4ws _of W-4nsstcuoS164-17
Erternal Public Debt
4.1 External Public Debt Oatstanding as of December 31, 1971'4.2 Debt Repayable in Forsign Currency, 1967-1986
Fiscal Statistics
5.1 Summary of Central Government Finances, 1964-1972/735.2 Recurrentb Buuget Reven-ue, 19614-1972i'735.3 Recurrent Badget Expenditures, 1964-1972/73.> .4 Development uaget MXpendLTuresj 6LY04-9LY7L1(4
Monetary Statistics
6.1 Holdings of Medium and Long-Term Governmient Securities,1964-1971
Sector Statistics
7.1 Electricity Generation by E.S.C.O.M. and Consumption,1958/59 to June, 1972
7.2 Primary School Enrolment, 1964-1970/71: All Schools7.3 Secondary School Enrolment, 196h-1971: All Schools
7e4 Malawi Housing Corporation - Financial State of Affairs,1966-1970
7a5 Malawi Housing Corporation - Financial Forecast, 1971-1986
7.6 Assets and Liabilities of the New Building Society, 1965-1972
7.7 Net Output of Manufacturing Industry, 1964-1970
7.8 Net Output and Employment in Large-Scale Industry, 1964-1970
Prices
8.1 Tnrdlce of Retail Prices in Blantyre. 1968-1971
Projections
9.1 Projections of GDP by Industrial Origin, 1975 and 1980
9.2 Projections of Sairing. and Investment. 1975 and 1980
9.3 Malawi Government Development Program, 1972/73-197h/759./4 Balance of Payrnents Projections, 1975 and 19809.5 Manufactures Export Projections, 1975 and 1980
Ta'Dle 1.1: POPULATION Bf REGIONS, AGE ANID SEX, 1966 1/
Under 5 5 to 14 15 to 44 45 to 64 65 years All Persons peryears years years years and over Ages square kilo-
-__ metem
Mrialaw- , Tota '718. 1026.5 r - 1. r5.7 45. 161. 40. ZI.WL, L UUdL-L I L4U. C ±VL~U. -LU4~..( L4-(. iDi.)4U.)Y .Q 4-)
Male 366.1 513.2 732.5 21L.> o8.9 1913.3 20Female 382.1 513.4 913.2 238.1 79.5 2126.3 23
Southiernz Regio-nTotal 372.8 517.7 856.7 241.8 78.1 2067.1 65
Male 182.3 259.6 38.-4 121.6 41.8 992.6 31Female 190.4 258.2 469.3 120.3 36.3 1074.5 34
Central RegionTotal 282.7 375.6 598.2 155.7 62.8 1475.0 42
Male 138.3 187.6 263.2 71.9 30.6 691.6 19Female 144.4 188.0 334.9 83.8 32.2 783.4 22
Northern RegionTotal 92.8 133.2 190.9 60.1 20.6 497.5 19
Male 45.5 66.0 81.9 26.1 9.5 229.0 8Female 47.3 67.2 109.0 34.0 11.0 268.4 10
1/ In thousands of persons except where otherwise specified.
2/ Land area only, i.e. excluding all lakes.
Source: Malawi Population Census, 1966.
Tab-Le 1. 2 NIJI4BE:R AND MONTHLY EARNINGS OF PAID EMPLCYEE'S BY INDUSTRY, 1 968 -- 1 971
1968 1 960 1 970 1'9711 st qr. 4 th. qr. 1 st Cqr. 4th cjr. 1 st qr. I4th qr. 1 s t qr. 4th qr.
Number of paid enployees
Agriculture, forestry and fishing 50,790 43,909 53,4461 48,463 61,646 58,721 66,632 59,998Mining and quarrying 477 470 1,020 817 '715 5;26 620 753Manufactunring 14,417 16,290 15,173 15,6'71 16,4s22 17,363 18,732 18,806C'onsltruction 13,352 16,767 16,029 1'9,056 20,690 '15,301 15,538 17,588Electricity and water 1,341 1,538 1 ,531 1 ,431 1,565 1,710 1,705 2,317Transport and conmunication 7,940 8,421 8,106 8,698 8,.372 8,790 8,785 9,586Wholesale and retail trade andhotels and restaurants 6,733 7,308 7,563 8,5'74 8,:385 9, 956 10,061 10,770
Financing,insurance and businessservices 795 985 1,042 1,1'35 1,'194 1,211 1,348 1,513
C ornmity and personal services 36,998 38,42 h 38,823 42,1 11 41,995 45,137 48,292 48,o59
All :Lndustries: Private 89,113 87,960 98,085 98,937 '112,854 1109,218 121,132 116,270Govermnent 43,730 46,152 46,663 147,079 48,130 49,497 50,581 53,120Total 132,843 1 34,11 2 144, 748 14l6,0o16 '160,984 1138,71 5 171,713 169,390
Monthlyr earnings of paid employees (K' 000)
Agriculture, forestry and fishing 409 343 462 388 524 452 566 / 593M4ininag and quarrying 9 10 '1 8 :25 21 18 10 -1-3-Manufac turing 365 462 431 508 466 586 603 664Construction 252 360 359 542 5,80 409 381 491]Electricity and water 47 52 59 69 63 58 64 76Transport and communication 341 365 391 406 395 454 474 4887Wholiesale and retail tra.de andhotels and restaurants 266 289 334 4:25 378 460 451 484
Financin,g, insurance and businessservices 110 133 1 32 1652 158 162 179 185
Comranity and personal services 1,431 1:,468 1,471 1,815 1,677 1,811 1,992 1,894All industries: Private 1.808 2,003 2,188 2,599 2,637 2,752 2,947 3,046
Government 1 '.420 1,479 1,469 1,741 1,626 1,739 1,626 i,84c0Total 3,228 3,482 3,657 4,3,4 0 4,263 4,492 4,720 4,885
Source: National Statistical Off'ice.
Table 2.1 INDUSTRIAL ORIGIN OF GROSS DOMESTIC PRODUCT, 1964 - 1971(K million)
1964 1965 1966 1967 1968 1969 1970 1971V' Percent chanze1964 - 1971 d
Agriculture, forestryand fishing:
Monetary 21.8 28.1 28.8 31.5 30.9 37.1 41.1 48.5Subsistence 63.0 71.1 78.8 78.4 79.1 81.4 88.2 97.01
Mining and quarrying 0.1 0.1 0.1 0.1 0.1 0.1 0.2 0.2 1
Manufacturing 12.1 15.3 18.9 21.7 23.8 27.6 31.9 34.7
Construction:
Monstary 3.3 3.9 6.1 5.3 6.8 8.6 8.5 7.6Subsistence 2.3 2.7 2.8 3.3 3.4 3.5 3.6 3.8
Electrici''ty and water 1.1 1.3 1.7 2.0 2.3 2.5 2
WlVI _V D;CX k0u I-OW |-
trade 11.9 14.8 15.7 15.5 19.3 22.6 24.3 26.7
Transport, storage and5 7. 8 A 0 .a 6 A 10. 1nA 19 A 1 0n
real estate 3.5 4.7 4.8 5.6 6.1 6.3 6.8 7.3
Conmunity, social andpersonal services:
Public adninistrationand defence 13.8 13.9 15.7 17.2 17.7 18.2 19.1 19.9
Education 2.8 3.1 4.0 4.3 5.1 5.3 5.7 6.1Health 1.1 1.4 1.5 1.6 1.7 1.8 1.9 2.0Other services 4.0 4.4 5.0 5.8 6.0 6.6 6.9 7.1
G.D.P. at tactor cost 16 171.9 192.9 202.9 212.7 232.0 253.7 278.1
Plus net indirect taxes 4.9 6.9 9.9 10.9 11.1 13.5 17.2 21.6
G.D.P. at market prices:
Monetary 79.1 96.6 112.7 122.4 131.5 151.1 169.4Q..1- 7 13 I A~ ,i ort i c I Q . or ) o . cf I ni if
S-ub s isa t- er.ce 72.3 82 jLO.1 9 .7S 17 97.4 2.3 794.5 I 01.5 .
Total 151.4 178.8 202.9 213.9 223.8 245.6 270.9 319.2 / 11.2
Real G.D.P. (1964 prices):
Monetary 73.4 85.6 94.2 101.3 99.8 109.2 114.4 7.6S9IbRistencA 76.1 77.9 81 .1 82.8 85.2 87.9 89.7 2.8Total 151.4 173.8 190.9 197.7 189.8 204.0 207.7 225.8
Y l1dnary, 19O pricemIn current prices
;rce Natimal Statistical rffice
Table 2.2 EXPENDIFURE ON GROSS DOMESTIC PRODUCT AT CURRENT MARKETPRICES, 1964 - 1971 (K millicn)
1964 1965 1966 1967 1968 1969 1970 19711/
Private consumptionexpenditure:
Monetary 56.5 68.0 78.2 82.5 92.4 101.4 112.4 137.0Subsistence 70.2 80.2 86.9 88.2 89.5 91.9 98.5 116.3
Total 126.7 148.2 165.1 170.7 181.9 193.3 210.9 253.3
Government consumptionexpenditure 23.8 26.8 31.6 34.5 36.7 38.6 41.9 43.0
Gross fixed capitalformation:
Public 7.9 13.4 16.2 13.5 18.1 24.1 25.6 2627Private 5.3 5.9 1J.2 11.9 19.3 25.0 23.0 25.3
Total 13.2 19.3 29.4 25.5 37.4 49.0 48.6 52.0
Chuage -in stock-s:
Monetary -2.0 5.4 4.4 2.8 -1.5 -1.6 5.2 5.0Subsistence 0.8 0.4 1.6 1.2 0.8 0.6 0.8 1.0
Total -1.2 5.8 6.0 4.0 -0.7 -1.0 6.0 6.o
Gross domestic exPenLditure62.5 200.1 232.1 234.7 255.3 279.9 307.4 354.3
Exports of goods andservices 27.5 32.6 40.9 47.9 48.0 50.8 55.6 67.0
Less Imports of goods andz-e ri e s 38.6 53.9 70.1 68.7 79.5 85,2 92.1 102.1
Expendit4lCure on- grossdomestic product 151.4 178.8 202.9 213.9 223.8 245.6 270.9 319,2
1, Preliminary
Source: National Statistical Office
Table 3.1 I4PORTS BY END-USE, 1964 - 1971L/
1Y064 '1O69 IYOC IYO( IU 1969 17(UV 1 7[
Goods mainly for finalconsumption:
Motor cars andbicycles 1,484 1,968 2,128 2,236 2,048 2,056 2,408 2,805
Piece goods 3,922 6,498 5,318 4,430 3,996 3,770 5,06 3,872Motor spirit 562 534 578 682 900 C942) 1,893 2,282
Other 7,958 11,452 12,514 12,754 12,626 12,002 1iE545 15,564
Total 13)926 20,452 203538 20,102 19,570 18,770 22,352 24,523
Capital equipment:
Transport equip-ment n.i.e. 2,174 2,636 4,970 4,986 7,024 7,384 9,569 9,708
Other 2,006 3,526 6,914 4,968 768 7,978 9,807 10,454
Total 4,180 6,162 11,884 9,954 15,792 15,362 19,376 20,162
Materials for building.construction 1,808 2,746 3,428 3,446 4,334 5,994 6,128 7,437
Other goods mainly fori-term.ediate sonn_sumption:Petroleum products 1,038 1,070 1,426 1,546 2;158 2;332 4,479 5,324
n.i.e.Parts,tools and mi sc-ellaneous appliances 550 794 1,106 1,258 1,624 1,840 3,365 4,029
Other 6,688 8,942 14,874 13,362 13O392 153782 25,316 27.008
Total 8,276 1o,8o6 17,406 16,166 17,172 19,954 33,160 36,361
Misceiianeous 450 638 1,034 1,184 1,312 1,398 1464 1.370
Total Imports 28,640 40,804 54,292 50,852 58,180 61,478 82,480 89,853
1 / 1964-1969 valued at FOB, 1970 and 1971 at CIF values. All figures are based
on customs estimates and are not quite camparable to balance of pa7yments data.
Source: National Statistical Office.
-~-' ,'L,TMAOV nr' -v-CT0rt1TTTrr1TfMhT cV~ TMMnn~rVQ 1t1v WTTT)~ TTQ7l -i cnAI. -1 071T-able 3. 2 PrjLUZC11-tUAGJ DISt.IBUTION"j._LA OFl -IPOR- -BY Em USE, ,I6 =17
_Z1. -I nz rL 14-L1 1 Z7 1- C 10on 1 070 1 071I E U14 I 7Z) 17 v , uu) , 7UU ,7f 17 I I t
Consumer goods 49 50 38 40 34 31 27 27
Capital goods?J 15 15 22 20 27 25 23 22
Building and construction /
materials o 7 I I 7 1 U
Other intermediate goods3/' 29 26 040 LiJ
Miscellaneous 1 2 2 2 2 2 3 3
TOTAL IMPORTS 100 100 100 100 100 100 100 100
1/ Non-durable consumer goods, motor spirit, piece goods,motor-cars, bicyclesand other durable consumer goods.
j Plant and machinery, auxiliary equipment and transport equipment n.i.e.
J Basic and auxiliary materials for industry (including unmanufactured Zambianto.bacco). narts and- tools chargeable to current account, and Petroleumproducts n.i.e.
Source: National Statistical Office
Table 3.3: IMPORT DUTIES AND INPORT DUTIES RATES BY END-USE1964-1971
1964 1965 l966 1967 1968 1969 1970 19`71K'OOO K K'OO 11,0O iooo K'000 9 .' 000 %L000Consumer Goods
Non Durable 940 13.3 1,380 13.3 2,388 22.8 2,968 27.4 2,734 25.2 2,626 25.7 3,636 29.9 3,721 28.2Durable (excluding vehicles) 74 6.4 128 8.o 352 17.5 500 26.]. 440 24.7 510 28.7 670 28.1 931 40. 3Plant, Maclhinery and Equipment
Operating Maclhines 20 2.1 40 2.1 84 1.3 34 1. 62 1.0 66 1.2 70 1.2 80 1.3Auxilliary Eqaipment 18 1.7 28 1.8 70 3.3 84 4.2 80 3.0 90 3.4 146 3.6 1L51 3.7Transport Means
Motor Cars and Bicycles 168 11.3 240 12.2 452 21.3 568 25.1, 584 28.5 640 31.1 902 29.5 960 34.4Other 82 3.8 106 4.0 392 8.D 484 9.7 528 7.5 644 8.7 940 10.5 1,5Q1 15.5Building anld Construction Materials 24 1.3 60 2.2 180 5.3 150 4.)L 182 4.2 186 3.1 232 3.8 299 4.0Materials f'or Industry 158 2.9 256 3.5 334 2.5 336 2. 5 316 2.L 394 2.5 460 1.8 '70 0.0Parts, Tools and Other Appliances 14 2.6 18 2.3 42 3.3 44 3.5 70 4.3 56 3.0 86 2.6 ]L27 3.1Commodities for Intermediate and FinalConsLmptiorn
FaLbrics 526 13.4 1,328 20.4 2,028 37. 0 2,098 47.4 1,710 42.8 1,614 42.8 1,434 40.9 1,514 38.8Oil, Fuels, anid Lubricants 1,000 62.5 1,232 77.2 1,482 ) 43.7 1,730 77.6 2,396 78.4 2,882 69.1 1,814 28.5 4,633 60.9Other 66 5.6 80 5.0 126 ) 6 21.4 6 13.6 6 25.0 8 25.0 6 23.1Imports Under K20 and ]Yiscellaneous - 0.0 8 5.6 58 5.3 144 12.2 174 13.2 202 14.5 248 17.3 248 18.4
TOTAL 3,090 10.8 4, 904 12.0 7',988 14.7 9,146 18.0 9,282 16.c 9,916 15.1 10,846 12.9 14,7lr41 16.4
Note: Since 1970 duty levels are based on imports at c.i.f. values, before 1970., at lower f.o.b. values.
Source: National Statistical Office, ArLnual Statements of External Trade
Table 3.4 COMPOSITION OF EXPORTS BY MAIN COMMODITIES 1964-71-
(K million)
1964 1965 1966 1967 1968 1969 1970 197'1
SMATIT.HOT,nVR CROPS: 12.2 15.5 1L.8 19.0 17.7 1 8.1 17.8 23e5
Tobhar~ceo 5,R 7.9 6. t 5.1 6.0 6.4 8.3 11.4
r.-nnnnnut. 2.2 3.3 2.6 6.9 L.6 5a6 5
Cotton 2n0 2P2 2-2 1.4 1.3 1-7 2.8 2.5
Other 2.2 2.1 3.6 5.6 5.8 4.3 2.5 3.6
HS DA TER G_ROF5 9'9-SQ- 10.6 19.0 1 3140 1 6 16Q 95 20
Tobacco 2.6 2.4 2A 3.3 4.6 6.2 8.2 10.4
Tea 6.6. 7.5 R.8 9n0 9.7 9.5 10.9 11.7
Other n.6 n.7 0.6 0.7 n.3 04) JL) 0 3
OTHKR EXPORTS 1.0 1.0 0.8 .1 I. 2.7 3.1
TOTAL DOMESTIC EXArRTS 23.0 27.1 27.7 331 338 36.6 40.3 49.
RE-EXPORTS 2.0 1.6 7.2 7.8 6.4 7.4 9.0 9.6TOTAL EXPORTS 25.0 28.7 34.8 40.9 40.2 44.0 49.3 58.6
1/ Figures based on customs returns and are not auite comparable to balance of ppyr-mentsdata.
Source: National Statistical Office
Table 3.5: RE-EXPORTS BY C0M24ODITY, l964-1971
(K thousands)
Commodity 1964 1965 1966 1967 1968 1969 1970 1971
Petroleum products 496 626 760 956 1,384 1,302 1,248 1,246
Zambian tobacco 18 16 5,000 4,686 3,178 3,744 3,378 5,021
Migrants' vehiclesn n ffectS 870 282 Li 2 384 )h58 604 634h 1; _N40
Other 608 774 974 1,778 1 ,466 1,734 3,700 2,335
TnTAT. 1 992 1.698 7;1)46 7.804) 6;4T86 7384 8;951 9.642
Table 3.6: QUANTITY OF EXPORTS OF MAIN AGRICULTURALPRfODUCu, MM 964-1971 1/
Products 1964 1965 1966 1967 1968 1969 1970 1971
Tobacco by MainTypes
Burley ('000 kilos) 2,578 2,5349 2,113 1,945 2,770 2,816 3,241 4,054
Virginia Flue cured('000 kilos) 911 1,021 1,446 1,472 1,812 2,301 3,512 4,787
Virginia Dark/Fired/Sun-cured ('000kilos) 9,774 13,957 12,434 10,433 10,961 8,785 9,519 1(),571
Other Tobacco('000 kilos) 25 93 25 873 542 660 1,087 1,340
TOTAL 13,237 17,621 16,018 i4,774 16,080 14,561 17,359 20,751
Groundnuts 15,757 18,935 14,848 51,035 29,989 34,253 22,506 29,156
Il¶q i 7.e 13,681 1,016 44,349 91,426 86,956 47,295 - 4,535
Cotton bre 4,234 1,647 L,837 3,148 2,487 3,814 ,837 ,812
PulRses 21,688 25,145 17,385 27,358 10,389 15,848 9,988 8,176
Cassava 4,079 5,349 24,929 21,335 47,682 21,959 22,202 20,198
Rice 1,256 l1053 1,389 1,517 892 1,677 2,827 5,180
Coffee 174 29 132 168 197 180 136 204
Sunflower Seed 31 30 192 33L 658 2,869 1,393 2,711
h.ng Oil 1,>l 1,991 1,2)46 1,760 940 1,140 1,138 871
Tea ( I000 klos) 214,l 46 26,390 21,371 33,673 31_A578 31,488 33,1409 36,1462
1/ Metric tons except for tea and tobacco
Source: National Statistical Office
Table 3.7: DIRECTION OF TRADE, 1964 - 1971(K thousand)
I.Damestic Exports by Country of Final Destination
19614 1965 1966 1967 19A6 1969 1970 1071
'Jnited Kingdom 10,954 12,834 13,338 18,214 16,996 16,816 19,536 21,122
Rhodesia 3,208 2,766 1,560 1,270 1,564 2,364 3,130 3,445
South Africa 1,154 1,128 954 914 1,544 1,210 1,708 2,147
United States of America 704 724 810 1,072 1,610 2,292 1,197 2,315
Netherlands 696 1,200 1,386 1,668 1,410 1,428 1,847 2,260
ireland 172 870 1,072 932 1,526 972 1,136 2,262
West German !90 362 840 709 1 n,R 1, n4 1 9,2 017
Zambia 160 214 448 776 786 3,054 1,305 1,987
AUl other countries 5,770 6,986 7,264 7,556 7,o64 7,409 9,239 12,548
TOTAL 23,008 27,084 27,670 33,104 33,558 36,588 40,340 49,003
II. Imports by Country of Origin &'(K thousand)
1964 1965 1966 1967 1968 1969 1970 1971
United Kingdan 6,692 10,338 16,840 14,466 17,898 18,236 18,998 25,210
Rhodesia 11,202 14,860 12,334 10,646 10,490 10,446 15,505 13,277
South Africa 1,714 2,181 3,928 3,920 6,414 8,820 8,968 9,476
Japan 1,330 2,738 2,690 4,276 2,814 3,212 3,752 6,511
United States of America 640 1,093 1,714 1,408 3,272 2,356 3,719 3,643
Wesqt Germany 5814 1?1714 1,296 ij41i 2A 16 92i,A1 2,697 3,733
Zambia 972 721 5,230 3,532 2,312 2,636 2,1t98 3,1S3
Australia 560 1,061 922 790 840 1,056 1,321 2,573
All other countries 4,946 6,637 9,338 10,396 11,994 12,550 13,909 22,232
TOTAL 28,640 40,804 54,292 50,852 58,180 61,478 71,367 89,353
Y From the first quarter of 1971 imports are reported on a c.i.f. basis. All other figures are onf.o.b. basis.
A~Lgrr,AO LTf.fTfnVa(r AWDO(AT)h I OAE~1 71
Table 3..8: RENITTANGES BY rinAai±'1 2 vJOPX4JG 1 19
(K thousand)
1 965 1 966 1 967 1 968 1 969 1970 1971
South Africa 3,090 3,046 2,802 3,484 5,750 7,836 10,479
Rhodesia 622 542 522 604 690 728 70h
Zambia 346 668 646 218 78 l37 365
TOTAL 4,058 4,256 3,970 4,306 6,918 9,001 11,548
(As Per cent of total)
South Africa 76.2 71.6 70.6 80.9 83.1 87.0 90.7
Rhodesia 15.3 12.7 13.1 14.0 10.0 8.1 6.1
Zambia 8.5 15.7 16.3 5.1 6.9 4.9 3.2
TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Source: Ministry of Labour
Table 3.9 :FOFREIGN EXCHAN{;E RESERVES, 1 96'5 - 1972(K thousand)
END OF PERIOD June1965 1966 1967 1968 1969 1970 1971 1972
Total Reseres 18,,208 113,69'7 13,643 115,266 14,9g61 21,799 22,757 26,1l08
A. MonetELry Inst. 15,358 11,l9 3 2 9,942 10,91.6 11,604 18,514 2C 23,314
Reserve Bank 15.,180 13,59)4 15,054 1)4,410 14,146 21,050 22,276 24,7 51
Ccnmercial Banks (net) 178 - 1,6112 - 5,112 - 3,094 - 2,542 - 2,536 - 1,745 - 1,437
B. Treasury Balances withGrown AgentE; 1,870 730 5Th 842 244 1,74 102 466
C. Reserve Position with IlF 980 985 1,153 1,162 1,166 1, 1 6 4 1pl7l 1,3c31
I). Special Account - 2,034 2,346 947 947 947 9)47
Source: Reserve Bank of1 MaLawi
Table 3 : ESTIMATED BALANCE OF PAIMENTS, 196)4-1)71
(K million)
196L4 1965 1966 1)67 1968 1969 1970 1,71
Me rchandise
E.ports f.o.b. 24.4 28.5 34.o L40.'4 40.0 )43.2 i47.5 5c.0Imports f.o.b. -28.6 -40.9 -514.1 -50.2 -57.0 -61.0 -68.)4 -75.6
Trade Balance -4.2 -12.4 -19.5 -9.7 -17.0 -17.8 -20.9 -17.6
Services
Non-factor Receipts 3.2 4.1 6.3 7.5 8.0 7.7 8.1 9.0Factor Income Receipts 3.9 5.5 5.3 5.1 5.6 8.0 9.8 8.3Non-factor Payments -10.0 -13.1 -16.0 -1B.5 -22.5 -24.'2 -23.7 -26.5Factor Income Payments -10.1 -9.8 -10.9 -12.9 -12.6 -13.7 -14.7 -114.9
Services Balance -13.0 -13.3 -15.3 -18.8 -21.5 -22.2 -20.5 -2)4.1
Trans Ce rs
Private 0.1 0.9 0.7 1.3 1.6 1.7 1.7 1.7Government 18.0 26.3 16.2 16.l4 14.9 13.8 11.3 9.4
Net Transfers 18.1 27.2 16.9 17.7 16.5 15.5 13.0 11.1
Balance on Current Account 0.9 1.5 -17.9 -10.8 -22.0 -2L4.5 -28.k) -30.6
Cr nr i >L-1 A e.&ccount
T,n n TRrm Private: Inflow 1.)! 2.8 3.7 )4.7 8.0 9.9 6.2 8.0Outflow -0.3 -0.7 -0.5 -1.2 -0.4 -l.4 -9.7 -1.5
L.nng Terrn Pubhlic Inflow 5.3 3.1 7.3 11.8 13.0 17.)4 32.Lt 20.1Outflow -)4.3 -3.1 -2.1 -2.7 -1.3 -2.2 -3.3 -3 .5
Other, including errors andomissions 0.9 2.R L,o -2.8 L.2 -o.6 7.5 7.2,
Net monetary movements -0.6 1.2 1.0 0.5 0.1 1.0 2.211/ 1
Balance on Capital Account 2.)4 6.1 13.)4 10.3 23.6 2)4.2 35.2 31.6
Change in Reserves -3.14 -7.6 4.5 0.5 -1.6 0.3 -6.8 -1.'
(- - Increase)
l/ Includes allocat,ion of SDR's equivalent to K 1.6 million.2/ Includes allocation of SDR's equivalent to K 1.3 million.
Source: Balance of Paymlents, 1970 and The Economic Report, 1972.
Table 3.11: EXPORTS OF MAIN MANUFACTURES, 1964-1970(K'nOn)
1964 1968 1969 1970D1em n l.n- b as ed
Cement - 178 - _
Chemical products - 15 I5 27
Fishing nets and cordage 85 27 27 27Cotton1 pie-ce g0oods - =10 6Blankets - - 1rni'uwear - 20 78 55Clothing, other - 91 133 155OIloe CL _; ,
Agricultural implements - 21 100 8Other rrieta.L andu riachiny 2 12 1 237Waste metal 38 86 54 134
TOTAL 133 610 795 1,043
2. Supply-basedK s h 19 51 I7 zu
Hides and skins 98 166 182 225Oil cake 2/314 288 n62 3n2
Oil seeds2 3 6 55 16LCotton seed oil 67 - -
Groundnut oil - 3-Ninde oil /- Canned fruit- - 29Paper products 1 72 27 87Wood products 142 131 105 165Glycerol 11 47 82 67Molasses - - 32 29Rare earths - - - 20Precious stones - 11 82 127Electric current - 4 18 23
TOTAL 475 776 1,155 1,579
TOTAL 1. and 2. 608 1,386 1,950 2,22
1/ Including general chemicals, fertilisers, paints and plastics.2/ Excluding groundnuts; including cotton and castor seeds.3/ Including juices.
Source: Statement of Develorment Policies 1971-1980
04/03/73
Table 4.1 t EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31.1971
FOR LOANS ISSUED DURING THE PERiOD JANUARY i, i900 - OECEMBER 3ii97iDEBT REPAYABLE IN FOREIGN CURRENCY
IN THOUSANDS OF U#S. DOLLARS
DEBT OUTSTANDING DECEMBER 31*1971
CREDITnOR niITov IC IT AT C-
IYPE OF CREDITOR DISBURSED BURSED TOTAL
SJuTHl AFRICA 49 -4
UNITED KINGDOM 2#239 - 2.239SUPPLIERS 2J288 ' 2,288
UW1TE0 KLNUuM 339'JiA 10 -1MJLTIPLE LENUEIRS 590 - 590
PRIVATE BANKS 990 990
uNI1TED KINuDUM 14'465 - 14P465USA 63 - 63MuijLTiPLE LENUEK'S p1.459 - 1i459
PUBLICLY ISSUEO BONDS 15.987 - 15,987
SOuTH AFRICA 36 -3OTHER PRIVATE FINANCIAL INST. 36 - 36
IJA 24.192 15,806 39,9tiLOAN$ FROM INTL. ORGANIZATIONS 24.192 15A806 390998
flA.1 AIA - 1,9 C f 49 C
DEItMARK 4.093 3,789 7Pd82GEilMANY (FED.REP.nF) 8,330 2,76SoUTH AFRILA 22,815 - 22.dr5UNITED KINGDOM 56,521 9,o763 66,2d4USA 5.045 2.155 7,200
LOANS FROM GOVERNMENTS 96,864 19,774 116,638
TOTAL EXTERNAL PUBLIC DEBT 140357 35o56O 175P937
NOTES OEUT WITH A MATURITY OF OVER ONE YEAR
ECONOMIC AND SOCIAL DATA DIVISIONECONOMIC PROGRAM DEPARTMENT
0 4 / 0 3 / 7 3
Table 4 .2: EXTERNAL PUBLIC DEBT AS OF DECEMBER 31.1971
FOR LOANS ISSUED DURING TliE PERiUD JANUARY 1J 1900 - DECEMBER 31p1971DEBT REPAYABLE IN FOREIGN CURRENCY
IN THOUSANDS OF U.S. DOLLARS
TOTAL
DEBT OUTSTANDING TRANSACTIONS DURiNG PERIOuBEGINNING OF PERIOD CANCEL-
LATIONS,
nISBURSED INCLUDING COMMIT- DISBURSE' SERVICE PAYMENTS ADJUST-YEAR ONLY UNDISBURSED MENTS MENTS PRINCIPAL INTEREST TOTAL MENTS
Ci) (2) (3) (4) (5) (6) (7) (A)
1966 * 33.277 12.906 953 2.515 3.468 514 19
1i9il 63s097 83.743 7?.740 i0039 ;,477 2 'I0 4 .-227 2 674
1968 60.942 77.332 42.742 11.037 1.365 2.595 3,960 -2'082
1969 68,534 116P627 33P073 18,ll 996 2*639 3#635 305190,' 85'619 149'009 9.379 3b'O49 2'230 3P552 5A782 -3621971 12!,088 155.796 26i451 26.J79 2J667 3.592 6,259 -3'643
1972 140.357 175P937 ' 12.146 40463 3.723 8'1,36 9451973 147.O95 170.529 - 12.046 4.bj2 3,829 8,641
i?74 15oS332 165.717 - 5,084 6,981 3,6706 10 697 _
IY75 15?A!j36 158.736 - 3.823 5.373 3S.572 8,9501976 150.881 153P359 - 1,315 6.651 3P614 10.265 1
1977 145i544 146,708 - 581 6.854 3.o374 10.228 -5
1978 139p266 139.849 320 9.645 3.132 12.*7801979 129.' A8 13.e201 167 7.912 2,71 10,693
122p193 122o289 - 74 7,5c5 2,463 10.02U81961 114.70" 114,724 ' 21 7.582 2.224 9,8077
1982 ~ 107,1i40 1071941 - u1983 100.873 too0873 ' - 6313 1.161 6.0751984 94P559 940559 - - 6.337 1.569 7.906
1985 8'972?? 88.222 5.555 1.360 71,2341986 82p368 82.368 - - 4,963 1.234 6,2021987 77.400 77.400 - 4.760 1.281 6,0411988 72.639 72.639 - ' 5.180 1d163 6,3641989 67,459 67.f459 - _ 5,654 1.080 6.734 -
'6:*8f;j 6:1.80, - - "I755 972 5;727
1991 57.050 57.050 - - i.797 889 S,607
Table v.l: SUkD!4ARY OF CENTRLL GOVRNMENT FINIANCES19614-191'2/73(K miLlion)
1 Budget Estmn.19614 1965 1966 1967 1968 1969/70) 1970/71 1971/72 3972/73
Recurrent Bidget, Revenue 17.14 18.3 22.9 26.,7 29.7 32.7 40.8 47.0 51.6
Recurrent BuidgetExnditure 32.0) 32.3 35.5 38.9 40.3 42.0 46.9 50.5 56.2
Recurrent Budget Deficit 14.6 14.0 12.6 12.,2 10.6 9.3 6.1 3.5 4.6
DevelopnentBuet F xpenditure 5.4 9.14 12.8 10.,1 14,.0 17.1 35.2 31.2 31.3
OVERALL DEFICIT 20.0 23.14 25.4 22.3 24,.6 26.4 41.3 34.7 35.9
F'INANCED BY:
Domestic Bo3-rawing jross) 0.1 2.L 2.1 2.5 6.1 3.2 5.0 6.2 5.9
External Public Funds 17.4 22.3 17.3 17.7 17,.9 22.6 39.2 26.0 26.3Bilateral 17.14 22.3 17.2 17.5 16,.1 13.0 31.4 17.6 19.1N tota] 17.3 22.0 15.5 16.2 14,.9 14.2 114.0 11.9 10.3Grant-in-Aid (10.0) (11.93) (8-5) (8-3) (6.-4) (5.8) (4.2) (0.6) (-)Other Grants anid Loans toRec. Budget (14.14) (3.3) (3-0) (3.6) (4. 0) (3.3) (3.2) (3.3) (3-3)Grants to Dev' t. Budget (2.2) (6.8) (0.6) (_) (.-) (-) (-) (0.6) (1.0)Loans to Dev't. Bucdget (0.7) (-) (3-4) (4.3) (4,.5) (5.1,) (6.6) (7.4) (6.0)South Africa - - - -_ 2.6 12.6 3.3 2.7Germany - 0.0 1.4 0.9 0.3 0.5 1.2 1.2 0.5USA 0.1 0.3 0.1 0.1 0,.2 0.0 3.1 0.14 0.9Other - - 0.2 0.3 0.-7 0.7 0.5 0.8 14.7Multilateral - - 0.1 0.2 1,8 4.5 7.8 8.4 7.277rLd-MRlkC Group - - 0.1 0.2 1.8 4.5 7.8 6.9 5.9Other - - - - - - 1.5 1.3
Other Miscellaneous Short-TernTransactions and Changerin Reserves 2.5 -1.0 6.0 2.1 0°.7 0.6 -2.9 2.5 3.7
T-) .. increase in reserves)
See footnote 1/ appendix table .1.
Source: Malawi Government. Pulblic Accounts; Bu-dget Estimates 1972/73; ana infornation provided by the Malawi authorities.
Tabllt 2s RECURRENT BUllGET REVENUE1964-.1972/73(K million)
1/ 2/ 3/196h 1965 15,66 1967 1968 1969,/7r 1L970/71 19'71/72'-1972/73-
Direct Taxes 4.5 5.1 6.2 8.3 9.7 10.0 11.9 1h.1 14.1urn Tax Collected in Malawi . (13 l.2 1.3 T .1 3) i7 1.7
Remitted from abroad .. (0.: O.1 0.1 0.2 0.2 0.3 D.4 0.3Total Minimum Personal Tax l (1. 1 1 1.. L 1.6 1.6 1.9 2.1 2.0
Graduated Tax ) (0.6) 0.6 0.7 0.9 1.0 1.1 1.2 1.2P.A.Y.E. Tax 0.9 (1.3) 1.6 1.9 2.0 2.5 2.7 3.1 3.2Tax Paid by Companies and
Self-employed 1.8 (1.8) 2.7 4.1 5.2 4.9 6.2 7.8 7.8Total Income and Profit Taxes .. 3.7 L.9 6.9 8.1 8.LI 10.0 12.1 12.2
Indirect Taxes 5.2 7.4 91-9 11.0 C L1.2 13.0 17.0 21.9 22.9Import Duties 2.3 i 7.1 9.0j 79 T97 1 0.0 7 To.9Excise Duties 0.5 0.6 0.7 0.8 1.0 1.8 2.3 2.7 2.8Surtax - - - - - - '. 0 7.1 7.5Other 2.4 2.6 2.1 1.2 1.2 1.5 1.7 1.6 1.8
Licences (0.7) (0-9) (1.0) (0. 9) (1.1) (1.3) (1.10 (1.4) (1-6)Stamp and Dther Duties (0.1) (0.1) (0.1) (O.1) (0.1) (0.2) (0.2) (0.2) (0.2)Miscellaneous (1.6) (1.6') 1.0 (0. ) (0.0) (0.2) (0.0) (0.0) (0.0)
TOTAL TAX REVENIUE 9.8 12.5 16.2 19.2 20.9 23.0 28.9 36.1 37.0
Department Services 1.0 1.2 1.3 1.E 2.3 0.7 0.9 1.6 1.6Posts and Telecorm. 1.2 1.5 1.6 1.9> 2.3 0.9 1.5 - -Interest and Loan Redemption 1.1 1.3 .6 1.6 1.5 2.0 1.6 -Rents 0.4 0-14 C.L 0.17 0.8 0.8 0.7 0.8 0.8Miscellaneous Receipts incl. Reimburserients 3.9 1.4 1.8 1.7 1.9 1.8 l.4 1.3 1.1Appropriations-in-Aid L/- - - - - 3.4 5.8 7.2 11.1
TOTAL NONTAX REVENUE 7.6 5.8 f.7 7. 5 8.8 9.6 11.9 10.9 1h.6
TOTAL DOMESTIC REVENUE 174 18.3 22. 9 26. , 29.7 32.6 40.8 L7.0 51.6
UK Grant-in-Aid 10.0 11.9 8 .5 8.3 6.4 5.8 h.2 0.6 -
Various UK Grants and Loans- 4.4 3.3 3.0 3.06 4. 3.3 3.2 3.3 3.3
TOTAL UK CONTRIBUTION TO RECURRENT BUDGET 1ls.4 15.2 11.5 11.94 :10.4 9.1 7.4 3.9 3.3
TOTAL AM,DUNT CREDITED TO RECURRENT BUDGET 31.8 33.5 34 L 4 38.6 J-0o. 1 41.7 48.2 50.9 5L.9
i7%jec :ootnocl: t- *]c -.i'.' rclirnri mr--
QJ3udz7et estimT-f-l/ Previously included under othetr "Nontax Revenue" itemns; excLuding UKLfinanced expenditures§/ Mainly payments to UK officers
Source: Malawi Government, Public Accounts; Budget Estimates 1',7?/7", and information provided by the authorities.
Table 5.): RECURRENI' BDGEM T EXPENDITUE'ES1964 - 19-7'2/73
Budg. Esti.1915h 1965 1966 15967 1968 1,69/70 1970/71 1971/72 1972/73K mill. ( K mill. , K mill. % K mill. % K nLill. % K mill. % K mill. % K mill. % KrmLLL. %Administration 5.1 15.9 6.3 19.5 7.0 19.7 7.3 18.8 7.2 17.9 7.7 13-3 7.5 16.0 9.2 18.2 ..0 .16.0Secuiity 3.1 9.7 3.5 10.8 3 10.7 4.1 10.5 IL. a 10.7 4.2 12D O 1,5 2&6 I42 2"7 i.9 LDefense .7 2.2 CT7 ' 0.9 27 1.1 2L 1.1 2.7 1.1 2.6 1.2 2.6 1.4 2.o 1.5 2.7Police 2.0 6.3 2.2 6.8 2.4 6.8 2.5 6.4 2.6 6.5 2.6 6.2 2.7 5.8 2.8 5.5 2.9 5.2Prisons 0.4 1.2 0.5 1.5 0.5 1.4 0.5 1.3 0.6 1.5 0.5 1.2 0.6 1.3 0.6 1.2 o.6 1.1Econcmic Services 6.7 20.9 6.6 20.4 7.7 21.7 8.4 21.6 8.5 21.1 8
.ij 20, 0 93 19.8 9.2 18.2 _aZ L22-OAgriculture, inc. land Use ) ) ) 1.5 3.59 1].6 4.0 1.Z3 04.3 2.0 4.3 2.2 4.4 2 5.0Veterinary Serrices ) 21 6.6 ) 20 62 2.5 7 0.5 1.3 o.6 1.5 0.6 1.4 0.7 1.5 0.7 1.4 0.8' 1.4Fisheries ) ) ) 0.1 0.3 0 (.1 0.2 0.1 0.2 0.1 0.2 0.1 0.2 t O.Lv 0.2Forestry and Game ) ) ) O.L 1.0 O.4 1.0 0.3 °.7 0.3 0.6 0.4 J. 38 O 0.9Geological Survey 0,0 0.0 0.1 0.3 0.1 0.3 0.1 0.3 C).1 0.2 O.L 0.2 0.2 0.4 0.1 0.2 0i 0.2Tourim 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 C).0 0.0 0.0 0.0 0.1 0.2 0.1 0.2 0,1 0.2Transport and E'ublLc Works 3.4 10.6 3.3 10.2 3.8 10.7 4.3 LL.I 4.1 10.2 4.6 LL.0 5.0 10.7 4.6 9.1 5,1 9.1Posts ancl Telecommunication 1.2 3.7 1.2 3.7 1.4 3.9 1.5 3.5 1.6 4.0 0.9 2.1 0. 9 1.9 10 2.0 1,0 1.oSocial Services 5.9 18.4 7.0 21 .7 8.0 23.7 10.2 26.2 11.0 j273 12.l _29, 13.2 26.1 14.2 28.1 lS.1 ?6-)Education 3.7 11. .1 12.7 4.9 137 6.4 16.5' .9 17.1 7.6 13.1 8.0 17.1 8.5 16.8 9.2 L6.4Health 1.8 5.6 2.1 6.5 2.5 7.0 2.7 6.5' 2.7 6.7 2.9 6.9 3.1 6.6 3.3 6.5 3.5 6.2Community Dev't. 0.2 0.6 0.6 1.9 0.5 1.4 0.2 0.5 0.2 0.5 0.2 0.5 0.2 0.4 0.2 0.4 0.2 0.4Malawi Young Pioneers - 0.4 1.C C).8 2.0 1.0 2.4 1.1 2.3 1.2 2.4 1.,3 2.3Information andL Broaclcasting 0.2 o.6 0.2 0.6 0.5 1.4 0.5 1.3 0.5 1.2 0.6 1.4 0.8 1.7 0.9 1.8 0o9 1.6Subventions to Local Authoritiesa D-istrict Administrations 0.8 2.5 0.9 2.8 0.9 2.5 1.0 2.6 1.3 3.2 1.0i '-3 1.5 .2 1.6 36 1, 310Financial ObLigations ]10.4 32.5 7.9 2L.5 7.7 21.7 7.8 20.1 8.o 199 7. 18.6 10.8 23.0 .1.4 22.6 ,J ;26.2P'ublic Debt Chargeis £T 2 4i3 i 3.9 l.0 4 .0 10.3 -.o 9.9 4.97 L1.7 6.8 L4.5 8.1 16.0 11.6 20.6Pensions and Gratuities 3.9 12.2 3.3 10.2 3.3 10.7 3.9 10.C 3.8 9.4 2.8 6.7 2.9 6.2 3.0 5.9 3,1 5.5Miscellaneous - - - - 0.0 0.0 0.0 0.0 0-3 0.7 0.2 0.5 1.1 2.3 0.2 0.4 0.0 0.0
':OTAL ]2. 0 100.0 32,.3 10O.O 35,5 100.0 38.9 1CO.C 40.3 100.0 42.0 100.0 46.9 100.0 50.5 100.0 56.2 100 0
j See footnote I/ appendix table 5.4
Source: Malawi Governnment, Public Accounts and Budget Estimates 1972/'7'3
Table 5. 8YVEW1DMCN1 2UDGE1 EXPENOII7JRES
1964I - 197 (/72
196;/70 l/ 6196±, 1965 1966 255' 1968 19to6-1966 (15 months) 2969/70 1970/71 197172' 1969-1971,/72 1964-1971/72
Admicuotration 249 6.5 622 .6 L4C.50 5.2 46.3 ±,.5 5651 4.0 3, 046 5.9 2,2 9.7 1,. X.7 3,373 9.6 4, 7 13 I10, 140 10. 6 13,186 9.65
Government Raildings 259 4.- 6113 4.4 7731 6~.o 392 3.3 342 2.1L 2,137 4.1 ':27 2.0C 343 2.0 592 3.7 972 3.1 1,993 2,.3 4,130 3.0New capital - - 34~ O.. 55 0.4 517 1.0 20! 1.5 391 o.8 1,602 7.5 1,287 7.5 2,630 71.5 3,391 10(.9 7,523 8.7 8,o1L4 5. 6Other 70 1.7 175 1.) 224 1.8 11 0.L 18 0.1 51! 1.0 28 0l.I 22 0.1 15,1 Co.4 345 1.1 524 0.6 1,042 0.7r
3eourit 15 C ±- 35~' 6009 5 5 6'Sb 63 165 1-.2 1, ~% 3.6 106. 0.5 4j5 .5 566 0.2 186 c.6 360 u,6 2,223 2.6
Dlefurse 15 11 ' ' 255 ±L 52e 5.- 71, 0. l, 25, 2.4 27 0.1 22 .1. 54 0.2 91) 0.3 171 0.2 1,..2' 3.0Police - 4J 6 97 0. 6 10 ' 91 0.7 p35 tO0 77 2.2 63 0.4 6 D.O 57 0.2 542 0,.2 675 0. 5
Prisons - '3 ~~~ ~~~~~~ ~~~~ ~ ~~ ~~ ~~ ~~04 37 037e 0.1 - - - - 6 0. 0 "I 0. 7 01.1 121 0.1
zr.oOg,lc Infrastructures 2~~~~~~,675 729/2' 7- 021 3 64 77C,5 1.1,52 71.3 2 ~ I9 22.736 721.9 65,980 75.3 -,5 72.3
A,Lrpxcol~tur 25So 47 4 '-'I1 105 'M ' nh 101 25 1 l5 5 - 1. 5,033 23.5 ,02)2.5 5,295 2.5.2 6, 982 22.4 17,260 19.7 23,24; 16.Votorsisury Services 2 7 7 53 fl 0 201 4 50 1.1 3±6 1.6 273 3.6 38! Li 625 2.2 1,411 1,61 127,920 is 1n '7 Z1.21,41 L.61,97 1.1
anesrymd lan- 413; 41 30'5 < 7 y5 7 81 3, . .6 85059 4.2 712 6.2 733 2.1 766 2.5 2,389 2.7 5,860 L.32F7 oieries 21 C. j6 1.5 5± 3.3 413 J. 3 46 0.1 96 0).3 154 D.2 -4314 0.37-ological Sur,,y and Lao;i D-e1e,eet ±•7 .�5 "1 Lu 1.; 1,352 2.7 198 3.3I- 15:. 7 170 3.5 359 1. 2 727 0),8 2,10,9 1,51
Funarco, Ce-ocero,, industry 3/ - S ~- 1 il')2900s 4.5 3,813 7 . ,21 ', 20 336 -0 4 1.6 1,332 1. 3 2,00 2. ,13 .Tr-ansp.rt.tior 1,07 .2 5 9, ).) ,i -9 '2'? -z7L 25.9 12,03-7 213 7460 2 0 71>35 ' 19,256 E4,.,5 B,a
63 27.2 35,336 4 l.o 50.325 36.1L
<00cr ~~~~~~~ ~~~~~~~~~33!5. . ,C: D. 2,43il 742 2.1 3,223 10.3 3.955 1..5 6,316 6Post, uo Telec- rn.cuation 1F2o4 2. 6 5± 3.7 1,465 i 6Thc 2., a8i 2c 0 55 2.5 LI3 9 2 .7 2,33.. 2.7 4, 202 3.0(
boost - uC ~~~~~iJ, 7< 2 ' 19z 2'90 1.6 12,036 730 '76" 2'6 51(2 'Sr 3455 '06 3,535 11.3 11,153 12.7_ 23,199 16-.?535 1-3 _63 1. 23,12 16
Kducution ~~~~~~~~ ~~~~~~1,140 1, '"< 1- 0 ]p26 530 "29 . '4 7.5 5,237 -13. 2 2, 544 IL.9 2, C3,7 1i ., 2,549 3.1 1,850 5.9 7,245 J. 3 12,332 9.0(Hieal th i' 13 1.4 64 3 1.3 '05 '0 1-n, 1.0 105 0).3 3LO 3.1i 653 D.,7 1,323L U.):lm . ;ater Suppliesc Sanittionor ?L 3 .. 3,j1 .,~ 74 C.3.0 ,±38 L), 7 1 411 4.l 346 1.0 570 2.1 1,5321 1.2 3,969 2.2
.tescdretiul housing 2~~~~~~ ~~i 6 711 5.1 2,457 1. o cOS 2 8 47" 2 4 321 1.0 550 0.8 1,57 16 ~ ,6 .9 82 1,7 3,9403 2.32-arout nd be,tial Deoelopisoct 4,2 01 2.:2 65". i.?7 1,191 7 3 102 0. Si 0) 5 24 2.1 125 (J.4 250 0.3 1,4L1 1.3
Aso ef Apr12 1, 1973) toe fiscal y~ear chuojed froec t~he culmidar jear t- :joo ,-: 6 r; 1 - 6aoch 31..rFial uccouc-ts ore u-eolsble Per cOre 15-r.:,nths period ilunuery 1, 1969 to, March 31, 1970. Tie figures shown are600i of the finulo for thse 05-rectOs per? xl.
5/inluded under Wa2rJcultrmn'H/ Nisly loa- to t~he Mulawi Deveiup,exxt Ircn.s:lr,clu des "I1ofonsuCloo and Bolanc
J ector-al brea}odos, io subject to oincr tohenge,
Sour-cc, M,1uwi Sjovmerr,t, Public Accounts end inforreucie prorlderd oy tire Faue uto- i 65
Table 6.1: HOLDINGS OF MEDIUM AND LONG-TERMGOVEPRN]MENT SECURITIES, 196--197
(KIOOO, end of period)
1964 1965 1966 1967 1968 1969 1970 1971
Reserve Bank 154 306 959 1,072 1,76, 1,88? 2,263 2,788
Commercial Banks 724 1,391 1,315 1,715 2,479 2,479 1,419 3,536
Pbst Office Savings Bank ) 1,236 1,784 2,460 3,186 3,816 4,728 6,hoo2/)
New Building Society ) 930 20b 424 h2 676 550 5)40) 2/)11.669-
Other Residents 1/ ) 1,060 1,709 3,152 6,583 9,533 10,097)
Non Residents 11,730 9,761 8,858 8,653 8,641 7,905 7,31? 6,h443
Total 13,538 13,958 15,049 17,476 21,328 26,166 28,359 32,836
m- Minl,y parastatal bodies and insurance companies
2/ Estimat e
Source: Reserve Blank of Mal-wi
Table 7.1 :ELECTRICITY GENERATION BY E.S.C.OMM.AND CONSUMPTION, 1958/1959 10 JUNE, 1972
Total Consumption Total
Generated Ind & Comm. Domestic Other Units Sold
1958/59 25.5 1325 7.3 0.1 20.92/
1959/60 27.9 15.0 8.2 0.2 23.42/
1960/61 33.8 20.2 8.5 0.4 29.1
1961/62 38.6 23.2 9.4 0.5 33.1
1962/63 42.0 25.7 9.9 0.6 36.23 /
1963/64 65.0 40.5 14.9 0.9 56-3
1965 52.2 34.1 11.0 0.7 45.8
1966 68.7 48.o 12.4 0.8 61.2
1967 85.2 60.7 15.6 1.0 77.5
1968 102.4 74.1 18.4 1.4 93.9
1969 116.1 82.8 20.7 2.2 105.7
1970 133.0 96.0 23.2 2.7 121.9
1971 144.9 104.2 25.2 3.0 132.4
Jan/June 1971 71.6 51.2 12.2 1.7 65.1
Jan/June 1972 82.5 59.5 13.5 2.2 75.2
1/ Includes Street Lighting and from 1965 General Purpose consumptionand from 1968 Arnovt to MocambhiJue
2/ Tnelueiiris iint-1 1ifid qa1Ae of 10fR8, 0 C00 KW)and 1J.7 ON) TWh for 19Q59/A6
and 1960/61, respectively, for Mzuzu and Mangochi.
t/ This period is the 18 months from July 1, 1963 to December 31, 1964.
Sour-ce: Escom Annual e-orts nand Monthly Pe+u ..s
Table 7.2 : PRIMARY SCHOOL EN]lO.NT, 196441970/71: ALI SCHOOLS
Year Standard Std. 1 Std. 2 Std. 3 Std. 4 Std. 5 Std. 6 Std,, 7 Std. E' Total 7. of 6-14Category Year Olds
1964 Assist,ed 41,520 36,128 36,888 32,737 30,838 29,249 30,214 - 237,564Unassisted 47,697 31,140 21,999 12,217 7,864 853 507 - 122,277 n/aTOTAL 8921L7 67X268 58,887 4Z4,944 38702 30,102 30,721 - 359,841
1965 Assisted 54,399 40,596 38,053 34,101 31,566 25,891 32,649 - 257,255Unassisted 29,262 18,287 16,753 9,136 6,637 294 287 - 80,656 n/aTCOAL 83,661 58,883 54,806 4,,237 38,203 202185 32,936 - 337 911
1966 Assistied 40,1.32 30,993 31,148 28,270 27,654 25,573 23,012 24,022 230,804Unassisted 19,056 13,331 9,613 6,940 4,842 548 411 511 55,252 32.1TOTAL 59,88 4,324 40,761 35,210 32,496 26 121 23,423 24,533 286,056
1.967 Assisted 48,090 35,709 31,542 26,761 26,760 2:3,041 21,030 26,192 239,125Unassisted 20,162 12,563 10,691 7,450 5,592 660 539 674 58,331 32.6TOTAL 68,252 48,272 42,233 34,211 321i52 23,701 21,5i69 26j866 297 456
1968 Assisted 73,124 45,597 38,300 30,393 28,281 23,890 21,690 26,475 287,750Unassisted 18,213 11,713 7,824 4,282 2,831 406 361 496 46,126 35.7TOTAL 91,337 57,310 46,124 34,675. 31,]12 24,296 22,051 26,971 333,876
1.969/70 Assisted 60,733 48,824 39,064 29,119 26,775 21,107 19,271 24,832 269,725Unassisted 21,032 16.005 12,162 7,638 5,772 720 488 454 64,271 34.9TOTAL 81j65 64,82 51 ,226 36,757 32,547 2,1 827 19,,159 25,286 333,996
1.970/71 Assisted 69,052 52,531 44,012 32,240 26,705 23,1801 19,504 23,813 291,019UnLassisted 14,023 10,145 7,508 5,268 3,430 590 580 539 42,083 34.0TOTAL 83,075 62,676 51,520 37,508 30,135 23,770 20,()84 24,352 333,102
Source: Ministry of Education
Table 7.3 SECONDARY SCHOOL ENROLMENT, 1964-1971: ALL SCHOOLS
FORM/Category I II III IV V V & VI TOTAL of 15-19
Year Olds
1964 Assisted 1,469 1,498 957 914 603 - 5,441Unassisted 114 117 79 47 25 - 382 n/aTOTAL 1,583 1,615 1,036 961 628 - 5,823
1965 Assisted 2,356 1,612 1,596 1,067 940 45 7,616Unassisted 125 81 86 56 32 - 380 n/aTOTAL 2,481 1,693 1,682 1,123 972 45 7,996
1966 Assisted - 2,364 1,530 1,415 905 41 6,255Unassisted - 141 63 51 29 - 284 1.6TOTAL - 2.505 1.593 1 466 934 41 6,539
1967 Assisted 3,031 - 2,332 1,184 1,064 43 7,654Unassisted 129 - 123 35 29 - 316 1.9TOTAL 3,160 - 2,455 1,219 1,093 43 7,970
1968 Assisted 3,338 3,003 - 1,115 1,011 54 8,521Unassisted 289 210 - 113 150 - 762 2.2TOTAL 3,627 3,213 - 1,228 1,161 54 9,283
1969 Assisted 3,074 3,188 1,755 - 1,075 50 9,142Unassisted 156 126 105 - 68 - 455 2.2TOTAL 3,230 3.314 1,860 - 1.I43 50
1969/70 Assisted 3,310 3,390 1,858 1,691 - 63 10,312Unassisted 463 345 202 170 - - 1,180 2.6TOTAL 3,773 3,735 2,060 1,861 - 63 11,492
1970/71 Assisted 3,502 3,502 2,094 1,910 - 63 11,131Unassisted 470 463 210 202 - - 1,345 2.7TOTAL 3,972 3,965 2,304 2,112 - 63 12,416
1) Figures from 1964-1970/71 are actual, the rest are projections.2) Between 1963 and 1969 secondary course was five years leading to School Certificate and
hence the column headed Forms V & VI shows figures of those doing 'A' Level. The courseis now four years.
3) Tn 199 there was a shortL academic year from January co August, 1969 and then the presentsystem started in October, 1969 which runs to August of the following year.
4) There was no Form I intake in 1966.
Source: Ministry of Education
-able 7.4h PU lP 0T OUS-INO COPRORAMION - FINANCIAL SPAT7F OF AFFAIRS, :1966-70(K1IAC A)
19,66 :1967 19 68 1969 1970
I. FIXEE ASSETSLand. & Buildings 4,297,968 4,692,5412 5,199,156 5,959,812 6,649,588Plant &: Machinery 6,.392 4,79 8 1,380 3,734 3,064Motor Vehicles 3,136 2,872 6,880 11,782 16,890Furniture & Equipment 2,414 4,766 25,124 32,242 34,578
4,309,900 4,7104,978 5,232,490 6,007,570 6,704,120
II HOUSING LOANS 23,648 33,400 23,500 19,018c 15,646
III. CURRENT ASSETSStock aLt COst 6,.568 ,8,62 5,854 5,738 10,424Debtor's & Prepacyments 30,720 24,554 84,578 87,512 116,,470Deposits & Investments - 28,556 194,888 420,486 623,952Cash & Bank Ba:Lances 59,562 137,446 60,494 281,742 194,998
4,430,398 4,933,796 5,601,804 6,822,066 7,665,610
DeductIV. CURTRETT LIABILITIES & PROVISIONS 26,876 93,612 172,794 159c,104 213,342
4,403,522 4,84o,184 5,429,01.C 6,662,962 7,p452,268
Represented by:V. CAPITAL I)EVELOPMNT FLVD 36,672 193,638 246,838 263C,622 275,424VI. 1LNG TERIN LIABILETIES 4,239,704 4,427,470 4,707,418 5,548, 698 54,891,494VII, ACCUMULATED FJND (Surplus Income) 127,146 219,076 47L,754 850,642 1,2855,30
4,403,522 4,840,184 5,42,0.10 o 6,662,962 7,452,268
Net Increase over previous year 4,262,222 436,662 588 ,82 6 1,233,95'2 789,306Net Assets (after deducting lo:ngterm liabilities) 163,818 412,714 721,59 2 1,1141,2614 1,560,774
Source: ,Ialawi Housing Corporation, Amuail Reports
Table 7.5- 71LAWI2 HOUS2ING CaOU7 ATTON'- FINA(8MAL FORECAST,7 j¶t7N4566
1974 (6027 191 l 004 0L7 5 10-76 697 7 1478_? 190 9 198') 1981 :982 1 9(2 1082 1985 1986
1. CAPITAI. CHARGESCr-rent.-Loans
A) Molau Sove- -nt 200 200) 200 200 200 200 200 250 200 200 200 200 2CC 20) 200 230
b) " " 70 0 70 70 70 20 10 70 25 2 70 7 70 70 , 70 70 ~ 70
a) Iqes-dol Tttbsn- Grou.p 12
C.Aort-sis Loan 0 (1968-1970)
d) 74160- Oner-Amee 'A' 4 8 12 12 12 12 12 12 12 12 12 12 12 12 12
e) Hlnu1 Co-e-met '8' 28 56 84 HO 0 84 3 4 84 04 4 84 64
0) Eneske 4 20 40 40 40 40 40 'Ao 40 40 40 410 45 40
8) C.S1. C. 12 14 96 96 96 96 96 06 96 96 96 96 96, 04 96 96
SHy~Itgl CiLe H ...slns LoseS 1 (1970/71)
0) Capital1
City Housin Loan 2 48 94 94 94' 94 94 94 94 90 4 94
Osts1 C.pita1 Ch-rgen - Cutrret L.an 299 310 0.14 418 410 494 568 596 396 596 596 396 595 506 536 1556
-prenend Hew. Luans[1 Coun-rtien Lon II
i) K.OseS G- -nneont 'A' 4 8 12 12 12 12 12 12 12 12 12 12
Li) MalsoO Gene-oet 'B' 24 46 60 80 80 s0 80 s0 80 80 80 92 40o9 80
£11) C.5.0. 48 90 140 010 L00 1550 150 IS0 150 1,50 050 137 130 650 1 50
iv) Hooks 4 a 12 20~ 32 32 32 22 2 02 32 72 -3 7 2 32j) CapOitel City Houing Loon II 66 12 252 252 252 222 252 52 252 212 230 252 2t52
TOTAL CAPITAL CHARGES5 INCLUDING PROPOSED 0E`2 L00AN0 298 2846 5 724- 80 2 [016 1090 1122 1122 12 [.212 0272 02 108 7
2. 07rHE0 LXPfN921000
a) RnpoOis nod Maintenan e 196 210 702 ~ 28320 744 360 300 360 040I 340 760 360 24360 760
b) Rent oooiaae12 12 14 16 16 19 10 18 ii 16S 18 i8 10 1s 1) 14
a) Rae o-no hre 10 116 34 152 173s 100 229 2 20 229 220 129 220 229 220 220 Ole
2) Adoi-vsttati-n 174 ~ IA 192 1172 2012 214 220 228 228 220I 220 228 228 229 223 700
Ž7 onL D.enme- Pl,nntg 50 50 so 001 50) 50 00 53, 50 55, 50 50 50 59 50 50
TOTAL "Other Enpo,diss-" 497 512 3512 676 764 SIc 885 985 903 863 865 065 683 005 900 938
TIGAL CO. 00D114NT 180. ALL CAPITAL CHARGES &, OTHER EXPENSDIT7LRE, 795 907 1170 1782 1561 1770 1979 2007 7007 20071 21007 2007 2007 2000 1967 1940
3. INCOME
A) Haste Rot- en- - Prset eaos70 740 760 760 769 700 760 167 7603 7602 760 760 762 3410 760 760
6) New House lot Co.ses-tiso Lone 200, 700 700 300 707 300 300 1000 300 320 300Q 300 700 7010 300 700)
N) 1e Heu..en C.C. Ottusing Lean I 10 3 50 0 5 100 100 200 100 104100 IOIG 100 107 ID 100 100 100
TOTAL2 IN5CLUING9CURROENT LOIINS 960 1000 III 11(5 060 1160 56 1160 1160 5160 1160 1160 5160 1160 1 NoI1 61, 1160 1160
-p.s-eed Sew Losesj
d) lN- Bnnett: 2nd.Cozsn-tiuo.Lone 1D 00 207 300 300 7 00 7 00 30700 300 700 500 3(1 300 300 300
e) Ne, HouesC. C. Hu ssig Inse II 100 200 500 300 700 205 700 300 SOO 730 300 300
TOTA,L ANTILCIPAOED INCCOME AT PRESENqT RENT LEVEL 960 .17 1310 0466 4560 14-60 1760 1760 (760 1760 1760 1760 17650 1)6 1 760 17 60
f) lOT. Rent leos-ea- 1.1.1973 120 146 116 166 106 176 176 176 L76 174 114 176 176 176
&) 107. Rent Lncroan- 1.1.1978 194 104 194 194 194 104 134 004 194
h) N-s Scene Rnns -ecing-t spec eslog sel- -. uds 0 12 46 20 24 28 32 36 40 04 48 56 66 40 64 64
TOTAL 1807940 INt. 1st 6 2nd 10ONS0RTIU39 LOANSCAPITAL CIT HOUSIHG LOANS RENT IN'CREASESON19 1.1.197341. 1. I978 F RC8i SELF-CEll. FUNDS 060 n210 1150 1624 17c0 4653 5060 0766 0270 2174 7117H 2106 2106 21(07 2100 2194
4. AtNNUAl. 5URPLU0/DEPOCIT
(Onu Iedie f-o se1f-g.ee-tid fund) '[173 1751 A287 +246 -'174 +24 -11 +159 -c163 +11.7 -17 1 +109 +172 .103_ *707 4227
3. 2E0. FROMtSELF-C0140RTElE)UNDT 110 123, [20 120 1Ž0 100 120 700 200 700 200 200 700 207 277 200
6. F14 I S0 ~ RP LtJS/OPEPIoTIT +53 -134, L67 -'17/ '-)' -96 -071 -41 -37 -3~3 -29 -01 -24 -17 .27 --27
7.AC10726JATED BALAN)jE (URPLUS) _7) -63S4 +_- -5 (4 +436 +307 -'266 -'-299 +106 -167 *149 +125 -.10/ *132 +140
Corpo-ti-~== ==
Table 7,.6 :ASSETS AND LIABI.ITIES OIP TUE NEW BU:ILDDIG SOCIETY, 1965-1972
(K')00)
(ErLd of' Period Balances)
1966 15966 1967 1968L 1969 1970 I971 197:2 (June)
Assets 1,96 2,197 2,787 3,54' 2 L4 4 ?61 L4 14 69
C,ash 6,0 .11 86 5Lf 93 79 62 50
13overnment Securities 533 684 541 8811 4hhO 818 867 1,027
Private 'Loans 1,189 1,251 1,988 22,h2c 3,170 3,L52 3,304 3,40~2
Land and Buildings 145 1ah2 162 166 1596 198 198 193
Other Assets 9 9 10 9 15 l1 17 16
Liabiliti3,s 1,93,6 2,L197 2,787 }, 542: 3iU 9 4'61 448 ij693
Share Capital 60 60 60 6c) 120 240 240 240
Deposits: 1,800 2,047 2*689 t,276 3j'6 3,89 4 L881D
Fixed 800 6,76 1,235 1, 482 1,52,4 1,',51 1,537 :L,59'7
Investment 710 1,073 1,000 1,308 1,5'0 1,,708 1,798 1,986
Savings 290 298 354 486 5 02 5 30 556 597
Other Liabilities 76 90 138 206 218 232 317 273
Source: The New Building Society
Table 7.7: NET OUTPUT OF MANUFACTURING INDUSTRY, 1964-1970(K million)
1964 1965 1966 1967 1968 1969 1970Output of Monetary Sector
Large-scale 5.3 6.7 9.7 11.3 1h.o 17.5 21.1
Small-scale 2.4 3.3 3.7 4.2 3.5 4.0 4.71
Total 7.7 10.0 13.4 15.5 17.5 21.5 25.8
Output of Non-Monetary Sector 4.4 5.3 5.5 6.2 6.3 6.1 6.1
Total Manufacturing Output 12.1 15.3 18.9 21.7 23.8 27.6 31.9
1/ Provisional estimate
Sn1r2 . of. Devlo nt Polcis 197_:1_-1980>Qf
Table 7.8 NET OUTPUT AND EMPLOYMENT IN LARGE-SCALE INDUSTRY1964-1970
1964 1965 1966 1967 1968 1969
Supplv-based Industries
Net Output (K million) 2.8 3.3 h.2 3.9 4.3 4.?
Employment (Thsd.) 6.4 6.7 7.6 8.5 8.8 8.2
Net Output per worker (K) 364 486 556 )463 486 24
Demand-based Industries
Net Output (K million) 2.8 3.8 6.14 7.5 11.5 14.2
Employment (Thsd.) 4.7 5.3 6.9 8.2 10.0 11.8
Net Output per worker (K) 599 713 937 923 1,151 1,201
TOTAL
Net Output (K million) 5.6 7.1 10.7 11.5 15.7 18.4
Enployment (Thsd.) 11.1 12.0 14.5 16.6 18.7 20.0
Net Output per worker (K) 5o8 587 737 689 840 920
1/ Total net output fieures differ from those in table 7.7 due to difference
in original source.
Source: Statement of Development Fblicies 1971-1980
Table 8.1 INDICES OF RETAIL PRI3CES IN EILANI'YRE, 1968 - 1971 Y(19'70 =: 100) averages)
Weights 19568 1 969 19 70 1971
Low income index 1/ CO.O 590.5 91 .3 100.0 106.6
F'oodstuff's 7.-9 84.6 56.1 100.0 109,2Drinks an.d tobacco 7.7 88.0 S91.3 100.0 112.8Clothing and footwear 17.6 594.8 597.1 1 00.0 1 00.5H:ousehold. gocids 19.8 596. 8 '96.4 1 00.0 i o04.2Domnestic help 1.6 590.5 591.3 100.0 106.6Vehicle expense 1.8 87.6 90.8 100.0 1 o8.4Miscellaneous Y 3.6 100.0 99.5 100.0 101.1
hTih.ccinome indLex 4/ 10C0.0 590.3 c94.7 10(0.0 107.7
F'oodstuff's 23.0 55.1 c95.1 1010.0 110.0Drinks and tobacc:o 6.5 86.4 93.4 1010.0 105. 7Cloth.ing and footwear 8.1 85.7 90.8 1 00C.0 1 08.5H:waseholdl goods 13.9 85.4 95.1 100.0 107.6Dlomes-tic helpi 9.4 87.7 932.2 100.0 107.7V'ehicle eixpenses- 23.7 89.4 96.0 1 00.0 108.3Miscellan.eous 15.4 95. 9 96.8 1 00.0 104.0
1/ The indices are based on. a "Household IncomEt and Expenditure Survey for Urban Areas andAgricultural Estates 1 96,8" which the National Statistical Office published in May 1970.These indices cannot be taken as indices3 of the cost-of-living since they exclude dwellingexpenses, metdicaLl ceLre, donations to charitable and poL-Ltical organizations, dowry andmarriage settlements, cash gifts and al:L personal taxes,. For thUe low i:ncome index, pricesare observed monthly and the weighting pattern refers only to Blantyre. Prices for theligh income index are observed four times a year (in January, April, July, and October)
and again only in Blantyre, but the weights are averages for the maiLn tDwns. T'he annualindices are the arithmetic means of the monthly indices.,
2 Covetrs households wi.th yearly expencLiture up to K600 and an average expenditure of1 K210.This index is very sensitive! to priCe movements of the staple food items such as maize,meat',ancd fish.This item consists mainly of schlool fees, personal services, entertainment, and trave'l.
4/ Includes household expend-t.ure exceeding Ke2, 000 a year and. an average expenditure oL K3,71 9.
Source: ?orithly Statistical Bulletin, June 1972.
Table 9.1: PROJECTIONS OF GDP BY iNDUSTRIAL ORIGIN, 1975 and 19850
(K Milllon)
Actual 19701i75196' 1970 _7 9
Agriculture:
SmallholdersIN UonI -M'oIn e t,a r,y 7I. 88. .2 ---
Monetary 21.7 26.6 46 78s'uates andu uoverruiientu2 28
rT In , . 1T 9 . 168 91IVI%I.J // &LI
Mining and Quarrying 1/ 01 0.2 1Manufacturing
Non-Monetary 5.3 6. 7 8Monetary 10.0 25.8 4o 73
TOTAL 15.3 31.9 47 81
Constructi 4n 0Non-Monetary 2.7 3.6 4 5
Montar 3 8 1 19
'TVIAT. 6=6 12 1 16 2)
Electricity, Sanitation and Water 1.3 2.9 5 11Public Administration and Defence 13.9 19.1 28 40Education 3.1 5.7 9 14Health 1.4 1.9 3 6
TOTAL 18.4 26.7 Lho 60
Distributifonn Banking and Finnnane 1.2 21,.9 Id 72Transport and Communications
Non-Monetarv 0.5 0.6 1 1Monetary 6.5 12.0 21 42
TOTAL 7.0 12.6 22 43
Other Services n.e.s.N1on=-Monetr 2.5- a. 1 5Monetary 6.2 10.1 15 24
TOTAL 8.7 13.1 19 29
GDP at Factor CostNon-MoneIit;ctar-y 82.1 101.5 l1
Monetary 89.8 152.2 243 h09
TOTAL 171.9 253.7 359 5h1
j/ Projection does not include bauxite.
Source: Statement of Development Policies, 1971-1980
Table 9.2: PROJECTIONS OF SAVINGS AND INVESTMENT, 1975 and 1980
(K Million)
Actual Projected1965 1970 1975 icRn
Domestin TnvHstment 251 546 71n0 109.nMonetary 23.1 51.6 67.0 103.0(Grrn s Fixpci Capnit1l Form-at.ion 17.7 n6.4 60.0 95.0
Public 13.4 25.6 33.0 50.0Pri vate 20-8 27.0 5 5.0
Stock Changes 5.4 5.2 7.0 8.0Non-Monetary 2.0 3.0 4rn 6.0Gross Fixed Capital Formation 1.6 2.2 3.0 4.0Stock Changes 0 A 0.8 1.0 2.0External Debt Amortization 3.8 13.0 7.9 17.1
Pub! 3-1 33 -I .-Private 0.7 9.7 2.0 4.0
Changes in FoOx ign Reseres 7. A.8 2.0 3Total Investment Requirements 35.6 74.4 80.9 129.1
Domestic Savings 3.6 18.1 40.0 77.0Monetary -1.6 1ff1 .o -I71.0
Public -9.9 -11.0 1.1 13.3Prl4vate 1-1.5 )6.-1 34. 57.7_)L4 .7 21f-
Non-Mone tary 2.0 3.0 4.0 6.oNet- F';actor Payments Abroad -. 49-. 1.
Public -1.3 1.1 -31 -3.3I Lva u~~~~~~~~~~~~~~-0 fi ''
I IiLVdU 9. 'W ) )U -LL.OH*
National Savings -0.7 13.2 31.4 62.1Iionelary -2.7 10.2 2 11 *I ]Non-Monetary 2.0 3.0 4.0 6.oNetU '01ULrII Foreig 1sLCrs 27.2 L.)L 10.9 i1.O
Public 26.3 11.4 8.3 8.3Private 0.9 1.7 2.6 3.5
Capital Inflow 9.9 48.1 38.6 55.2Public 4.3 34.4 28.0 33.0Private 5.6 13.7 10.6 22.2
3Re a 36-5 74.4 80.9 129.1
Source: Statement of Development Policies, 1971-1980
lable 5.3: M4ALAWI GOV&MNOthT DEVEWD?4ET PROGRAM15721/73-19714/75
TotalPrga--- Atal- c t---------l--- Develo aent P'rogram-------------- ------------ --Anticipa ~5aarces o Fin a ----- e--.-------0t1~e ut Total Sources1969/70-71/72 1972173 1973/7b 19714/75 1972/73-19714/75 L~ocal External Total. UK and private Mulitilat. Shares
K I000 % K'000 K'000 x K'000 K000O % K' 1000 'o00 % K'000 f K'000 KI OO A~ A
Actainistration 9.7286 11.7 3j213 12.0 8,166 22.2 7L30 0
23.0 18 679 19. 6 2,751 11*.7 15,28 5.2, 213 1.1 15,715 841 __ - 10.0Govermnt Buildinigs 1,907 2.3 129 1, 1,20 2.7 2175 ? *T72 2,17 100o.0 - - - - - - - 10.0New Capital 7, 303 8.8 1,1L4~ 14.3 7,073 19.2 7,000 22.0 15,217 15.9 *- - 15,217 100.0C 213 1.14 15,0014 98. 6 - 10. 0Other 518 0.6 310 3.0 7 3 0.2 52 0.2 935 1.0 2214 214.0 711 76.0 -- 711 76.0 - 10.0
Security 331 0.14 191 0.7Q !.~ Jj,2 1.820 Id 3 ~513 i , 9- 290 oo 65.0 L3 ~ 5.0 Def,-ense -- M TT 78 0.1. 1,200 3.3 1,230 3.0 2,146 2. 6 u . 6.8 2,300 9 3 .2 2,300 93.2 - - 10.0Police 126 0.2 77 0.3 107 0.3 210 0.7 3914 0.14 39h~ 100.0 - - - --- 100.0Pris;on 147- 0.1 76 0.3 220 0., 330 1.2 676 0.7 6rI76 110.0o - -- - . - 1DO. 0
Econcrric Infr-astrucLu.res 62 952~ 75.5 19360 72.1 22 213 60.4 17,938 56.14 59 511 62.14 10 L73 1.7 1 149 333 82.5' 17 877 30.0 15 506 26.3 15 '55 26.8 100.0CAgriculture I~~~~~TS' ~~ 7,~~ 7 T-T' 277 10,1413 .7 ~ ~ ~ i2 r7 '~~Ii It ~ 3
Veterinar-y Services 1,3141 1.6 1,100 14.1 1,216 3.3 981 2.2 3,000 3.-1 467 15.6 2,533 814.8 1,589 953.0 930. 31.0C 214 0.5 100.0Forestry anid Game 2,211 2.7 P91 3.3 81414, 2.3 790 2.5 2,515 2. 5, 2514 10.1 2,261 39.59 2,261 89.9 - - - 100.0Fisheries 137 0.2 180 0.7 363 1.3 182 0.6 730 0.86 3141 146.7 389 5 3.1 277 37.9 112 15.3 *-- 100.0Geological Survey and Land
Development 637 0.8 3146 1.3 3314 O.? 209 0.7 889 0.9 290 32.6, 52; 67.14 599 617.4 - - .-- 100.0Fi-nance, Commserce and Ind. 2,216 2.7 14914 1.3 1,361 5.1 2,075 6.5 4,1430 14. 6 1,505 314.0 2,925 66.0 *-- - 2,925 66.0 .- 100i.31Transportation 33,854 140.6 5,633 21.0 6,053 16. 5 3,011 9.5 114,697 15.14 2,137 .14. 5 12,560 85.5 14,J62 33.1 6,509 141.3 1,13? 3.1 100.0Powe r 3,965 14.6 2,055 7.7 1-16 0.3 - - 2,171 2.i - 2,171 100.0C - - - 2,1L71 100.0 1&).0CPost, and Telecomsn. 2,212 2.6 1,306 14.9 1,313 3.5 5714 1.8 3,193 3.3 -307 9.6 2,886 90.14 1,1423 1414.6 1,1463 145.a - 100. 0
Social Infrastructures 10 371 12.4 4,083 15.2 14 31 13.? 11748 114.9 1lt3 ~680 114.3 3,438 .25.1 10 2142 714.9 14 239 31.0 14,642 33.9 ~1,61 9.2 10I. 0Educ'ation 3773g T1- 1,990 ITh T T37 1,367 T7- 7 157.tE37 ~ WTh 722 ~,M 3 - - 1,2.2 2 .1 100.0Health 609 0.7 860 3.2 1,935 5.3 2,199 6.9 14,9914 5.2 1,1L85 23.7 3,809 76.3 - 3,809 76.3 - 100.0Dor. Water Supplies and
SaLni tation 1,4*28 1.7 5147 2.0 507 ].1, 31 2 .6 1,866 2.0 2117 11.6 1,6149 38. 14 779.~41.7 791 142.14 7,1 L.2 100.0CResidential. Housing 1,368 1.6 56o 2.1 765 2.:L 320 1. 0 i,6149 1.7 1, 0149 63.6 600 36.14 600 .36.14 - - - 10oo.oCommnunity aLnd SociLal
De'velopment 230 0.3 122 0.5 90 0.2 50 0.2 262 0.3 220 914.0 142 16.0) - - 142 16.1) - 100. 0
Total 83,390 100.0 26,8147 100.-0 36,755 100.0 31,3o6 100.0 95,1408 100.0C 17,600 18.14 77,808 81.6 214,629 25.8 35,863, 37.6 17,316 18.1 100.0
~/Includes E2.3 mi-llion IJ.K. grEtnt for- construction of arm,m barracks at L,ilongwe
Source. Govoe-rnment of Mlalawi; Developcment Frogs-re 1972/73-1971/75, appendix table and informnation providied by goverrnment.
Tale I.. - - 'A3 NT A OF T C fLAV?L.trTSC MtO TCrTITr)jC 97r' and 1980
(K Million)
Actual. Projected1965 3-970 1975 1980
Merchandise:Credit 28.5 47.5 79.0 12 3.0Debit 40.9 68.b 95.0 135.0Net Credit -12.4 -20.9 -16.0 -12.0
Non-Factor Services:Credit 4.1 8.1 13.0 22.0Debit 13.1 23.7 28.0 L2.0Net Credit -9.0 -15.6 -15.o -20.0
Factnr Tncnome:Credit 5.5 9.8 9.0 8.0Debt-hi t. 9.8 Ih.7 17.6 22.9Net Credit -h.3 -h.9 -8.6 -A.9
Net Gordnri and cPrvinRs -25.7 -hl.L -39.6 -IL6.9
Transfers:P rivate+. 9T -r-an - fe.rs:
Credit 2.1 2.1 3-0 4.0De bi t 1.2 n.L 0.4 I 0.5Net Credit 0.9 1.7 2.6 3.5
Crvernment Transfers :Credit 26.Is 11.6 8.6 8.6Debitf 0- .2 0.3 0
Net Credit 26.3 11.4 8.3 8.3A1,i+ qransf Aocon 27.? 13.1 10.Q 11.8
Balance on Current Account 1.5 -28.3 -28.7 -35.1
Long Term. Capital:Private:
Credit 2.8 6.2 10.5 21.0Debit 0.7 9.7 1/ 2.0 4.0Net, Credit 2.1 -3.5 8 . 17.0
Goverrment (inc. Public Enterprises):Credit 3.1 32.4 1/ 27.0 32.0Debit 3.1 3.3 5.9 13,1Net Credit - 29.1 21.1 18.9
Net Long Term Capital 2.1 25.6 29.6 35.9Net Short Term Capital 2/ 2.8 7.5 0.1 1.2Net Monetary Movements 1.2 2.1 1.0 1.0Balance on Capital Account 6.1 35.1 30.7 38.1Movement in Foreign Exchange Reserves 4/ -7.6 -6.8 -2.0 -3.0
1/ The large outflow of private canital arose from the renatriation of workinngcapital, by the Nacala rail link contractors after the receipt of the finalnqvment of K1O million from Malawi Railwavs. A similar sum was receiveri ns aGovernment loan and inflated the figure for Governxment long-term capital.
21/ Tncn-udinsy errors and omissions.T/ Including SDR allocations.
_/ M;nus equals a rise, plus equals a fall in the r'serves.Source: Statement of Development Policies 1971-1980
Table 9.5: MANUFACTURES EXPORT PROJECTIONS, 1975 and 1980(K' 000)
Actual Projected
1970 1975 1980Demand-based
Cotton piece goods )Knitwear )Clothing, other ) 530 1,500 29 8oShoes )Blankets )
Metal products h59 ),nf 600
Other ii), n
TOTAT. 1i n,0 22-),0 3,9c
Si rv)nlv-hp; q-f
Anhimal origin 525 600 900
Vegetable origin 88 ,nn600 17,60OL/
Mineral origin 170 850 1,150
TOTAL 1 ,579 r,05 rlLt,TOTAT M A7JTACTTDIREC 'Q A,29 A ,570
1/ Includes Vipya Pulp and Paper Project
Source: Statement of Development Policies 1971-1980
132D -10,14
s 0 , ,) RFPLFBLIC X~~~~~~~\TANZANIA(t
4' 0 \ ;//^> H IL U M 8 A \ -9 - 1[ \ J~~~~~ilp REPU'BLIC - L A D
7-2~~~~~~~~~"l ) \ MALA/
jt % t. REt'// j 1 sl _-. _-~~~~REUBLI
(!AI*4 \ ~~~R, HIUB j RE } @PUBLIC
. / 2 \ j f , ' -J
on~~ ~ ~~~~~~~~~ h.et SOUTnj i ' E'bTHe
; OK~~~~~~~~~~~~~~~~~~~~AFRICA_
5v <> *~~~~~~~~~~~~~~ 5~~~T J/CK.L 6
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0 T\ |,Q io o n t ,\0 * I x. A : . Mnoh J vJ \> R it THF\ O A9L
X huX|NMob }<<
NKHTA
MALAWI !gP y >uen,~/X~~~~~~~~~~~,,^, ZC,w
-~~~~~~~~~~hu, Alitd oe 70 fe rmw3t&) 3x03>5 E -iO00-7000 /,- A_R iTX~~~~~~~~~.........
N PAR D"0 Nkhoty \ s kot A J
.... ~~~~cKI R egilai Cob,d)re \...... .t- f e-*-Internotional Bondaries > x hirornChivr <
'1~~~~-~ ) NChmj
~~~~~~~ - ;,,'"'i. ,. O . H.6( ''.!i',,,:l,,,, ..
^ 20 40 60 80 iuO \\ y1 |~/~itilES TO BEIRA\@SH FBrfuARY 1973 |~
IBRD-T0315_ R
0 5.,
5. Jj \ ~ RE pu~.Ic FEBRUARY 1.\.1
OF ~ TANZANIAJ
APORO ZABI _rnL ` rJ
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(RFe) NMIBIA iTSWANA, -,7,j
Woe_HILUMBA!''/ -I -q j S W%ILUMBA) v 11 V JREPUBLIC WAZILAND
| v \ . ;7C\C^iwiltet |l \ ~~~~~~~~~~~~~~~~~SOUTH _'L.EsS O!
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Rp /,\~~ ~~~~~~~~ R* A \
t jv / R S &(/D- O .e.t j.tIKWINA/NHAPUNGA . .-'r z u egrated Rurac haea
z i (e')' t / , i~~~~DNecelopreent Frojec6«,
i> ,phasa Dae ho
ig \ { - \: 7 ~Rice Scheme /* _
West M,imhba Landwa)" Deuela ea/Utilization Proe, AMwANJIwA f I..<
I - , - *- = I *K- -JS M A L A W I
/ _- wagw ARICULTURAL PROJECT AREASI/ .~~~ I .- E ~~~Pilot Proj ct \
~. C [(4 f9'4,A./-'Nlk LAKEo05 C f t F R /< NhotWoiro /MA!Aw,
li Kosurigu j > < 0 IrIlrigated
Kasungu Flue Cur. -,.ice ProjectTobacco Growers S-Eere v ,fG( )
_jIISANDWA A D-e hionl,akesiore C e r9
Lo GIt ~~~~clopmenr- mol * Nonkr,m. ' % NOW - H IPOKA
- CoClb Agri rural _ .__. MONKBs
_ eMX t \ + -J-- >X....PINDA \_. _ ~~~~~% Dza~~la anvam i .. ~-Ced,to 1 ,
| O 6 r Forest Reserue\ 1 li (/ + , - ,
.(,. ' . \Arua '.SD u, C,-\, y R To NACALA
EXISTING MAJOR PROJECT AREAS K rLAWONoFei.ore
P!ANNEDIrn MPIAD DnrrOJT AREAc \ i/it C /,1
,IrI rTirTrIAL FUTURE MAJOR PROJECT AREAS J *
t iuiiffu1IIiIIIPLANNED FUTURE EXTENSION AREAS Go.h X FUM
'Ii :hRIJRI ;4I H 11;AREAS Potato Growing Area!E 0 t , gJ Chs Ia|| ,|||||i]lSUGAR SCHEME To T.. e * Mwonwo 4 8 < ZOMBATo TOTE Meeanw *~~~NASAWIA
I --- TP(rTAT,P, GROWING AREAS C,re*AAl I1j 1 VIPYA PULPWOOD SCHEME B BLNTYRE PhaIOmePla;I
I ' !MARSH1 - .MOnr ,-
1I * [MALAWI YOUNG PIONEER TRAINING -I; BASES AND DEMONSTRATION FARMS , IIIII=WO I
- ON Ire~~~1 gatos 1
RReNational Park - TeArsROADS SW ucoma Estate (Sager) 'j H~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IKNE/AAG
ITI I :j*" |RAILWAYS r Shire Valley (Marsh ReclnationDeepttProjec A G
| ... . REGIONAL BO UNDARIES.............<W * S
| ~~~~INTERNATIONAL BOUNDARIES ) NsonleKIVERS \ W Nd;ndi Marsh
0 20 40 60 80 100I __ \\ jJ 771r. b-,damlnu ,, brn ont - tLet a,ruy do ,,,I
MILES Tio,zpl ,',r d c,l,r,e o-r ueyrnc- h, thrTo BEIRA Wo'rld Bnk, u-dit, u$ftiurr
IBRD-10316
| -. s 1 l X ). t.5 ~~~~~~~~~ ~ ~ ~~~~~~REPUBLIC | \ *_ > | | 2 > ~~~~~~~~~~~~~~~~~~ZAIRE j\ AZAl
[ \ itl2tholire \/$r ! s 11 \ , ~~~~~~~~~~REPU8LIC on N
1+9 C hie7;,// IT N1 1 / AF)- BOTSWANA.
I / 8 ^7wStVING5TONIAXk
I ( mPhf ~~~~~~~~R f 7 .~ N .AI
N X C ,$ .{,.D..amUtaii. ! /!M A L A W I
X TV \'\S ,ITRANSPORTIATI IItIO NEWORK
jI K osu n g u ~~~~~Brid;Ai-
// , wBurz t g) > ~~~~k t. V oCorl
Jj U 5 ;J<ridge .]yg 1fs t \Sk rids
| _-_ 5 Likuniv 3 r * +0sAa \ .~~~~~~~ jh ,4 -17lrol
-A' ~ ~ ~ ~ \ I AAk;; n r _ AN A/anoocu.r \ -',^//tR\ TNCL
r, D 9 v /V\ O DE ,:
| ROADS Ge ,t1 :-Xt Xi.SZj.,I. AChi/* vN
I\ P NE OSRCINMqGd/Aenfns,l EMB - !
I Q ~~~~~~~~/ s C h/~~~~G\llmT hy lq
I~~~~~~~~~~~~~~~~~~~~ T. NACALAS
| ' * A I R P O R T S eB\l3 k
!U--a N DER CTONSTRUCTOUNDARIESA
|~~ ~I EA TO EIIR 10FERAR 97