Trade and aid in Malawi

Figure 1: Official development assistance (ODA) received by Malawi (current US$ per capita), 2012 to 2022

Extract B: Development challenges in Malawi

Malawi’s real GDP growth has been volatile, averaging around 3.5% over the past decade, which has limited significant inroads into poverty reduction. The economy remains highly vulnerable to external shocks due to its heavy reliance on agricultural exports, particularly tobacco, which accounts for over 50% of export earnings. Government initiatives, such as the Affordable Inputs Programme (AIP) for fertilizer subsidies and investment in smallholder irrigation, have aimed to boost food security, but fiscal constraints have hampered their effectiveness. The national poverty rate remains high, only decreasing from 51.5% in 2010 to 50.7% in 2020, with rural poverty persisting at nearly 60%. Rising public debt-to-GDP ratios have severely restricted the government’s capacity to invest in secondary education, healthcare, and infrastructure. Malawi's Gini coefficient has also pointed to persistent inequality, hovering around 0.45.