Our Comment - 2

The exoected complete refurbishing of the Liwonde-Nacala connection will be  a significant event for the Malawi economy. The immediate effect will be it will lower the cost of Malawi exports and imports by 40 per cent. This will in turn significantly contribute to the improvement of Malawi´s competitivity. But this will not happen automatically. The government will have to be proactive in addressing problems of production.

There are three things that are a major constraint on Malawi’s exports.

The first is the low level of production of exportables.  Other than a limited number of agriculture products we have no industrial base for increased export of manufactured or processed  goods- This is partly related two other factors that the government must address: lack of skills and poor infrastructure. On skills, we need to dramatically improve the quality of education and training at all levels and expand the intake of institutions of secondary and tertiary education. We have wasted too much time argueing about sharing the little we have-the quota system debate.

As for infrastructure, the most obvious one is electricity. We have three projects that can radically improve our position. The first is the Cabora Bassa interconnectivity. We need to speed up this project. The second is the thermal plant to be built by a Chinese company. The final one is the Millennium Challenge Fund project to completely revamp the national power grid. The government should indicate to its partners that this is urgent and urged to push themselves further in effectuate the projects.

The final problem is domestic road network. Although Malawi is not the worst placed among landlocked countries it has high transport costs for its goods. A significant share of these costs is domestic because of the poor road network to centers of production of agricultural produce.  If we are to benefit from Nacala we must improve the road network within Malawi to reach rural producers everywhere.