The Reserve Bank of Malawi has cautioned the country against depending too much on agriculture for economic growth.
The caution has been made at a time when the country’s per capita income is said to be stagnant compared to other countries.
For instance in 1980, Malawi’s GDP was three times of Ethiopia, however in 2018 Ethiopia’s GDP is now 12 times of Malawi.
This according to Dalitso Kabambe, governor of the Reserve Bank of Malawi is as a result of the over reliance on agriculture.
Kabambe said if the agriculture sector is hit, all sectors remain likely to shrink – a situation which he argues needs urgent alternatives.
The governor has since urged the country to start investing in other sectors including tourism, mining, manufacturing and diversifying the agriculture sector.
Central bank authorities have said overdependence on agriculture is impeding the nation from realizing its full economic potential.
Current statistics indicate that there has not been much improvement on the country’s GDP per capita as it only accounts to 4% of the world’s average.
This is less when compared to other African countries such as Ethiopia whose GDP per capita is 12 times that of Malawi.
Meanwhile, Dalitso Kabambe, Reserve Bank governor feels the current status quo is detrimental to the country’s economy.
According to the governor time has come for the authorities to consider investing in others sectors such as Mining, Manufacturing and Tourism which have potential to turn around the country’s economic misfortunes.
Unless this is done, Kabambe is of the view that the country stands to lose out on potential economic gains.
Malawi agriculture is composed of two main subsectors: small-scale farmers and estates. Smallholder farmers comprise an estimated 2 million farm families and cultivate about 4.5 million hectares of land. Smallholder production is highly subsistent.
It is characterized by low levels of input and low output levels.
Approximately 25 percent of smallholder farmers cultivate less than 0.5 ha on average; 55 percent cultivate less than 1.0 ha; 31 percent cultivate between 1.0 and 2.0 ha; and 14 percent cultivate more than 2.0 ha.
Despite being resource-poor, smallholder farmers produce about 80 percent of Malawi’s food and 20 percent of its agricultural exports.
The estate subsector is the nation’s principal foreign exchange earner. While it contributes only about 20 percent of the total national agricultural production, it provides over 80 percent of agricultural exports mainly from tobacco, sugar, tea and, to a lesser extent, tung oil, coffee and macadamia. The estate subsector operates on leasehold or freehold land. [FAO].
Source: MIJ Online