Aid Freeze Threatens Malawi’s Recent Development

Will the successive freezing of foreign aid to Malawi negate the progress it has attained in the past five years?

The Millennium Challenge Corp.’s decision on Tuesday, July 16, to freeze its $350 million accord with the troubled African nation is the latest in a series of donor pullouts prompted by government actions seen as undemocratic.

In March, the country lost more than $400 million in aid money when donors, including Germany, Norway, the World Bank, African Development Bank, and the European Union, suspended or ended their budget support. Earlier this month, United Kingdom, Malawi’s biggest donor, also suspended £19 million ($31 million) in budget support for 2011.

The succession of aid suspension and termination is likely to deter investment and undermine a five-year economic boom in Malawi, Bloomberg says, especially considering that as much as 40 percent of Malawi’s budget depends on foreign aid.

The silence of Malawian senior officials on the issue of MCC’s pullout says much about the prevailing political condition in the current administration, wherein embattled President Bingu wa Mutharika is reportedly the one strictly calling the shots.

Donor pressure is mounting for the Malawian government to shape up. With about 74 percent of its 15 million people living on less than $1.25 a day and an economy teetering on the brink because of fuel and foreign exchange shortages, the country cannot afford this aid impasse for very long.

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About the author

  • Che

    Che de los Reyes

    As a senior staff writer, Che focuses on international development breaking news coverage as well as interviews and features. Prior to joining Devex, Che handled communications for local and international development NGOs and government institutions in the Philippines.