Malawi’s development programs are in limbo as the government struggles to plug gaps left by the United States’ aid cuts. With the Malawian kwacha plummeting, an additional 435,000 Malawians were expected to fall below the poverty line last year — experts told Devex the country will be hard-pressed to make up the shortfall, despite changes to the tax regime and a bilateral deal with the United States for health funding.
The U.S. government, through USAID, had been supporting Malawi with over $350 million annually across sectors, including HIV/AIDS, basic health, agriculture, and education. Malawi also benefited from compacts with the Millennium Challenge Corporation, or MCC, launching a second $350 million compact aimed at improving transport networks and land productivity in 2022.
However, following a U.S. federal directive to reduce foreign aid spending, most development projects have been halted, and MCC has shut down operations in Malawi.