2022 Index of Economic Freedom

Malawi

OVERALL SCORE53.0
WORLD RANK134
Rule of Law

Property Rights48.1

Judicial Effectiveness53.0

Government Integrity29.4

Government Size

Tax Burden78.7

Government Spending87.4

Fiscal Health11.0

Regulatory Efficiency

Business Freedom34.0

Labor Freedom56.4

Monetary Freedom71.1

Open Markets

Trade Freedom67.4

Investment Freedom50.0

Financial Freedom50.0

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Quick Facts
  • Population:
    • 19.1 million
  • GDP (PPP):
    • $20.7 billion
    • 0.6% growth
    • 2.9% 5-year compound annual growth
    • $993 per capita
  • Unemployment:
    • 6.0%
  • Inflation (CPI):
    • 8.6%
  • FDI Inflow:
    • $98.0 million

Malawi’s economic freedom score is 53.0, making its economy the 134th freest in the 2022 Index. Malawi is ranked 26th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

Malawi’s economic growth has continued at an uneven pace over the past five years. Unfortunately, economic freedom also continued to be quite weak during that period. With generally higher scores for rule of law edging out a decline in fiscal health, Malawi has recorded a fractionally higher 0.8-point overall gain in economic freedom since 2017 and remains among the lower ranks of the “Mostly Unfree” countries. Monetary freedom and trade freedom demonstrate some strength, but government integrity is very low.

IMPACT OF COVID-19: As of December 1, 2021, 2,306 deaths had been attributed to the pandemic in Malawi, and the government’s response to the crisis ranked 77th among the countries included in this Index in terms of its stringency. The economy grew just 0.6 percent in 2020.

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Background

Malawi achieved independence from the United Kingdom in 1964 and was ruled as a one-party state by Dr. Hastings Kamuzu Banda for 30 years. Arthur Peter Mutharika, brother of former President Bingu wa Mutharika, won the presidency in 2014 in elections that were of questionable legitimacy. The constitutional court overturned his reelection in 2019, citing large-scale irregularities, and Lazarus Chakwera won the subsequent rerun of the election in 2020. More than half of the population lives below the poverty line, dependent primarily on subsistence agriculture. Tobacco, tea, and sugar are important exports. A long-running border dispute with Tanzania centers on Lake Malawi and its potentially large oil and gas reserves.

Rule of Law

Property Rights 48.1 Create a Graph using this measurement

Judicial Effectiveness 53.0 Create a Graph using this measurement

Government Integrity 29.4 Create a Graph using this measurement

Property rights and interests are not sufficiently respected. The land registration system is inadequate. The judiciary is reputable and independent, but the overall system is inefficient and weakened by poor record-keeping, heavy caseloads, a lack of resources, and a shortage of judges, attorneys, and trained personnel. Corruption is endemic in both the public and private sectors, although the government has stepped up anticorruption efforts.

Government Size

The top individual income and corporate tax rates are 30 percent. Other taxes include value-added and inheritance taxes. The overall tax burden equals 18.3 percent of total domestic income. Government spending has amounted to 20.5 percent of total output (GDP) over the past three years, and budget deficits have averaged 8.7 percent of GDP. Public debt is equivalent to 67.3 percent of GDP.

Regulatory Efficiency

Resolution of business disputes can take an enormous amount of time. The development and implementation of regulations are only semitransparent. There is a scarcity of skilled and semi-skilled labor. The government lacks resources to enforce its labor laws. Despite the significant economic role played by state-owned and subsidized enterprises, information on their finances is opaque, and relevant statistics are not readily available.

Open Markets

Malawi has two preferential trade agreements in force. The trade-weighted average tariff rate is 8.8 percent. The lack of transparency, often worsened by bureaucratic delays, is a considerable impediment to foreign trade and investment. The investment framework remains underdeveloped. High credit costs and scarce access to financing constrain the private sector. Much of the population remains outside of the formal banking sector.

Country's Score Over Time

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Regional Ranking

RANK COUNTRY OVERALL CHANGE
1Mauritius70.9-6.1
2Cabo Verde66.72.9
3Botswana64.8-2.8
4Côte d'Ivoire61.6-0.1
5Seychelles61.1-5.2
6Benin611.4
7São Tomé and Príncipe60.34.4
8Senegal602.0
9Ghana59.80.6
10Tanzania59.5-1.8
11Namibia59.2-3.4
12Madagascar58.91.2
13Burkina Faso58.31.8
14The Gambia58-0.8
15Togo57.2-0.3
16Rwanda57.1-11.2
17South Africa56.2-3.5
18Mali55.90.3
19Gabon55.8-2.3
20Mauritania55.3-0.8
21Djibouti55.3-0.9
22Niger54.9-2.4
23Nigeria54.4-4.3
24Uganda54.2-4.4
25Guinea54.2-2.3
26Malawi530.0
27Cameroon52.9-0.5
28Kenya52.6-2.3
29Angola52.6-1.6
30Sierra Leone520.3
31Eswatini51.4-3.7
32Mozambique51.3-0.3
33Comoros50.4-5.3
34Chad49.8-0.6
35Ethiopia49.6-2.1
36Zambia48.7-1.7
37Republic of Congo48.5-2.2
38Lesotho48.1-5.4
39Liberia47.9-1.3
40Democratic Republic of Congo47.6-1.4
41Equatorial Guinea47.2-2.0
42Guinea-Bissau46-8.9
43Central African Republic45.7-3.1
44Eritrea39.7-2.6
45Burundi39.4-10.5
46Zimbabwe33.1-6.4
47Sudan32-7.1
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