[{"bbox": [147, 155, 383, 186], "category": "Section-header", "text": "# 2 RATIONALE"}, {"bbox": [147, 221, 294, 247], "category": "Section-header", "text": "## 2.1 Context"}, {"bbox": [147, 266, 297, 291], "category": "Section-header", "text": "### Country context"}, {"bbox": [147, 307, 1082, 591], "category": "Text", "text": "Malawi is a landlocked, low-income country, with one of the highest incidences of poverty, food insecurity and frequent weather-related shocks. Malawi ranks 169th out of 191 countries in the 2020 Human Development Index² putting it in the low human development category. With an estimated population of 20.41 million (2022), spanning over 118,484 km² and an annual population growth rate of 2.6%, it is one of the most densely populated countries on the continent. The economy is heavily dependent on agriculture and there is a relatively low urbanisation rate with 84% of the population living in rural areas. Over 50% of the population is younger than 18 years and the median age is 16 for both women and men. With a growing population, expected to double in 2038, there is increasing pressure to deliver jobs and public services. In addition, Malawi continues to face many challenges in gender equality and empowerment of women."}, {"bbox": [147, 610, 1082, 807], "category": "Text", "text": "Malawi has suffered the effects of climate change with an increase in frequency and intensity of extreme weather events like dry spells, droughts, intense rainfall, tropical storms/cyclones, and floods. Most recently the impacts of tropical storm Ana (2022) and cyclone Freddy (2023) have had devastating effects in the southern region on both the population and infrastructure, particularly the Kapichira hydropower plant. Additionally, deforestation is a major environmental issue and compounds the effects of extreme weather events. While weather conditions are less severe in the central and northern regions, the design of the transmission line will take relevant disaster risk reduction measures into account."}, {"bbox": [147, 827, 1082, 1081], "category": "Text", "text": "While Malawi has undertaken a number of economic and structural reforms, the economy remains weak and is heavily dependent on agriculture accounting for nearly 80% of employment. The already fragile economy has proved vulnerable to external shocks, particularly climatic shocks and their associated flooding and droughts. Cyclone Freddy was particularly destructive with damages in excess of USD 500 million and estimated production losses equivalent to 0.5% of GDP. Additionally, the impact of the Russian aggression against Ukraine has had a direct consequence on rising commodity prices, higher production costs, and higher borrowing costs. Increasing prices of imported fertiliser and poor harvests have given rise to increased domestic food prices and consequent pressure on household incomes, pushing many into poverty and acute food insecurity."}, {"bbox": [147, 1101, 1082, 1384], "category": "Text", "text": "Weak economic growth is coupled with macroeconomic imbalances, an ongoing crisis in the balance of payments and a worsening fiscal deficit. Recent scarcity of foreign currency has led to crippling fuel shortages, negatively impacting the whole economy. The industrial sector has been hard hit by the fuel rationing and intermittent electricity supply. Access to foreign exchange is also impacting on the private sector's ability to import inputs necessary for production. While government debt is currently unsustainable, there are continuous efforts on debt restructuring, which the EU supports. This resulted in the IMF approving the Extended Credit Facility in November 2023, taking into account the implementation of the debt restructuring strategy adopted in August 2022. Further reforms are necessary to get the economy back on track and the growth forecast is for a slow recovery. However, fiscal space is expected to remain constrained especially for the needed investments to support jobs and growth."}, {"bbox": [147, 1403, 1082, 1544], "category": "Text", "text": "In January 2021, the Government launched its development plan, the Malawi 2063 that aims at transforming Malawi into a wealthy and self-reliant industrialised upper middle-income country. The Malawi 2063 first 10 year Implementation Plan (MIP-1, 2021-2030) outlines priority objectives and interventions with the aim to move Malawi into the lower middle-income category by 2030, and meeting most of the SDGs of the 2030 Agenda. Implementation is based on a number of enablers"}, {"bbox": [147, 1589, 746, 1615], "category": "Footnote", "text": "² https://hdr.undp.org/data-center/specific-country-data#/countries/MWI"}, {"bbox": [977, 1682, 1081, 1706], "category": "Page-footer", "text": "Page 4 of 19"}]