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Economists: Floods Will Slow Down Malawi Economic Growth


A house damaged by floods in Phalombe district. (Lameck Masina for VOA News)

A house damaged by floods in Phalombe district. (Lameck Masina for VOA News)

Economists are warning that the flooding in Malawi is likely to have an adverse effect on the country’s agro-based economy - which accounts for 30 percent of GDP and 90 percent of export revenues.

A new Malawi government assessment said two weeks of torrential rains in early January washed away about 64,000 hectares of crop land - representing a food production loss of more than $8 million.

The floods, the worst to hit the southern African country in 15 years, prompted President Peter Mutharika in mid-January to declare over half of the country’s 28 districts disaster zones, and he appealed for international aid.

Statistics from the Department of Disaster Management Affairs show that the floods have killed about 276 people and displaced 230,000 others who are seeking refuge in schools and churches.

Many houses have been destroyed, livestock killed, roads damaged and bridges washed away.

Once a maize field, the area has now turned into a play area for children in Malawi southern district of Phalombe. (Lameck Masina for VOA News)

Once a maize field, the area has now turned into a play area for children in Malawi southern district of Phalombe. (Lameck Masina for VOA News)

As relief aid continues being channeled to flood victims, business people say they are suffering losses.

Chancellor Kaferapanjira is the chief executive officer of the Malawi Confederation of Chambers of Commerce and Industry. He told journalists in Blantyre the floods have adversely reduced the production capacities of many companies.

“A lot of bridges and of course roads have been affected, and that is affecting the cost of transportation in terms of taking longer routes than we normally take. The implication is that the business in not really going on well. A lot of our members are not selling as much as they would because the focus now is on food items to people who are affected,” said Kaferapanjira.

Insurance companies say they will likely pay more for property insurance claims for the damage caused by the floods. Prakash Patel with General Alliance Malawi, an insurance company in Blantyre, said there is a possibility that clients hit by floods will not be able to pay back insurance fees.

“But still, we can compensate for the properties. If we put ourselves in that situation, you will realize what the pain and suffering they are undergoing. Such is disaster that affects insurance business," said Patel.

President Mutharika recently said the floods have cost the Malawi economy at least $54 million, excluding the cost of relief programs.

Malawi's government and the International Monitory Fund last year projected that Malawi's economy would grow by 5.8 percent in 2015. They based their projections largely on a “good agriculture season.” Finance Minister Goodall Gondwe thinks the flooding situation will, in the long run, affect that projected growth rate.

“The figures that we had will be affected by what disaster requirements will going to be, because this country has suffered huge blow and although we think that the donors and all other philanthropic organizations will help us, I suspect that our projections on how the economy is going to grow, things like inflation, foreign exchange, will be negative,” said Gondwe.

Gondwe added that although flood victims will suffer between now and June, further suffering is expected from October to about March of next year “because that’s when people’s stocks of foods come to an end.”

To mitigate the impact, Ministry of Agriculture officials say they plan to start providing seeds of early maturing crops to farmers for replanting their gardens in March, the time they expect the rains to normalize.

Meanwhile, the government is appealing for $81 million to address the immediate needs of flood-affected people for the next six months.

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