Barack Obama’s Administration and a number of Members of Congress have welcomed Malawian
President Joyce Banda’s accession to power, largely because she has reversed a
number of contentious decisions taken by her predecessor, Bingu wa
Mutharika, who died in early April 2012 while serving a contentious second
term. Banda’s status as Africa’s second female president, an
internationally recognized women’s rights advocate, and a leader with personal
socioeconomic development expertise has also drawn U.S. and other
international support. There are also some indications that Banda may
pursue a foreign policy aligned with selected U.S. regional policy goals.
In August 2012, Secretary of State Hillary Rodham Clinton traveled to Malawi
for discussions of economic and political governance and reform and to
highlight bilateral development cooperation projects. In September Banda
addressed a gathering of Members of Congress at a forum on U.S.-Malawian
and broader U.S.-African relations.
Malawi, a former British colony, is a small, poor country in southeastern
Africa that underwent a democratic transition from one-party rule in the
early 1990s and has long relied on donor aid. Under Mutharika, however,
Malawi’s ties with donors had been damaged over concerns related to economic
management, undemocratic governance trends, and Mutharika’s acrimonious stance toward
donors. Upon taking office, Banda—who had served as Mutharika’s vice president
and therefore succeeded him upon his death—made a range of economic and
governance reform pledges and related policy decisions. In response, most
donors that had suspended aid under Mutharika have reinstated it, a
welcome prospect for Malawi’s flagging economy. Such reinstated aid has
included a U.S. Millennium Challenge Corporation (MCC) compact.
Key among Banda’s donor-backed policy changes have been a devaluation of the
national currency, the kwacha, and support for the repeal of
several controversial civil and political rights laws passed under
Mutharika. She has also supported austerity measures, such as the sale of a presidential
jet and state-owned luxury vehicles, and she and her deputy are taking a 30%
salary cut. She has also set out a number of policies designed to spur
socioeconomic development and growth, gender equality, and respect for
human rights. Banda appears politically well-positioned to implement her
agenda, having garnered substantial support in parliament.
Banda faces interlinked economic and political challenges arising from her
management of the faltering economy she inherited from Mutharika. Her
decision to devalue the currency was intended to bring parity to currency
exchange rates in the long run, provide market incentives to spur greater
production for local and export markets, and boost macroeconomic stability. In
the short run, however, it has sharply driven up inflation, including for
fuel and the staple food, maize, sparking public sector strikes. In
addition, some donors have released aid funds more slowly than initially
anticipated or have imposed new aid policy conditions.
In addition to a $350 million, five-year MCC compact, the United States
provides significant bilateral aid focused on food security and
agricultural growth; poverty reduction; health and education; economic
growth; and democracy and good governance. State Department and U.S. Agency
for International Development (USAID)-administered bilateral assistance to
Malawi totaled over $172.6 million in FY2011; an estimated $166.7 million
in FY2012; and $145.8 million in requested funds for FY2013.
Date of Report: December 11, 2012
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