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Economic Report 1 974 j JU\l. 71t -_u Budget Document No. 4 MALAWI GOVERNMENT ECONOMIC REPORT 1 974 OFFICE OF THE PRESIDENT AND CABINET ECONOMie PLANNING DIVISION Priee: K2.00 ' Pri nted by the G overnmcnt Printer, Zomba, Malawi CoteRo,u ·····--·le_ .. t~i]···- -- Exempl. ...... _._··· · No En tréeltt.::. ...~~16: ECONOMie REPORT 1 974 (Budget Document No. 4) Prepared by OFFICE OF THE PRESIDENT AND CABINET ECONOMIC PLANNING DIVISION CONTENTS P AGE Chapter 1 World Economie Background 1 1. The 1973 Boom 1 2. Balance of payments . 1 3. Exchange Rates and the International M onetary System 2 4. The Position of Malawi 4 Chapter 2 Economie Conditions in Malawi in 1973 5 1. General Review 5 2. Consumption, Investment and Savings 8 Chaptèr 3 Trends and Prospects 11 1. Recent Changes and Short Term Prospects 11 2. The Longer Term 12 Chapter 4 Externat Trade 13 1. Trade Balance 13 2. Domestic Exports 13 3. Re-exports 15 4. Merchandise Imports 15 5. Direction of Trade 16 6. Terms of Trade 17 Chapter S Agriculture and Natural Resources 20 1. The Agricultural Seasons 20 2. Maize 2 1 3. Groundnuts 21 4. Cotton 22 5. Paddy 22 6. Pulses 23 7. Cassava 23 8. Tea 23 9. Tobacco 23 10. Sugar 25 11. Fisheries 25 12. Livestock 25 13. Forestry 27 14. Geo1ogy 29 lU CONTENTS-(Continued) PAGE Appendix- Comrnodity Markets in 1973 30 1. General 30 2. Grains 31 3. Ri ce 31 4. Tea 32 5. Tobacco 32 6. Sugar 32 7. Cotton 33 8. Groundnuts 33 9. Conclusion 34 Chapter 6 Transport and Communications 34 1. Rail ways 34 2. Lake Service 35 3. Air Transport 36 4. Road Traffic 38 5. Training in Transport 38 6. Roads 39 7. Telecommunications 41 8. Postal Services 42 Chapter 7 Commerce and Jndustry 42 1. General 42 2. Manufacturing 43 3. Building and Construction 45 4. Electricity and Water .. 46 5. Distribution, Banking and Finance 47 6. Malawi Development Corporation 48 7. Tour.ism 50 Chapter 8 Employment and Social Services 52 1. Employment 52 2. Earnings 53 3. Manpower Requirements 54 4. Education 54 5. Health 55 6. Housing 55 IV CONTENTS-(Continued) P AGE Chapter 9 Banking and Finance 56 10 Money and Credit 56 20 The Reserve Bank of Malawi 57 30 The Commercial Banks 58 40 Other Financial Institutions 59 Chapter 10 Public Finance 62 lo Overall Public Sector Expenditure and Financing 0 0 62 20 Revenue 63 30 Public Enterprise 63 40 Public Sector Debt 64 Chapter 11 The Development Programme 68 10 The Development Programme in Retrospect 68 20 The 1974/75-1976/77 Development Programme 69 v LIST OF TABLES TABLE PAGE 1.1 Commodity Priee Indices, Selected Groups 1 1.2 Foreign Exchange Rates .. '5 )42.1 National Accounts 1971-73 6 ~ 2.2 Summary data on fertility, mortality, growth rates and life expectation at birth .. 7 2.3 Total Domestic Supply and Demand 9 2.4 Savings and Investment .. 9 2.5 Balance of Payments 1973 10 3.1 Economie Progress 1965-1973 11 4.1 Visible Trade Balance 1964-1973 13 4.2 Composition of Exports by Main Commodities 1964-1973 14 4.3 Re-exports by Commodity 1964-1973 15 4.4 Composition of lmports by End-Use 16 4.5 Direction of Trade Percentage Share of Trade with main Trading Part ners ( 1968- 1973) 16 4.6 Terms of Trade Indices . 17 4.7 Ex ports of Main Agricultura1 Products: Quantity 17 4.8 Domestic Exports by Main Commodities 1964-1973 18 4.9 Imports by End-Use 1964-1973 19 5.1 Admarc Purchases of Main Smallholder Produce 1970-1973 in Quantity and Volume 22 5.2 Malawi Tea Production and London Priees 1970/73 .. 23 5.3 Malawi Tobacco Auction Sales 1971- 1973 .. 24 5.4 Fish Imports, Exports and Estimated Landings 25 5.5 General Statistics of Activities of the Department of Veterinary Services and Animal Industry . 26 5.6 Total Cattle Slaughterings 1967-1973 26 5.7 Imports of Meat 1967-1973 27 5.8 Department of Forestry: Total Earnings 27 5.9 Forest Industry Sales by Category 28 5.10 lmport Equivalent Value of Domestic Sales and Export Sales by Forest Industry Division . 28 6.1 Traffic of Malawi Railways 1964-1973 35 6.2 Malawi Railways Gross Operating Surplus (1964-1973) 35 6.3 Freight and Passengers moved by the Lake Service 1964-1973 .. 36 6.4 Gross Operating Losses/Surplusses of the Lake Service (1964- 1973) 36 vi LISt~ OF ' - · i'ÀBLES --'- (Co ntinued) T-ABLE PAG E 6 .5 ·.-·( T ~-iffië at"CEileka Àitpû-rt- .: t•_ 37 37 6.7 Percentage change in Air Traffic over previous year 37 6.8 Number of vehicles licensed by Type 197 1- 1973 38 6.9 Miles of Road by C1ass and Surface 197 3 . 40 1.1 Index of Manufacturing Output 44 7.2 Investment and Employment- New Enterprises 1967- 1973 44 7.3 Statistical Indicators of Buildi ng Activity 1967- 1973 44 7.4 Value of Building and Construction by Type of Work 45 7.5 Value of Work done by Region (Private Sector) 1967- 1973 45 7.6 Value of New Plans Passed : Blantyre and Lilongwe 46 7.7 Sales of Electricity Units by ESCOM 46 7.8 Blantyre Water Supplies . 47 7.9 Priee Indices 1968- 1973 . 48 7.10 Malawi Development Corporation Investment 49 7.11 Definco Investment 50 7.12 Tourist Indicators 51 8.1 Structure of Emp1oyment 1971- 1973 52 8.2 Average Earnings in Selected Sectors in September 1972- 1973 53 9.1 Bankin g System : et Foreign Asset Holdings, 1965- 1973 58 9.2 Reserve Bank of Malawi : Resources and Uses of Funds 1965- 1973 59 9.3 Commercial Banks : Resources and Uses of Funds 1965- 1973 60 9.4 Other Financial Institutions Resources and Uses of Funds 1965- 1973 . 61 10.1 Malawi Government : Expenditure and Financing 1970/71- 1972/ 1973 62 10.2 Malawi Government- Receipts on Revenue and Development Accounts 1970/71- 1972/1973 64 10.3 Public Enterprises Summary Accounts 65 10.4 Public Entcrprises Summary Accounts 66 10.5 Details of Public Sector Externally-held debt- 1972 and 1973 67 10.{) Public Sector Ex ternally-held Debt- Summary 1964- 1973 68 11.1 Development Account Expenditure 1964- 1973 /74 69 11.2 Malawi Government Development Programme 1974/75- 1976/ 1977 Summary for Three Years by Heads ofExpenditure 71 . vu LIST OF CHARTS CHART PAGE 2.1 Gross National Product Final Consumption Expenditure and Fixed Investment 1964-1973 . 8 5.1 Admarc Payout to Smallholders and Pr.ivate Traders 1964-1973 20 vili Notes (1) AU values in Mala\vi Kw<léha unless otherwise stated. Until19th November. 1973 Kl=f0.5. Since theo rates have been quoted daily by the Reserve Bank of Malawi, and the Kwacha has appreciated against sterling. (2) While the Report was being prepared sorne revised statistical series became available. This accounts for minor discrepancies between sorne of the figures quoted in different chapters. Glossary Gross domestic product (GDP)-the value of ali goods and services produced in Malawi for final use during the year, before allowing for depreciation, i.e. the aggregate of" value added " during the year. Gross national product (GNP)-GDP plus net incarne from abroad. Gross fixed investment-the total value of ali additions to the real capital stock of the country during the year before allowing for depreciation. Gross savings-the difference between the value of total incarne and total consumption before making allowance for depreciation of capital due to wear and tear and obsolescence. ix Chapter 1 WORLD ECONOMIC BACKGROUND 1. The 1973 Boom 1.1 General economie developments in the world were, in 1973, dorninated by an unusual combination of circumstances, making for high but unstable levels of activity. The simultaneous expansion of output in practically ail major industrial countries, reaching its crest in that year, produced a very rapid growth of international trade; inflation accelerated both in the developed and the developing countries, and considerable uncertainties affected international monetary arrangements, manifested in wide fluctuation of fo reign exchange rates. Balance of payments position , ali affected by an unusual and general­ ised rise in the priees of internationally traded raw materials and sorne in the process of adjustment from previous serious imbalances, were with few ex­ ceptions not maintainable. Towards the end of the year, they were threatened by new disturbances originatin g in unprecedented manipulations of crude petroleum priees. 1.2 A combination of sharply quickened demand with shortages of supply, in part due to crop shortfall s, produced very substantial increases in the priees of internationally traded raw material , even before the extraordinary advances in petroleum priees were imposed by the petroleum exporting countries in the last months of the year. As was exp lained in the Economie Report 1973, these raw materials priee movements had begun already in 1972 and early 1973. When full years are compared, it is seen (Table 1.1) that they have continued. TABLE 1.1 : COMMODITY PRJCE INDLCES, SELECTED GROUPS (VS dollar indices; percent changes from previous years Ail Export products of Non-food ma teri a ls Agric., excluding D eveloping Developed Foodstuffs Materials Metals petroleum countries countries 1972 14 26 2 14 9 28 1973 39 76 41 49 60 45 2. Balances of payments 2.1 The effects of the 1973 output and priee boom on balances of payments have naturally varied a great deal from country to country. Balance of pay­ ments developments have, in particular, interacted with exchange rate movements: the former produced prompt movements in the latter, and these in turn caused balance of payments changes after time lags of varying lengths.
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