Document of The World Bank Group Public Disclosure Authorized FOR OFFICIAL USE ONLY Report No. 154505-MW INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY Public Disclosure Authorized COUNTRY PARTNERSHIP FRAMEWORK FOR THE REPUBLIC OF MALAWI FOR THE PERIOD FY21-FY25 Public Disclosure Authorized April 2, 2021 AECE1 Country Management Unit Eastern and Southern Africa Region The International Finance Corporation Sub-Saharan Africa Region The Multilateral Investment Guarantee Agency Public Disclosure Authorized This document is being made publicly available prior to Board consideration. This document may be updated following Board consideration, and the updated document will be made publicly available. The last Country Assistance Strategy was published on December 17, 2012 (Report No. 74159-MW) and updated through the Performance and Learning Review of March 25, 2015 (Report No. 95178-MW) REPUBLIC OF MALAWI - FISCAL YEAR July 1 – June 30 CURRENCY EQUIVALENTS Exchange Rate Effective as of March 11, 2021 Currency Unit: Malawi Kwatcha (MK) US$1.00 = MK780 SDR 1.00 = US$1.432 ABBREVIATIONS AND ACRONYMS ADMARC Agricultural Development and Marketing Corporation AfDB African Development Bank AGCOM Agricultural Commercialization (project) AIP Affordable Inputs Program ASA Advisory Services and Analytics CAS Country Assistance Strategy CAT DDO Catastrophe Deferred Drawdown Option CBCC Community-Based Childhood Center CDSS Community Day Secondary School CE Citizen Engagement CEM Country Economic Memorandum CLR Completion and Learning Review COMESA Common Market for Eastern and Southern Africa COVAX COVID-19 Vaccines Global Access COVID-19 Novel Coronavirus CPF Country Partnership Framework CPSD Country Private Sector Diagnostic DPO Development Policy Operation DRM Disaster Risk Management ECF Extended Credit Facility EMIS Education Management Information System EQUALS Equity with Quality and Learning at Secondary (project) ESCOM Electricity Supply Corporation of Malawi FINES Financial Inclusion and Entrepreneurship Scaling (project) GDP Gross Domestic Product GESD Governance to Enhance Service Delivery GPE Global Partnership for Education HCI Human Capital Index ICT Information and Communication Technology IDA International Development Association IEG Independent Evaluation Group IEY Investing in Early Years for Growth and Productivity (project) IFC International Finance Corporation i IFMIS Integrated Financial Management and Information System IMF International Monetary Fund IPP Independent Power Provider JET Jobs and Economic Transformation MASAF Malawi Social Action Fund MFD Maximizing Finance for Development MGDS Malawi Growth and Development Strategy MIGA Multilateral Investment Guarantee Agency MNSSP Malawi National Social Support Program MRDRM Malawi Resilience and Disaster Risk Management (project) MSME Micro, Small, and Medium Enterprise MWSIP Malawi Watershed Services Improvement Project MW2063 Malawi Vision 2063 NLGFC National Local Government Finance Committee PEFA Public Expenditure and Financial Accountability PFM Public Financial Management PLR Performance and Learning Review PPA Policy and Performance Action PPP Public-Private Partnership SADC Southern Africa Development Community SAPP Southern Africa Power Pool SATC Southern Africa Trade and Connectivity (project) SCD Systematic Country Diagnostic SCTP Social Cash Transfer Program SDFP Sustainable Development Financing Policy SGBV Sexual and Gender-based Violence SME Small and Medium-sized Enterprises SOE State-Owned Enterprise SSA Sub-Saharan Africa SSRLP Social Support for Resilient Livelihoods Project SVTP Shire Valley Transformation Program TA Technical Assistance WASH Water, Sanitation, and Hygiene WB World Bank WBG World Bank Group IDA IFC MIGA Vice President: Hafez Ghanem Sergio Pimenta Hiroshi Matano (EVP) Director: Mara K. Warwick Jumoke Jagun-Dokunmu Merli Baroudi Task Team Leaders: Hugh Riddell Amena Arif Olanrewaju Malik Kassim Andrea Merrick Madalo Minofu Jessica Charles Wade ii FY21-FY25 COUNTRY PARTNERSHIP FRAMEWORK FOR REPUBLIC OF MALAWI TABLE OF CONTENTS I. INTRODUCTION ..........................................................................................................................1 II. COUNTRY CONTEXT ....................................................................................................................3 A. Natural, Regional, and Demographic Context ........................................................................................... 3 B. Economic Developments and Outlook ....................................................................................................... 4 C. Political and Governance Institutions ......................................................................................................... 8 D. Private Sector and Business Environment .................................................................................................. 9 E. Poverty, Vulnerability, and Inequality ....................................................................................................... 10 III. DEVELOPMENT OPPORTUNITIES AND CHALLENGES................................................................ 12 A. Leveraging New Opportunities to Strengthen the Demand for Good Governance ........................... 13 B. Protecting Human Capital Gains and Harnessing the Demographic Transition ................................. 13 C. Supporting the Shift towards Commercial Agriculture and Creating Opportunities for Youth Employment .......................................................................................................................................................... 14 D. Thinking Spatially to Target Vulnerability Hotspots and Rural-Urban Integration ............................. 14 E. Maximizing Finance for Development (MFD) and Deepening Regional Integration to Unlock Private Capital ....................................................................................................................................................... 15 F. Building Back Better by Accelerating Digital Development ................................................................... 16 IV. WORLD BANK GROUP PARTNERSHIP FRAMEWORK .................................................................... 16 A. Overview of the WBG Country Partnership Framework ........................................................................ 16 B. Integrating a COVID-19 Response into the CPF ....................................................................................... 19 C. Overview of the World Bank Group Country Partnership Framework ................................................ 20 V. IMPLEMENTING THE COUNTRY PARTNERSHIP FRAMEWORK ...................................................... 31 A. Financing ....................................................................................................................................................... 31 B. Portfolio Management and a “Learning CPF” .......................................................................................... 33 C. Partnerships and Donor Coordination ...................................................................................................... 34 D. Financial Management, Procurement, and Country Systems ............................................................... 34 VI. MANAGING RISKS TO THE CPF ............................................................................................... 35 Annexes ANNEX 1: CPF RESULTS FRAMEWORK .................................................................................................................. 38 ANNEX 2: COMPLETION AND LEARNING REVIEW ................................................................................................. 55 ANNEX 3: SELECTED INDICATORS OF BANK PORTFOLIO PERFORMANCE AND MANAGEMENT ........................... 107 ANNEX 4: OPERATIONS PORTFOLIO (IDA, GRANTS AND CO-FINANCING) ........................................................... 108 ANNEX 5: IFC PORTFOLIO (INVESTMENT AND ADVISORY) .................................................................................. 111 ANNEX 6: MIGA GUARANTEE PORTFOLIO .......................................................................................................... 112 ANNEX 7: COVID-19 IN MALAWI ........................................................................................................................ 113 ANNEX 8: HIGHLIGHTS OF THE IFC COUNTRY PRIVATE SECTOR DIAGNOSTIC ...................................................... 116 ANNEX 9: STATUS OF WOMEN’S EMPOWERMENT ............................................................................................. 117 iii ANNEX 10: DOING BUSINESS INDICATORS’ RANKINGS AND SCORES FOR MALAWI (2015, 2020) ........................ 120 ANNEX 11: ALIGNMENT OF THE CPF FY21-25 WITH MALAWI 2063 .................................................................... 121 ANNEX 12: DEVELOPMENT PARTNER ACTIVITIES IN MALAWI ............................................................................ 122 ANNEX 13: MAP OF MALAWI ............................................................................................................................. 123 Boxes Box 1: Examining the Social Contract in Malawi ........................................................................................... 3 Box 2: The Impact of Climate Change on Malawi ........................................................................................