afrol News, 7 January - The government of Malawi today was promised a US$ 350.7 million grant by a US development agency to improve the country's power supply. An erratic power supply is seen as Malawi's main development bottleneck.
The announcement was made by the Millennium Challenge Corporation (MCC), one of the US government's main development aid agencies. The MCC has a history of making major grant packages - or "impacts" - with governments of developing countries known for especially good governance, however following a long bureaucratic process.
Malawi has seen several major donors stepping down their efforts during the last decade following aid corruption scandals and poor transparency.
However, President Bingu wa Mutharika - a former IMF official - has been able to regain confidence after achieving major economic advances for the impoverished country. A fertilizer subsidy programme - at first protested by the IMF but later hailed - has revitalised Malawi's agriculture and produced record growth rates.
But other sectors have had difficulties to thrive and grow in the country, which is among the poorest in the region and suffers from outdated infrastructure.
Several analysts have seen these infrastructure shortcomings as the main bottleneck for further growth and development in Malawi. According to the national Economists Association, the lack of reliable power supply is costing Malawi US$ 215 million each year in lost industrial production.
Worst hit is the energy sector, with power outages being the daily norm in the major cities Blantyre and Lilongwe and rural electrification rates among the lowest in Africa. Less than ten percent of Malawians have access to electricity.
According to the MCC, Malawi is now eligible for a five-year impact, starting already this year. The first major grant, totalling US$ 350.7 million, has already been approved of and is to be directed towards the power supply sector following policy outlines by the Malawian government.
The MCC grant was "to support the government of Malawi's power sector reform agenda, as well as improve the availability, reliability, and quality of Malawi's power supply by rehabilitating key power generation, transmission and distribution assets," according to a statement by the US government agency.
It was estimated that almost half of Malawi's 13 million population would benefit from the foreseen improvement in power production and availability. The scheme would widely increase rural electrification and reduce power outages in Malawi's main urban centres.
Most of Malawi's power supplies come from rather old hydro-electric plants in the country, able to produce around two thirds of the current urban demand. Little is imported as also the Southern African region at large struggles with a greater power demand than supply. Plans to use national coal deposits in a new power plant have been presented by government.
The MCC initiative to boost aid to Malawi will make the US one of the country's major donors. It comes after Malawi recently has deepened ties with China, which has funded many large and symbolic projects in the country, including its recently inaugurated new parliament.
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