The Kapichira
hydro-electric power
plant in Malawi
 
Lilongwe. Malawi — ESIA-AFRICA.COM — 10 January 2011 – The United States government Millennium Challenge Corporation has given Malawi a US$350 million grant to overhaul its energy sector, the dire condition of which is a major brake on the southern African state’s economic growth.

A corporation statement issued here said the five-year grant should help improve Malawi’s erratic power supply, which economists say costs the country about US$215 million a year, and deters new investment. According to its energy ministry, Malawi had 63 days of power outages in 2009, one of the worst performances in the sub-Saharan region.

Its current installed electricity capacity is 282.5MW compared to estimated demand of 344 MW, and only 7% of the population of 13 million have access to electricity, with the rest relying on firewood and charcoal for energy.

Despite the constraints of its power system, Malawi has been one of the world’s fastest growing economies in the last few years, due in large part to a fertiliser subsidy programme that has boosted farm yields.

The IMF said in October farming output was flattening off “’ a cause for concern “’ but still raised its 2010 growth forecast to 7% from 6.3% to reflect the expansion of the mining sector, especially the opening of a new uranium mine in the north of the country.

Even with the strong growth, Malawi remains heavily dependent on foreign aid, with donors underwriting as much as 40% of its budget.