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Malawi Moves to Diversify Exports

Despite a growth rate of nearly 10%, most Malawians remain poor.

They live on less than $180 U.S. a year, and have a life expectancy of 40 years. Nearly half of the population is chronically malnourished.

The mainstay of Malawi's economy is agriculture. Tobacco,the main cash crop, accounts for more than 70 per cent of exports, but has been experiencing a decline in prices in the last two years. The country now wants to diversify the products it sells abroad.

President Bingu wa Mutharika, re-elected May for a second term, is hoping to take advantage of new opportunities on the world markets.

"Right now, one [crop with big earning potential is] rice because there is heavy demand, [and a global] shortage. At the moment, the major rice producers, India, Pakistan, Indonesia, the Peoples Republic of China and Malaysia are not producing enough. So Malawi can quickly produce more rice, [which] can compete favorably with tobacco in terms of foreign earnings," says the President.

To build a stable economy, Mr. wa Mutharika says his country is looking beyond agriculture to other natural resources.

"We are going to go into gold [and] bauxite mining. [In addition], we have heavy mineral sands, emeralds and precious metals," says President wa Mutharika.

Malawi's economy is registering impressive growth, which Mwiza Munthali, Public Outreach Director at the TransAfrica Forum in Washington, attributes to the work of President Wa Mutharika.

"The government seems to have a strategy, a vision. There are some tangible things. [There's more] infrastructure than five years ago. The roads don't have as many pot holes, and new ones are being built," Munthali says.

The Economics Intelligence Unit, a leading research and advisory firm, has forecast that Malawi will have the world's fastest growing economy after Qatar this year.

Munthali says only time will tell how the future plays out.

"People have to be careful. When you just look at the growth rates. Is it growth without jobs or with jobs? So we have to be careful on how we look at the figures," Munthali warns.

Malawi's economy has also been affected by high HIV/AIDS rates. But it has made progress since 2004 in curbing the spread of the disease, and President wa Mutharika predicts more gains in the coming years.

"Right now, Malawi is probably the top most country in its success in managing HIV in Africa, if not the world. The rate of infection was going up when we started, then stabilized and now is going down which means the messages are coming through," says President wa Mutharika.

Many analysts believe the country's economic success may depend on how the president manages the country's political turmoil. A protracted power struggle with former president Bakili Muluzi and leaders of the opposition almost paralysed parliament, prompting a failed impeachment bid and claims of a coup plot.

President wa Mutharika has promised to step aside at the end of his second term in 2014, as required by law. This is expected to re-assure investors and Western donors and keep Malawi on the path of growth.