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Introduction:

During the 1960s and 1970s, Malawi managed to produce sufficient maize for local 
consumption and even a surplus to sell to other countries. In the last decade around 
25% of Malawi&rsquo;s imports mainly consisted of cereal foods. After years of 
production Malawi entered a food crisis because of years without production due to 
drought. As a way of getting out of the crisis Malawi had to turn to the World Bank 
and the International Monetary Fund. 
 
As a way of the World Bank satisfying its interests it decided to eliminate the 
subsidy of fertilisers and seed, and the trade of fertilisers that had previously been 
controlled by the government was taken up by private traders and prices rose. 
However, to save the Malawian people the president decided with internal initiatives 
to subsidise these products in a way so that the farmers only paid around a quarter of 
their worth, another measure was the supply of agricultural inputs. 
 
In order to obtain loans from the World Bank and the International Monetary Fund, 
Malawi was forced by them to privatise some services of the four most important 
ministries (Health and Population, Education, Transport and Public Works and 
Agriculture and Irrigation). Many government workers were dismissed. This led to 
the rise in deforestation because the coal trade was one of the few options for many 
unemployed workers. 
 
One of the reasons that allowed Malawi to have funding, was it having maintained 
bilateral relations with China and the Middle East. This enabled access to funds from 
the Middle East, and Malawi managed to obtain a loan from the Republic of China. 
In the last few years China has been a great salvation for Malawi as well as many 
other African countries. China has been very prominent in funding this country and 
in the construction of social infrastructures. We have the example of the construction 
of the M1 Road, Thyolo Midimia Road, construction of a football stadium, and the 
construction of five 5 star hotels. In the education sector many Malawians have 
studied in China through grants given by the Chinese government. These are some 
of the various types of assistance that have been given. 
 
As a result, in 2006 and 2007 Malawi obtained record harvests and exported 
hundreds of tonnes to Zimbabwe and Lesotho, having also sold a part to the World 
Food Programme. 
 
The political situation has changed drastically since Joyce Banda became president 
in 2012. From the files attached you have possibility to reflect from various points of 
view. 
 
In this task you are going to have the opportunity to learn more surrounding 
financial institutions in Malawi.

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