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Why aid money has returned to Malawi

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“This is going to bring cheaper energy which is badly needed in the country,” Mr. Yohannes said in a phone interview with the Monitor after his meeting with Ms. Banda. “Malawians are going to benefit tremendously. It’s going to affect 5 million people, and provide up to $2 billion in value to the country’s economy.”

Test case

For experts on foreign aid, Malawi is a test case for the West’s attempt to use aid as a leverage to foster better democratic governance and economic reform in the developing world. It’s an approach that some African nations embrace, while others reject as a painful reminder of the West’s colonial period in Africa. For the latter, the no-questions-asked loans and grants from emerging foreign aid donors like China have become more attractive, and encouraged aid skeptics such as the late President Mutharika – who died in April of natural causes – to fight back.

America was not the only aid donor to cut off Malawi for its authoritarian policies, and it is not the only aid donor to reinstate aid when Banda began to strip away the Bingu baggage.  

Last April, the African Development Bank announced that it was ready to provide $45 million in budget financing for Malawi to help the new president revive the country’s weak economy. Malawi is dependent on one sector, agriculture, for 35 percent of Malawi’s gross domestic product, and 80 percent of its export earnings.

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