nfrastructure contributed 1.2 percentage points to the annual per capita growth of Malawi’s gross domestic product (GDP) over the past decade, thanks mainly to the revolution in information and Icommunication technology (ICT). Raising the country’s infrastructure endowment to that of the region’s middle-income countries could further boost annual growth by 3.5 percentage points per capita. Today, Malawi’s basic infrastructure indicators look relatively good when compared with other lowincome countries in Africa, although the performance of that infrastructure could be significantly improved.

Malawi is one of the few African countries to have already reached the Millennium Development Goals (MDGs) for water—almost a decade ahead of the target. The private sector has made GSM telephone signals widely available without public subsidy. A substantial road investment program has raised the average condition of the country’s road network, and a foundation for institutional reform has been laid in the ICT, power, and road transport sectors.

Despite this success, many challenges remain. Perhaps the most pressing is improving the reliability and sustainability of the power sector, which is taking a significant toll on the economy through underpricing and operational inefficiencies. In the road sector, adequate funding for road maintenance will be needed to preserve the value of recent investments in the sector. Future investments plans must avoid overengineering of the network and put greater emphasis on enhancing rural connectivity in highvalue agricultural areas. In ICT, the main issue is to bring down the cost of services to make them more affordable for the population. Securing access to the new submarine infrastructure along the East African coast holds the key to achieving that goal, as long as competition prevails.

Addressing Malawi’s infrastructure deficit would require sustained expenditures of almost $600 million per year (20 percent of GDP) over the decade 2006–15, about 80 percent of which would be for capital expenditure. The power, water supply, and sanitation sectors each account for about a third of total spending needs.

During the mid-2000s, Malawi’s infrastructure spending was close to $200 million per year (6 percent of GDP). About half of that spending was in the transport sector. Because of widespread inefficiencies in several infrastructure sectors, an additional $200 million is wasted. Key areas of inefficiency include underpricing of power (worth $72 million a year), undermaintenance of roads ($32 million), and utility distribution losses ($21 million).

Even if those inefficiencies could be eliminated, Malawi would still face an infrastructure funding gap of almost $300 million a year. This could be lessened to $100 million by engaging in regional trade of electricity, using lower-cost supply modalities in water supply and sanitation, and adopting appropriate technologies for road sector development. As long as efficiency gains are captured and spending sustained at the levels of the recent past, the country’s infrastructure targets could be reached within 16 years.

# The continental perspective

The Africa Infrastructure Country Diagnostic (AICD) has gathered and analyzed extensive data on infrastructure across almost all African countries, including Malawi. The results have been presented in