in the heart of the agriculture belt, in particular cash crops and tobacco, firms are more linked to domestic markets and adding value to agro production.

# **GEOGRAPHICALLY PRIORITIZING INFRASTRUCTURE INVESTMENTS**

## **Where do transport investments matter the most for growth?**

39. The analysis in this paper shows how linking GIS data to HDM4 provides an important tool for mapping areas of economic potential which could be targeted for infrastructure improvements. The empirical analysis identifies that production of these cash crops is concentrated in the central and southern regions of the country – as they offer suitable agronomic conditions. In addition, production intensity is highest in locations that are close to the country’s main urban agglomerations. The analysis of growth constraints and transport prices highlights that the poor quality of feeder roads linking these locations is an impediment to doing business (and raises transport costs). To get the highest return from transport infrastructure investments, resources should be allocated towards improving feeder roads in areas with good agronomic potential and are close to markets.

40. The Malawi Growth and Development Strategy (MGDS) recognizes that poor infrastructure limits national economic performance and affects internal and external trade efficiency. Transport investment is a priority area for public intervention, and has been supported by significant real increase in budget allocation to the transport sector since 2003/04 FY from around US$5million to over US$20million in 2008. Despite Government’s increased funding to the transport sector, the 2006/07 Annual MGDS Review reveals that project implementation in the transport sector has been very poor and not reflecting economic growth priorities (spatially inefficient).

### <u>Infrastructure Services Programme</u>

41. In 2006, the GoM developed infrastructure plans under the Infrastructure Services Programme (ISP) aimed at supporting economic growth in five prioritized corridors. These corridors contain about 30 districts that government determined would most likely benefit from coordinated infrastructure investments not only in terms of their needs but the importance of their potential contribution to overall economic growth. The basis for the selection of the five corridors was a priority ranking of the potential for value addition in key productive activities –agriculture, mining, and tourism. The evaluation attached points for high, medium and low productivity for each of these activities. The five corridors selected cover all of Malawi's three geographical divisions<sup>6</sup> - north, central and south. The total population in these corridors is over 2.6 million or 24 percent of total population. These corridors are:

- **_Rumphi-Nyika-Chitipa Corridor (location: northern region; population over 250,000)._** Chitipa is the district in Malawi that is most vulnerable to food insecurity and malnutrition. Agriculture and commerce are the main activities.  However, the high cost of agricultural inputs has limited the development of the corridor's agricultural potential.  This scarcity results in part from a poor road network, contributing to the isolation of the districts from the key sources of agricultural inputs.  And, as a result, many people in the corridor run out of food in the months of November through February.  The main agricultural crops include tobacco, maize and groundnuts. Livestock production is an important activity and bee-keeping by local communities surrounding Nyika National Park - a major national tourist attraction-

> 6 Malawi has two major cities (Blantyre and Lilongwe) that have a population of around 670000 each; 2 smaller cities (Zomba and Mzuzu) with a population of just over 200000 between them; 50 towns; and 75 smaller market centers.

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