Malawi is highly vulnerable to natural hazards and climate-related risks, particularly droughts and floods. Approximately 73% of the population live in areas susceptible to climate-related hazards. The country’s economy relies heavily on agriculture, making it especially susceptible to climate risk. Despite ongoing efforts, Malawi’s DRF framework faces significant challenges, including fiscal constraints, low insurance penetration, and limited financial protection mechanisms. Malawi faces several challenges in the use of CDRF instruments as financial tools for responding to climate and disaster risks. These challenges are summarised below:
- Need for further implementation of CDRF policies and strategies: While Malawi benefits from robust CDRF policy frameworks and strategies, there is a gap in implementation. Additionally, policies are centred at the national level with limited articulation at the subnational level.
- Limited domestic financial resources: Malawi relies heavily on international donors and government borrowing in responding to the impacts of natural hazards, making funding for disaster response unreliable.
- Gaps in national insurance and financial market: Both the insurance and banking sectors do not reach vast parts of the population, leading to limited insurance coverage for particularly vulnerable people. Insurance is further constrained by limited availability of tailored products that meet market needs.
- Need to increase data availability and EWSs: Enhanced data collection and modelling are critical for more precise risk assessments and effective anticipatory action through EWSs.
- High fiscal deficits: With a fiscal deficit of 18.7% in 2024, Malawi is one of the countries with the highest fiscal deficits in all of Sub-Saharan Africa. Natural disasters have the potential to exacerbate these deficits, leading to additional budgetary challenges for the country.
- Coordination gaps: There are critical gaps in public sector coordination on DRM; and sometimes institutional mandates overlap due to the many stakeholders and institutions involved in DRM.
- Technical capacity gaps: There are technical capacity in risk and vulnerability assessment and well as macro-economic risk assessment.
