Statement by Eugene Miagkov at the Board meeting of August 27, 1998

International Bank for Reconstruction and Development 86855 International Development Association International Finance Corporation Multilateral Investment Guarantee Agency FOR OFFICIAL USE ONLY CONFIDENTIAL EDS98-413 August 25, 1998 Board Meeting of August 27, 1998 Statement by Eugene Miagkov Malawi: Country Assistance Strategy I fully support the proposed Country Assistance Strategy for Malawi. The document is well argued and comprehensive; clearly a lot of thought, care and country knowledge has gone into its preparation. I was also impressed by the participatory nature of the CAS process, as well as by the candid and realistic approach to strategy formulation. I tend to agree with the analysis of the challenges the country is now facing, and with the need to simultaneously move on a broad spectrum of issues while bearing in mind the severe capacity constraints. I believe that the CAS strikes the right balance, stressing the need to move at the Government's pace (Box 4 outlining conditions for new lending is particularly useful in this respect). · The issues I would like to raise at this point are very few. First, we seem to be moving to the understanding that development process is advancing by emulation and internal learning, rather than by imported policy prescriptions. In this respect I was wondering whether any particular country examples were especially useful for Malawi, and if so, how are these examples incorporated in the country development strategy? Conversely, what is being done to make sure that the lessons learned in Malawi can be spread to our operations in other countries of the region and beyond, if applicable? Second, comprehensive approach to long-term development means the need to explore viable alternatives to small-holder agriculture and reliance on tobacco as the main cash crop. In this respect I would expect the experience of the IFC particularly pertinent. We learn from the CAS that there are five relatively modest investment projects currently undertaken by the IFC in Malawi. I would not recommend that this number should be expanded: I am sure there are valid reasons why these were the only projects which were deemed possible so far, let us hope that as the infrastructure and business environment improve so would the scope for IFC involvement. I am however anxious to make sure that the learning value of the private sector operations undertaken so far is fully exploited. What insights can we get from these active operations in five This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherv;ise be disclosed without: \Vorld Bmk authorization. I  2 different sectors regarding the long-term viability of these sectors as engines for the country's development? Finally, I cannot fail to mention the devastating effect of AIDS on the country's economy. I understand that the Government is working on a strategy to address the challenges posed by this epidemic. Presumably, given the fact that there is still no cure for AIDS, and also the prohibitive cost of available treatments, such a strategy should stress prevention measures aimed at shielding the so far unaffected segments of the population. I would like to hear more about what is being proposed, and the role that the Bank would be expected to play in this work. This may have implication for the work elsewhere. In conclusion, let me reiterate my support for the Malawi CAS and wish both the Government and the country team every success in meeting the many challenges that lie ahead. i J