Although is widely recognised that increased trade is key in contributing to economic development and poverty reduction in developing countries, the provision of aid and efforts to link that aid to boost the ability of developing countries to trade has been limited. This has contributed to the inability of a number of developing countries to compete on international markets. Aid for Trade, launched in 2005, aims to strengthen the linkages between development assistance and trade through initiatives that supporty the effective participation of developing countries in global trade.

AfT has been monitored by the OECD in co-operation with the WTO. This study is a complement to the work conducted by the OECD and the WTO and aims to identify the most effective way to measure the outcomes and impact of the AfT initiative in Malawi in the areas of trade capacity, environmental sustainability and poverty reduction. Malawi is one of the least-developed and most agriculturally dependant nations in the world. 

The report finds that only a few of the desired aspects of AfT are evident in Malawi. A lack of alignment, sustainability, local ownership and absorptive capacity in initiatives has meant that while exports are growing, the impact of AfT, both on development and on Malawi’s ability to meet its WTO commitments, is significantly limited. This is also aggravated by a general lack of in-country awareness of what AfT is.

The report also highlights that AfT’s efforts need to focus on boosting Malawi’s enabling environment for private sector development, and thus the country’s trade competitiveness. Initiatives need to place emphasis on developing the local capacity that is required to enable businesses to access the skills, finance, information, markets and inputs that they require, and to meet tax and regulatory obligations in a cost-effective manner. Thus more attention needs to be paid to the relationship between AfT and education, so that an adequate effort is made to link primary, secondary and tertiary education to increasing the skills base that government, civil society and the private sector require.

Despite AfT's limitations in Malawi, progress is being made in certain areas, such as improved donor coordination, an increase in government funding that is allocated to trade-related investments and a gradual increase in the awareness among key stakeholders of the importance of trade to their objectives and livelihoods.