Malawi became a British colony as the protectorate of Nyasaland in 1891. In 1964, after a decade of concerted anti-colonial activity, Malawi was granted its independence. Its prime minister at that time, Hastings Kamuzu Banda, remained the country's leader for the next 30 years, becoming successively president (1966) and president-for-life (1970), as his rule shifted from benign despotism (an authoritarian leader who respects human rights and rules in the best interests of his or her people) to dictatorial repression. Mounting political pressure in the late 1980s—leading to widespread strikes, demonstrations, and riots in 1992—eventually forced the 89 year-old president to concede elections in 1994, in which he was defeated by Bakili Muluzi, leader of the free-market-promoting United Democratic Front.
The transition from Banda's one-party autocracy to a multi-party democracy has been relatively smooth. Under the U.S.-style 1994 constitution, the president still wields considerable power, appointing the 28-member cabinet and senior judges, but he is kept in check by an independent judiciary and legislature. The presidency and the 193 seats of the National Assembly are decided by direct popular election, and all Malawians over 18 years of age have the right to vote. The basic soundness of the new system was affirmed in 1999 when Malawi successfully conducted its second-ever elections (in which Bakili Muluzi was re-elected).
Nevertheless, Banda's long rule and his authoritarian and eccentric style of government have left a burdensome legacy. Challenges facing Malawi's new government have been to repair the country's strained diplomatic relations with its neighbors (Banda was ostracized in the region for his long-standing support of South African apartheid—a political and economic system based on the dominance of whites at the expense of African blacks), to restore the badly rundown economy, and to foster confidence in the political system, corrupted by years of Banda intrigue and cronyism. Progress has been slow. Corruption scandals are becoming more frequent, not only undermining the public's faith in democracy, but alienating Malawi's foreign donors.
The Muluzi government, however, is committed to the program of structural reform drawn up by the World Bank and the IMF, which is aimed at poverty reduction and economic growth. In addition to a renewed emphasis on education and health, the program includes tightening fiscal management, opening up domestic markets, privatizing public utilities, reducing the civil service (non-miltary government organizations), and improving conditions and opportunities for smallholder farmers by liberalizing the agricultural sector.
Tax reform has also been targeted, with more emphasis placed on direct taxation , in keeping with Malawi's traditional sources of revenue— duties , excises, and levies . But in an economy in which so much of the population lives at subsistence level, and in which so much trade is conducted informally, tapping this source of revenue is very difficult, and the burden of the new tougher stance has tended to fall disproportionately on the private sector.