Business Environment

About Malawi

Malawi is a land-locked country in south-eastern Africa, bordered by Mozambique, the United Republic of Tanzania and Zambia. It has a primarily agrarian economy, with 80 percent of the population living in the rural areas. The share of agriculture in GDP has dropped in the last decade from almost 40 percent in 2002 to around the average of 21 percent in recent years. Simultaneously, share of service (in GDP) has been rising to about 55 percent owing to reforms in the financial services sector, a boost in the telecom sector driven by a rise in mobile subscriptions and privatization of the transport sector. Additionally, the share of industrial activity (including mining) has been rising in recent years. Malawi’s position in the continent means it is reliant on transit corridors and ports in neighboring countries. The agricultural sector heavily dependent on rain-fed agriculture to maintain food security, Malawi is exceedingly vulnerable to climatic shocks.

The country offers a business environment with political stability, a market-oriented and liberalized economy, competitive labour markets, preferential access to several markets, an investor-friendly climate, improving infrastructure and untapped investment opportunities. The country also has streamlined investment establishment procedures such as a One-Stop Centre to assist investors. Further, the Malawi government has undertaken reforms to ensure that tax, labour, environment, health and safety laws continue to support foreign investment. In terms of ease of doing business, Malawi performs better than the African average (and better than 38 other African countries) when dealing with construction permits, wp-signup.phping new property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency associated with new businesses according to the World Bank in 2020. Moreover, the government is keen to offer public–private partnerships to facilitate and promote strategic infrastructural investment through financial assistance, technical know-how, logistical support and operational management.

Within the basket of goods exported by Malawi, the top ten products comprised 70 percent of total goods exports in 2015, which rose tremendously to 82.5 percent in 2020. Of these, tobacco alone made up 47 percent on average of total exports in the period 2015–2020. Malawi is the fifth-largest exporter of burley tobacco and relies heavily on these exports to support its economy in terms of export earnings and employment generation. Exported variety is produced by small-scale farmers in small landholdings, and production remains dependent on the price of the preceding year. The second largest export is black tea, followed by cane sugar, which is produced chiefly for exports, nuts, peas, and soybeans. Malawi primarily exports to its regional partners in South Africa, Egypt, Zimbabwe, and Mozambique, as well as its extra-regional partners in the European Union (Belgium, Germany, and the Netherlands), the United States (US), and the United Kingdom (UK).

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Economic Facts of Malawi

Unemployment

The unemployment rate in Malawi decreased to 5.60 percent in 2022 from 5.70 percent in 2021. The unemployment rate in Malawi averaged 4.99 percent from 1991 until 2022, reaching an all-time high of 5.70 percent in 2020 and a record low of 4.80 percent in 1991. The top three sectors that employ more people are agriculture, forestry, and fishing, construction and transportation and storage according to NSO 2018.

GDP Growth Rate

At the start of 2024, the Ministry of Finance and Economic Affairs projected Malawi's GDP growth rate to be 3.2 percent from 1.9 percent growth in 2023. This optimistic forecast was based on anticipated economic recovery and reforms, including the implementation of the Extended Credit Facility (ECF) program and initiatives aimed at enhancing domestic revenue mobilization and boosting key sectors such as agriculture, tourism, and mining. However, several persistent challenges, such as high inflation constraining private consumption, El Niño-induced weather conditions and liquidity issues affecting fixed investment growth, tempered this optimism. Government spending remained limited due to fiscal consolidation efforts.

By June 2024, the growth projection for Malawi was revised downward to 2.3 percent for 2024. This adjustment reflected ongoing economic challenges, including inflationary pressures, foreign exchange constraints, and the slower-than-expected implementation of critical reforms. Similarly, the World Bank and the International Monetary Fund, which initially projected Malawi’s economic growth rate for 2024 to be 2.8 percent and 3.3 percent, respectively, have revised their forecasts to 2 percent for both organizations.

These revised projections underscore the complex and dynamic economic environment in Malawi, highlighting the need for continued efforts to address structural inefficiencies and boost economic resilience. Government's commitment to economic reform and targeted sectoral growth remains crucial for achieving sustainable economic progress in the face of these obstacles

Foreign Exchange

In July 2024, the Kwacha exhibited a mixed performance against major global currencies. It experienced a slight devaluation of 0.003 percent against the US dollar, settling at a monthly average of MK 1,749.49 per US dollar. In Europe, the currency faced notable declines, depreciating against both the Euro and the British Pound. Specifically, the Kwacha's value fell by 0.66 percent against the Euro, with a monthly average of MK 1,951.02. The British Pound also saw an increase, trading at a monthly average of MK 2,311.98, up from MK 2,287.32 in June 2024, reflecting a 1.08 percent devaluation.

In contrast, the Asian market saw the Kwacha gain ground against major currencies like the Indian Rupee and Chinese Yuan. It reported a 0.14 percent appreciation against the Indian Rupee, averaging MK 20.74, up from MK 20.77 in June 2024. Similarly, it appreciated by 0.12 percent against the Chinese Yuan, achieving a monthly average of MK 238.70, compared to MK 238.99 the previous month.

In the Southern African Development Community (SADC) region, the Kwacha's performance was mixed. It devalued against the South African Rand and the Zambian Kwacha by 1.15 percent and 1.93 percent, respectively. However, it appreciated by 2.06 percent against the Tanzanian Shilling.

Looking ahead, the dynamics of demand and supply are likely to continue exerting pressure on the Kwacha, particularly as the country approaches a new agricultural season, leading to anticipated increases in farm input costs.

Trade

Malawi’s trade balance is structurally in deficit. Malawi's trade remains heavily dependent on agriculture, and its exports and imports reflect this reliance on primary and intermediate goods: tobacco accounts for more than half of total exports, as the country is one of the world's largest producers of tobacco. Other major exports include tea, sugar, and agricultural products in general. Imports are led by refined petroleum (7.2% of total imports), machinery, transport equipment, fertilizers, spare parts and medicaments.

Inflation

The Year-on-Year inflation rate in Malawi eased to 27.9 percent in November 2025, reflecting a 1.2 percentage point decline from 29.1 percent recorded in October 2025. This moderation in headline inflation was largely driven by a notable slowdown in food inflation, which declined to 30.1 percent from 32.4 percent in the preceding month. The easing in food prices suggests some improvement in domestic food supply conditions, possibly supported by importation of maize, and improved market availability of selected food items

In contrast, non-food inflation increased marginally to 24.2 percent in November 2025 from 23.8 percent in October 2025, indicating persistent price pressures in the non-food category. The uptick in non-food inflation reflects continued cost-push pressures arising from exchange rate depreciation, higher import costs, elevated fuel prices, and increased electricity and transportation charges. Overall, while the decline in headline inflation points to early signs of price stabilization, the divergent trends between food and non-food inflation highlight underlying structural challenges, particularly Malawi’s vulnerability to supply-side shocks and imported inflation, which continue to weigh on the cost of living and business operating costs.

Malawi 2063

The Malawi 2063 (MW2063) is Malawi's national vision through which Malawians aspire to transform the country into an inclusively wealthy and self-reliant nation by the year 2063. It is anchored on the three pillars namely; Agricultural Productivity and Commercialization, Industrialization and Urbanization. The MW2063 will be operationalized through four medium term strategies of 10 years each, starting with the MW 2063 First 10-year Implementation Plan (MIP-1) from 2021 to 2030. The MIP-1 is a collection of minimum catalytic interventions that have been determined to contribute to two key milestones of graduating the country to a middle-income status and meeting most of the United Nations Sustainable Development Goals (SDGs) by 2030.

Monetary Policy

Following a comprehensive assessment of prevailing macroeconomic conditions as at the end of October 2025, the Monetary Policy Committee (MPC) resolved to maintain the Policy Rate at 26.0 percent for the fourth quarter of 2025 (October, November, and December). The Committee also decided to maintain the Lombard Rate at 20 basis points above the Policy Rate, while keeping the Liquidity Reserve Requirement (LRR) ratio unchanged at 10.0 percent for domestic currency deposits and 3.75 percent for foreign currency deposits.

In reaching this decision, the MPC noted that inflation edged up marginally to 28.1 percent in the third quarter of 2025, from 28.0 percent recorded in the previous quarter. The Committee further observed that the inflation projection for 2025 was revised upward to 28.9 percent, compared to 28.5 percent projected at the third MPC meeting, largely reflecting adjustments in pump fuel prices. In addition, the MPC highlighted that limited fiscal consolidation efforts and persistent supply-side constraints continued to exert upward pressure on prices, thereby slowing the pace of disinflation.

The Committee welcomed the Government’s initiative to import maize to address the prevailing food deficit, noting that this intervention is expected to help moderate food inflationary pressures in the near term. However, the MPC emphasized that sustainable disinflation will require deliberate and sustained fiscal consolidation, complemented by broader supply-side interventions aimed at easing structural bottlenecks. Such coordinated efforts by relevant stakeholders are crucial to reinforcing macroeconomic stability and fostering a durable economic recovery.

Financial Market

In July 2024, the market experienced a notable month-on-month increase, with the Malawi All Share Index (MASI) rising by 6.52 percent (6.51 percent in US dollar terms) from 121,101.77 points in June to 128,996.65 points. This also translated to a year-to-date return of 16.26 percent (12.87 percent in US dollar terms). Despite an uptick in trading volume, the total value of shares traded decreased.

During July 2024, the market executed 1,299 trades, involving a total of 35.32 million shares with a combined value of MK3.93 billion. In comparison, June 2024 saw 24.95 million shares traded over 916 transactions, with a total value of MK4.82 billion. This represents a 41.56 percent increase in the number of shares traded, but a decline of 18.44 percent (18.44 percent in US dollar terms) in the total value of transactions.

Out of the 16 companies listed on the Malawi Stock Exchange in July 2024, significant price gains from several firms contributed to an overall increase in the Malawi All Share Index. Notably, NBS recorded a gain of 68.19%, followed by FDHB at 41.87%, OMU at 8.19%, FMBCH at 5.83%, TNM at 1.56%, SUNBIRD at 0.01%, NBM at 0.003%, and STANDARD at 0.002%. These gains more than compensated for the share price declines experienced by AIRTEL (-10.02%), ICON (-0.75%), PCL (-0.28%), NICO (-0.17%), MPICO (-0.07%), and NITL (-0.02%). Consequently, the positive performance of the gaining companies offset the losses, resulting in an overall upward movement in the Malawi All Share Index.