Malawi WT/TPR/S/231 
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I. ECONOMIC ENVIRONMENT 
(1) INTRODUCTION  
1. Malawi is a land-locked least-developed ec onomy, heavily dependent on agriculture and 
exports of primary commodities.  Trade in goods and (non-factor) services rose from 67% of GDP in 
2003 to 83% of GDP in 2009.  Malawi has not retreat ed from its open policy st ance in response to the 
recent global economic crisis. 
2. Real GDP growth averaged nearly 6% between 2003 and 2008, and was 7.7% in 2009 
(Table I.1).  Growth was driven mainly by bumper harvests, especially of tobacco1, which is Malawi's 
main export commodity, and to a lesser extent by  construction and wholesale and retail distribution 
services.  As a result, GDP per capita rose from US$210 in 2003 to US$356 in 2009 (Table I.2).  
Some of Malawi's social indicators have also improved.  The proportion of the population living on 
less than a dollar a day declined from nearly 54% in 1998 to 40% in 20072;  and the proportion of the 
15-49 year old population suffering from HIV/AIDS declined from 13.5% in 2000 to 11.9% in 2007.3 
Table I.1 
Selected macroeconom ic indicators, 2003-09 
 2003 2004 2005 2006 2007 2008 2009 
National accounts (% change) 
Real GDP (at 2005 prices) 5.7 5.6 3.3 6.5 7.5 9.8 7.7 
Private final consumption exp. 2.4 4.6 5.7 4.9 3.1 4.0 .. 
Government final consumption expe nditure 6.0 22.2 4.1 3.7 5.4 7.7 .. 
Gross fixed capital formation 16.2 27.1 38.9 5.7 9.9 30.5 .. 
Incresase in stock 19.7 -29.9 39.0 -4.3 -47.7 3.8 .. 
Exports of goods and non-factor services (XGS) 37.0 4.2 0.6 -6.9 25.3 21.2 .. 
Imports of goods and non-factor services (MGS) 21.5 11.4 22.1 -4.1 4.7 13.1 .. 
XGS/GDP (%) 26.7 25.0 24.0 21.0 24.5 27.0 .. 
MGS/GDP (%) 40.6 43.2 52.2 50.4 51.2 55.7 .. 
Prices and interest rates (%) 
Inflation (CPI, % change) 9.6 11.5 15.4 13.9 8.0 8.7 8.5 
Discount rate (end of period) 35.0 25.0 25.0 20.0 15.0 15.0 .. 
Commercial bank 3-month fixed rate 25.1 13.7 10.9 11.0 6.0 3.5 .. 
Commercial bank lending rate 48.9 36.8 33.1 32.3 27.7 25.3 .. 
Exchange rate        
MK/US$ (annual average) 97.4 108.9 118.4 136.0 140.0 140.5 140.6 
Real effective exchange rate (index 2005=100) 110.9 97.5 100.0 99.3 98.3 101.9 119.4 
 (% of GDP, unless otherwise indicated) 
Overall fiscal balance -8.4 -5.7 -4.0 -0.7 -0.8 -1.6 -5.7 
    Current balance -8.0 -6.4 -4.8 -6.9 -2.7 -2.2 -8.4 
Total revenue and grants 19.4 25.2 27.2 30.9 30.7 31.9 32.3 
   Current revenue 14.5 16.4 18.2 17.8 17.6 18.8 20.6 
         Tax revenue 12.4 14.1 16.0 15.8 16.1 16.9 18.3 
    Grants 4.8 8.8 9.0 13.1 12.2 13.1 11.7 
Expenditure and net lending 27.8 30.9 31.2 31.6 31.5 33.5 38.0 
    Current expenditure 22.5 22.8 23.0 24.7 20.3 21.0 30.8 
    Capital expenditure 5.4 8.0 8.0 6.9 11.2 12.5 7.2 
Table I.1 (cont'd) 
                                                      
1 In addition, internatio nal tobacco prices rose. 
2 Government of Malawi (2008). 
3 World Bank (2010). WT/TPR/S/231 Trade Policy Review 
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 2003 2004 2005 2006 2007 2008 2009 
Government total debt (end-peri od) 115.4 110.1 114.3 17.0 19.3 19.0 20.3 
External sector        
Current account balance -16.2 -15.7 -24.3 -23.2 -14.2 -21.9 -22.0 
Net merchandise trade -10.3 -10.7 -18.0 -17.6 -9.2 -17.6 -14.3 
   Merchandise exports 17.9 17.2 18.5 18.6 24.2 22.7 17.8 
   Merchandise imports 28.2 27.9 36.5 36.2 33.4 40.3 32.0 
Services balance -7.5 -7.3 -9.1 -8.3 -7.4 -7.3 -7.6 
Financial account 8.2 11.4 12.8 9.8 14.1 23.5 14.4 
     Direct investment 2.3 2.1 1.9 2.5 2.8 5.0 2.0 
Balance-of-payments after debt relief -0.7 -0.5 -1.7 -2.0 -1.0 -1.0 -1.6 
Merchandise exports (% change ) 4.9 15.2 1.8 6.6 46.6 32.5 3.5 
Merchandise imports (% change) 15.0 18.5 24.0 4.9 3.9 45.7 5.0 
Service credit (% change) -15.7 -12.1 17.4 15.5 24.6 12.0 .. 
Service debit (% change) -10.9 10.3 17.1 0.3 5.5 12.4 .. 
Gross international reserves in months of imports .. .. 2.5 2.1 1.8 2.2 0.7 
Total external debt (US$ million)  2,797.0 3,199.5 3, 151.7 496.6 635.1 .. .. 
 
.. Not available. 
 
Source:  Reserve Bank of Malawi, Monthly, Quarterly and Annual  Economic Reviews, various issues.  Viewed at:  
 http://www.rbm.mw/publications/documents/Jul-2009.doc;  Reserve Bank of Malawi, Economic and Financial Data.  Viewed at:  
 http://www.rbm.mw/data/ecodata/index.asp?cont ent=externaldebt;IMF, IFS CD-Rom; IMF, Country Report  07/49; and Malawi 
 National Statistical Office (2008), Statistical Annual Report.  Viewed at:  http://www.nso.ma lawi.net/data_on_line/general/ 
 yearbook/yearbook_2008/yearbook_2008.html#Anchor-17-24911.  
3. However, the performance of Malawi's econo my, which is agriculture-based and relies 
heavily on exports of tobacco, tea and sugar, has been volatile with major food shortages in 2002 and 
2005.  Economic performance remains dependent on fo reign aid and is vulnerable to the vagaries of 
weather and terms of trade shocks .  Production and exports (a major source of economic growth) need 
to be diversified so that  growth is much less dependent on exogen ous factors.  In this regard, the new 
uranium mine at Kayelekera is a welcome devel opment.  Diversification will require significant 
private-sector involvement, and further efforts to  reform the business envi ronment are needed to 
attract, inter alia,  FDI.  State involvement persists in many sectors of the economy and has crowded 
out private-sector investment.  Private-sector investme nt is also hampered by weak public institutions, 
inadequate infrastructure, as well as input and finance shortages (notably electricity, foreign 
exchange, and skilled labour). 
4. Until recently, the IMF defined Malawi's exchange rate as a " de-facto  peg".  The rigidity of 
the exchange rate, low level of foreign exchange re serves and, according to the IMF, an overvalued 
exchange rate against the U.S. do llar, threaten Malawi's competitiven ess and its ability to alleviate the 
adverse impact of any exogenous shocks.  Therefore,  to be able to sustain growth and alleviate 
poverty, the Government would need to pursue a flex ible exchange rate regime, which would require 
strong growth in foreign exchange reserves and furt her fiscal consolidation (not at the expense of 
development expenditure).  Malawi is a net capital im porter (not unusual for an LDC) and is expected 
to remain so for the foreseeable future.  One avenue for developing quickly would require significant 
"aid for trade" to strengthen its export base and import capacity. 
(2) RECENT ECONOMIC DEVELOPMENTS  
5. Real GDP growth fell to 3.3% in 2005, due  to a drought-related decline of 7.8% in 
agricultural production.  It later rebounded, peaking at 9.8% in 2008, and was at 7.7% in 2009.  
Following the drought and the subsequent food cr isis, bumper harvests of tobacco and maize coupled 
with higher prices drove a recovery in agricultura l growth, which averaged 11.7% annually between 
2006 and 2009.  In addition, increased construction activity, expansion in the telecommunications and 
financial sectors, and debt relief c ontributed to the growth revival. Malawi WT/TPR/S/231 
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6. During the review period, the share of primar y activities (agriculture and mining) in GDP 
increased marginally, while the shares of manufacturing and services declined (Table I.2).  This is 
probably due to weather patterns.  On the other hand, the share of construction rose. 
Table I.2 
Basic economic and social indicators, 2003-09 
 2003 2004 2005 2006 2007 2008 2009
Real GDP, market price (US$ million, 2005 
prices) 2,531 2,671 2,757 2,937 3,156 3,466 3,733
Current GDP, market price (US$ million) 2,425 2,625 2,757 2,913 3,284 4,239 4,959.7
GDP per capita, current market price (US$) 209.9 219.9 223.4 228.3 249.0 286.5 356.4
 (%) 
Share of main sectors in GDP, constant 
2005 prices        
Agriculture 34.1 33.3 29.7 31.3 32.7 33.3 34.1
Crop & animal production 31.4 30.6 27.0 29.0 30.6 31.3 32.2
Forestry & logging 1.7 1.7 1.4 1.4 1.4 1.4 1.3
Fishing & aquaculture 1.0 0.9 1.3 0.9 0.7 0.7 0.7
Mining 0.8 0.9 1.2 0.9 0.9 0.9 0.9
Manufacturing 8.5 8.3 8.4 8.2 7.9 7.9 7.7
Electricity, gas and water 1.5 1.6 1.6 1.6 1.6 1.5 1.4
Construction 4.0 3.9 4.3 4.6 4.7 4.6 4.6
Services 48.0 48.8 50.4 50.4 48.4 48.4 48.0
 Wholesale & retail 12.4 3.9 14.8 14.7 14.3 14.1 13.8
 Transportation & storage 3.3 13.4 3.6 3.7 3.6 3.4 3.4
 Accommodation & food 2.1 4.0 1.8 1.8 1.8 1.8 1.7
 Information & communication 3.4 1.9 2.6 2.6 2.6 3.5 3.7
 Financial & insurance activities 6.5 2.9 5.9 6.3 6.4 6.5 6.5
 Real estate activitives 4.3 6.2 4.7 4.5 4.4 4.2 4.0
 Professional & scientific 1.3 4.4 1.7 1.6 1.6 1.5 1.5
 Public administration & defence 3.3 1.4 3.6 3.4 2.9 2.9 2.8
 Education 3.3 3.5 3.1 3.1 2.7 2.8 2.8
 Human health & social works 4.2 3.0 3.8 3.8 3.6 3.5 3.6
 Other services, nec 4.0 3.4 4.8 4.7 4.5 4.3 4.1
Less:  FISIM -4.6 -5.2 -5.9 -6.4 -6.4 -6.4 -6.5
Plus:  taxes less subsidies on products 8.2 8.7 10.3 9.4 10.2 9.8 9.8
GDP 100.5 100.3 100.0 100.0 100.0 100.0 100.0
 
Source: IMF, IFS CD-Rom;  Reserve Bank of Malawi, Economic and Fi nancial data.  Viewed at:  http://www.rbm.mw/data/ecodata/ 
 index.asp?content=externaldebt;  World Bank, World Development Indicators .  Viewed at:  http://ddp -ext.worldba nk.org/ext/dd 
 preports/ViewSharedReport?&CF=&REP ORT_ID=9147&REQUEST_TYPE=VIEW  ADVANCED. 
7. Inflation, as measured by the consumer price index (CPI), reached a peak of 17.1% in 
February 2006;  it has since come down, and was 7.8% in January 2010.  As a consequence of 
Malawi's food crisis in 2005, upward pressure on  prices came mainly from food inflation, which 
reached nearly 20% in February 2006, and to a l esser extent on high international oil prices.  During 
2009 inflation trended downwards, reflecti ng the easing of food and fuel prices. 
(i) Trade-related macroeconomic policies 
8. Malawi relies heavily on trade-related taxes (customs duties, VAT, and excise taxes), which 
were responsible for approximately 42% of tax revenue in 2009.  Additi onally, the overall tariff 
structure is complicated to administer, with six bands and myriad concessions and exemptions 
(Chapter III(1)(iii)), which tend to be discretionary a nd ad-hoc in nature, leaving scope for corruption.  
Furthermore, foreign grants and highly concessiona l financing fund nearly 40% of Malawi's annual 
budgeted expenditure.  Thus given Malawi's precarious  fiscal position, any further liberalization of WT/TPR/S/231 Trade Policy Review 
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tariffs in the absence of alternative revenue stre ams would have far-reaching consequences, especially 
in light of the Government's objective of a net repaym ent of domestic debt of 1.5% of GDP in 2010.  
With regard to generating greater  tax revenue, the authorities recognize the challenges of inefficient 
tax collection, smuggling, and tax evasion.  In addition to improving efficiency in tax collection, the 
MRA has taken measures to curb evasion, includ ing setting up risk management and post clearance 
audit units (Chapter III(1)(i)) as well as improved anti-smuggling measures.4  These initiatives have 
helped to reduce the fiscal deficit from 8.4%  of GDP in 2003 to 5.7% of GDP in 2009. 
9. Simplification of the tariff structure with a single MFN tariff (for example between 5% and 
10%) across all products, with no exemptions or concessions, would in all likelihood increase 
revenue.5  Furthermore, a sufficiently low import tariff would reduce the incentive to smuggle goods, 
while a single tariff band would make the tariff relatively easy to administer as well as reduce related costs. 
10. The rigidity in the exchange rate and the ove r-valued kwacha have probably resulted in some 
deterioration in international competitiveness as we ll as increasing the cost of doing business in 
Malawi, thereby worsening the investment environm ent (and discouraging FDI).  Given Malawi's low 
level of foreign exchange reserves, the author ities used moral suasion on banks as well as other 
informal administrative procedures, such as fo reign exchange rationing and multiple currency 
procedures, to keep the exchange rate stable.  These measures resulted in a backlog of unpaid 
importer invoices in 2006 and 2009, implicating th e increased cost of trading and doing business in 
Malawi and thus reduced international competitiveness. 
11. Between 2005 and 2009, Malawi's real effective exchange rate (REER) appreciated by nearly 
20%
6, mainly due to an increase in the U.S. dollar ag ainst other currencies as well as a deterioration of 
Malawi's terms of trade.  The appreciation in the REER reflects a deterioration of Malawi's international competitiveness. 
(3) B
ALANCE OF PAYMENTS  
12. Malawi had a projected current account defic it of US$1,091.9 million (or 22% of GDP) in 
2009, up from US$393 million (16.2% of GDP) in 2003 (Table I.3).  The rising current account 
deficit reflects an increasing gap between gro ss national saving and gross domestic investment.  
However, during the period under review, the current  account deficit peaked at over 24% of GDP in 
2005.  The rising current account deficit was largely due to the trade deficit, which reflected higher 
fuel prices and increased imports of fertilizer (in co nnection with the fertilizer subsidy programme) as 
well as to increased food imports following the food crisis in 2005.  The deficit in services (both 
factor and non-factor services) also rose, reflecti ng higher shipment, travel, and dividend payments, 
while the surplus on private transfers fell marked ly between 2003 and 2009.  The decline in private 
transfers was caused by the global economic downt urn, which resulted in lower remittances.  
Furthermore according to anecdotal evidence, the downturn also resulted in lower inflows of non-
governmental organization funds for dispersal in Malawi. 
13. On the other hand, the capital account su rplus showed a significant increase, from 
US$198.8 million in 2003 to over US$775 million in 2009.  The increase was due almost entirely to receipts of government transfers, which is essen tially donor funding for projects and balance-of-
payments support.  The capital account surplus has not  been sufficient to cover the current account 
                                                     
 
4 These included 24-hour patrols by flexible an ti-smuggling teams (FAST), an d increased checkpoints 
on key transit roads. 
5 Exemptions could be in place for a very  small number of products deemed sensitive. 
6 IFS online information. Viewed at:  http://www.imfstatistics.org/imf/ [10 January 2010]. Malawi WT/TPR/S/231 
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deficit during the review period.  Consequently, Malawi had to draw down its foreign exchange 
reserves, which stood at US$130 million at the e nd of 2009 compared with US$122.6 million in 2003, 
representing 1.7 months and 3.5 weeks of imports, respectively. 
Table I.3 
Balance of payments, 2003-09 
(US$ million) 
 2003 2004 2005 2006 2007 2008 2009 
Current account -393.3 -456.0 - 668.7 -677.1 -423. 5 -968.1 -1091.9 
 Trade balance -250.4 -311.2 -497.0 -512.7 -307.0 -806.3 -804.8 
  Exports of goods, f.o.b. 433.7 499.7 508.8 542.6 789.7 957.6 1,004.8 
  Imports of goods, f.o.b. 684.1 810.9 1,005.8 1,055.3 1,096.7 1,763.9 1,809.0 
 Non-factor services (net) -149.3 -167.5 -207.4 -206.7 -171.9 -269.9 -329.3 
  Receipts 40.0 41.3 50.0 58.1 73. 5 82.9 73.2 
  Payments 189.3 208.8 257.4 264.9 254.4 351.9 402.4 
 Factor services (net) -33.5 -45.8 -42.3 -35.6 -22.5 -24.7 -38.7 
  Receipts 12.2 4.6 3.9 4.1 4. 0 3.9 4.5 
  Payments 45.7 50.5 46.2 39.8 26.6 28.6 43.2 
 Private transfers (net) 40.0 68.5 77.9 77.9 77.9 131.9 76.2 
  Receipts 55.3 80.1 89.6 89.6 89. 6 144.0 89.3 
  Payments 15.3 11.6 11.7 11.7 11.7 12.1 13.2 
Capital account balance 199.0 332.3 353.6 285.0 461.4 1,004.2 815.5 
 Long-term capital balance 212.3 331.7 353.0 284.4 460.8 1,003.6 814.8 
   Government transfers (net) 120.9 222.1 197.3 151.7 267.9 611.1 537.9 
  Receipts 121.6 222.8 198.0 152.4 268. 7 611.8 538.7 
  Payments 0.7 0.7 0.7 0.7 0.7 0.8 0.8 
   Government drawings (net ) 21.8 33.3 88.7 44.9 86.0 161.7 160.9 
  Receipts 87.3 106.2 178.3 104.2 94. 1 167.7 172.6 
  Payments 65.5 72.9 89.7 59.3 8.0 6.0 11.7 
   Foreign direct investment 55.1 62.0 52.3 72.2 92.0 215.3 100.0 
  In Malawi 55.1 62.0 52.3 72.2 92.0 215.3 100.0 
  Abroad 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
   Public enterprises (net) 10.9 10.8 11.1 12.0 11.2 11.8 12.1 
  Receipts 12.1 12.1 12.1 12.1 12. 1 12.5 12.7 
  Payments 1.3 1.4 1.0 0.1 0.9 0.7 0.7 
   Private sector (net) 3.6 3.6 3.6 3.6 3.6 3.7 3.9 
       Receipts 6.8 6.8 6.8 6.8 6.8 7.0 7.4 
       Payments 3.2 3.2 3.2 3.2 3.2 3.3 3.5 
 Short-term capital (net) -13.4 0.6 0.6 0.6 0.6 0.6 0.7 
     Receipts 23.2 23.1 23.1 23.1 23.1 23.8 25.3 
     Payments 36.5 22.5 22.5 22.5 22.5 23.2 24.6 
Errors and omissions 130.4 61.5 209.7 225.2 -70.3 -28.6 0.0 
Balance before debt relief -63.9 -62.2 -105.4 -166.9 -32.4 64.7 -51.6 
Debt relief 47.6 47.1 59.8 109.7 1.1 0.0 0.0 
Overall balance after debt relief -16.3 -15.1 -45.6 -57.2 -31.3 64.7 -51.6 
Change in NFA  16.3 15.1 45.6 57.2 31.3 -64.7 51.6 
Memorandum items:        
Current account deficit/GDP (per cent)       
 Excluding official transfers -16.2 -17.4 -24.3 -23.2 -12.8 -24.5 -22.0 
 Including official transfers -11.2 -8.9 -17.1 -18.0 -4.7 -9.0 -8.6 
Import unit price (% change) 27.1 11.8 8.1 11.2 5.5 0.0 0.7 
Import quantum (% change) 14.9 18.5 24.8 8.4 1.4 60.8 2.6 
Exchange rate (MK/US$, period avge) 97.4 108.9 118.4 136.0 140.0 140.0 141.0 
 
Source: Information from the Malawi National Sta tistical Office;  and IMF, IFS CD-Rom. WT/TPR/S/231 Trade Policy Review 
Page 6 
 
 
(4) DEVELOPMENTS IN TRADE  
14. The ratio of Malawi's trade (imports and e xports) in goods and non-factor services to GDP 
rose from 67% in 2003 to 83% in 2009 (Table I. 1) reflecting higher imports of fertilizers and 
agricultural machinery (Table AI.1).  In addition,  agricultural exports, especially of tobacco, increased 
considerably during the review period.  Between  2003 and 2009, merchandise imports grew at a 
slightly faster rate than merchandise exports resulting in a rise in the trade deficit to 14.1% of GDP in 
2009.  The services deficit as a percentage of GDP in creased from 6.1% in 2 003 to 7.6% in 2009. 
(i) Composition of trade 
15. Malawi's main imports in 2008 were food, fe rtilizers, agricultural machinery and tractors, 
fuels, and automotive products.  As the 2002 and the 2005 food crises eased, imports of agricultural 
products (mainly food) declined (Chart I.1), while fuel imports declined on account of an easing of 
world oil prices.  On the other hand, the share of manufactures rose.  Imports of fertilizers and 
agricultural machinery and tractors ro se;  the increase in imports of fertilizers was also due to a price 
effect as prices peaked in June 2008.  According to  the IMF, the Government had contracted to buy 
significantly more fertilizer than was consumed an d although the international price for fertilizer 
declined after June 2008, the Government was obliged to pay higher prices as per its forward 
contracts.  Furthermore, the Government provided incentives to the transport industry such as duty-free import of vehicles (Chapter III(3)(i)), which pr esumably resulted in the increase in imports of 
automotive products. 
16. Malawi's exports are highly concentrated, w ith agricultural product s accounting for nearly 
90% of merchandise exports.  Malawi's main goods exports in 2003 were tobacco (both stemmed and 
unstemmed), sugar, tea, and clothing (Table AI.2).   However by 2008, the shares of sugar, tea, and 
clothing had declined sharply.  The decline in the shares of sugar and tea can partly be explained by 
the fall in international prices for these commodities in 2008.  Anothe r reason for the decline in sugar 
exports could be that EU preferential prices for su gar from Malawi declined in 2006.  Unrestricted 
and duty-free access for sugar under the "Everything but Arms" initiative only entered into force in 
2009.  With regard to clothing exports, it appear s that without the protection of the Multi-Fibre 
Arrangement, which ensured textile and clothing quotas to certain markets, Malawi is struggling to 
compete in international markets.
7 
17. The share of tobacco and agricultural raw materi als (mainly cotton) in Malawi's exports rose 
markedly during the review period.  The rise in the sh are of tobacco can be attributed to the increase 
in international tobacco prices between 2005 and 2008,  although these have since been declining.  On 
the other hand, the volume of tobacco exports rose in 2009. 
(ii) Direction of trade 
18. Malawi's main import suppliers  in 2008 were South Africa, Mozambique, the EU, Tanzania, 
and Switzerland (Chart I.2).  Since 2003, the shares of South Africa, the EU and Zimbabwe have 
declined, while the shares of Mozambique, Tan zania, Switzerland, and the UAE have increased 
significantly (Table AI.3).  Malawi's main export d estinations in 2008 were the EU, South Africa, the 
United States and Switzerland.  During the peri od under review, the shares of the United States, 
Japan, and South Africa fell, while the EU share rose considerably (Table AI.4). 
                                                      
7 OECD, African Development Bank (2008), African Economic Outlook 2008 . Malawi WT/TPR/S/231 
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(5) FOREIGN DIRECT INVESTMENT  
19. During the period under review, foreign direct i nvestment (FDI) inflows have been volatile.  
In 2003, FDI inflows totalled US$55.1 million (2.2% of GDP);  they rose more than three-fold to 
US$169.3 million in 2008 (4.3% of GDP) before subsid ing to US$60.2 million in 2009.  The stock of 
FDI in Malawi rose from US$378 million to US$627 million over the period.8 
20. The largest FDI project in recent years was in the mining sector by Paladin Africa Company 
Ltd., a subsidiary of Paladin Energy Ltd. of Aust ralia.  Production at the Ka yelekera uranium deposit 
at Karonga started in 2009.  Paladin's uranium (yellow cake) exports are expected to mitigate 
Malawi's shortage of foreign exchange.  Other major investments have been in agri-processing by 
Limphasa Sugar Corporation Ltd. of the United Kingdom and by Malawi Cotton Ltd. of China (Chapter IV(1)(ii)(e))).  The leading investor natio ns (in terms of FDI project numbers) have been 
India, China, and South Africa.  Overall, inward  FDI has increased in recent years, notably in 
agriculture and agri-processing (Table I.4).
 
Table I.4 
Foreign direct investment in Malawi, 2005-08 
(US$ million) 
 2005 2006 2007 2008a 
Agriculture 0.3 0.3 35.9 53.2 
Mining 0 134.3 17.3 4.0 
Manufacturing 15.6 47.9 17.9 30.2 
Tourism 3.8 1.7 12.0 27.1 
Other services 32.8 1.1 9.0 28.7 
Total 52.5 185.3 92.1 143.2 
 
a Up to November 2008. 
 
Note: Numbers include actual FDI and investment pledges. 
 
Source:  The authorities of Malawi. 
 
                                                      
8 UNCTAD (2004) and (2009). WT/TPR/S/231 Trade Policy Review 
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Chart I.1
Structure of merchandise trade, 2003 and 2008
2003 2008
(a)  Exports, including re-exports (f.o.b.)
Total:   US$502.4 million Total:  US$879.0 million
(b)  Imports (c.i.f.)
Total:   US$785.4 million Total:   US$2,203.7 millionPer cent
Source :  WTO Secretariat estimates, based on UNSD, Comtrade database figure (SITC Rev.3).Food
86.2Food
85.8
Manufactures
68.6Manufactures
76.8Tobacco, not 
stemmed
27.6
Tobacco, 
stemmed
21.4Beat and 
cane sugar
18.8Tea
7.0Other 
food
11.4Textiles and 
clothing
8.2
Food
17.4
Fuel
11.6
Iron and steel
3.1
Fertilizers
5.6
Other 
chemicals
11.2Other semi-
manufactures
10.3Electrical 
machines
6.8Transport 
equipment
11.0Textiles and 
clothing
5.6Other 
consumer 
goods
6.7Food
12.0
Fuel
9.7
Fertilizers
16.6
Other semi-
manufactures
7.1Non-electrical 
machinery
13.4
Other 
chemicals
10.8Electrical 
machines
5.0Transport 
equipment
8.5Textile and 
clothing
2.6Other 
consumer 
goods
9.8Other 
2.5Other 
1.4Other
5.5
Tobacco, not 
stemmed
48.7
Tobacco, 
stemmed
18.4Beat and cane 
sugar
5.8Tea
4.2Other 
food
8.7Textiles and 
clothing
5.4Other
8.8
Iron and 
steel
3.0
Non-electrical 
machinery
8.3
 Malawi WT/TPR/S/231 
 Page 9 
 
 
Chart I.2
Direction of merchandise trade, 2003 and 2008
2003 2008
(a)  Exports, including re-exports (f.o.b.)
Total:   US$502.4 million Total:  US$879.0 million
(b)  Imports (c.i.f.)
Total:   US$785.4 million Total:   US$2,203.7 millionPer cent
Sourc e:  WTO Secretariat estimates, based on UNSD, Comtrade database figure (SITC Rev.3).Africa
59.6Africa
61.3America
6.1 United 
Kingdom
5.2
Other EU(27)
6.9
South Africa
40.0Mozambique
5.3Rep. of 
Tanzania
1.5Other Africa
12.8Middle East
4.0Asia
17.0Other 0.0Other 0.4
Europe
13.2Am erica
2.8United 
Kingdom
3.4
Other EU(27)
7.4
Sout h
Africa
26.6
Mozambique
20.3Rep. of 
Tanzania
5.8Other 
Africa
8.7Middle 
East
5.5Asia
13.8
Other Europe
5.4
Ot her Europe
1.1Europe
16.2Other 0.2United 
States
5.7Other 
America
2.6
Other EU(27)
13.2Netherlands
5.9
Commonwealth of 
Independent States 
4.5South Africa
10.1Other 
Africa
16.6
EU(27)
45.3Asia
8.7
Other Europe
6.4Belgium
13.0
United 
Kingdom
8.9
Germany
4.2Africa
26.7Other 0.1United 
States
13.0
Other America  1.6
Other EU (27)
11.2Netherlands
6.4
Commonwe alth of 
Independent States 
2.4South Africa
14.7Other 
Africa
20.1
EU(27)
35.4Asia
8.8
Other 
Europe
3.8Belgium
2.7
United 
Kin gdo m
7.6
Germany
7.4Africa
34.9