Economy of Malawi

Theeconomy ofMalawiis $7.522 billion bygross domestic productas of 2019, and is predominantly agricultural, with about 80% of the population living in rural areas. The landlocked country in south central Africa ranks among the world'sleast developed countriesand poorest countries.Approximately 50% of the population lives below the national poverty line, with 25% living in extreme poverty.
In 2017, agriculture accounted for about one-third of GDPand about 80% of export revenue. The economy depends on substantial inflows ofeconomic assistancefrom theIMF, theWorld Bank, and individual donor nations. The IMF and World Bank has spearheaded structural reforms in Malawi for decades.
The government faces strong challenges: to spur exports, to improveeducationaland health facilities, to face up to environmental problems ofdeforestationanderosion, and to deal with the problem ofHIV/AIDS in Africa.
Malawi's most important export crop istobacco, which accounted for a third (30%) of export revenue in 2012.In 2000, the country was the tenth-largest producer in the world. The country's heavy reliance on tobacco places a heavy burden on the economy as world prices decline and the international community increases pressure to limittobacco production.Malawi's dependence on tobacco is growing, with the product jumping from 53% to 70% of export revenues between 2007 and 2008.
The country also relies heavily ontea,sugarcaneandcoffee, with these three plus tobacco making up more than 90% of Malawi's export revenue. Tea was first introduced in 1878. Most of it is grown inMulanjeandThyolo. Other crops includecotton,corn,potatoes,sorghum,cattleandgoats. Tobacco and sugar processing are notable secondary industries.
Traditionally Malawi has been self-sufficient in its staple food,maize(corn), and during the 1980s it exported substantial quantities to itsdrought-stricken neighbors. Nearly 90% of the population engages in subsistence farming.Smallholderfarmers produce a variety of crops, including maize,beans,rice,cassava, tobacco, andgroundnuts(peanuts). Financial wealth is generally concentrated in the hands of a small elite. Malawi's manufacturing industries are situated around the city ofBlantyre.
Lake MalawiandLake Chilwaprovide most of the fish for the region. For many Malawians, fish is the most important source of proteins. Dried fish is not only consumed locally, but also exported to neighboring countries. Most fishing is done on small scale by hand. However, Maldeco Fisheries owns several commercial fishing boats and operates fish farms in the southern part of Lake Malawi.
Malawi has few exploitablemineralresources. A South-African Australian consortium exploits uranium at a mine nearKaronga. Coal is being extracted inMzimbaDistrict. Malawi's economic reliance on the export of agricultural commodities renders it particularly vulnerable to external shocks such as declining terms of trade and drought. High transport costs, which can comprise over 30% of its total import bill, constitute a serious impediment toeconomic developmentand trade. Malawi must import all its fuel products. Other challenges include a paucity ofskilled labor, difficulty in obtaining expatriate employment permits, bureaucraticred tape,corruption, and inadequate and deteriorating road, electricity, water, andtelecommunicationsinfrastructure which hinder economic development in Malawi. However, recent government initiatives targeting improvements in the road infrastructure, together with private sector participation in railroad and telecommunications, have begun to render the investment environment more attractive.
The following are Malawi's top 20 agricultural production values and volumes for 2009. (Unofficial figures derived from FAO statistics)
Key:
F : FAO estimate, Im: FAO data based on imputation methodology, P : Provisional official data
The following table shows the main economic indicators in 1980–2024.
In 2013, Malawi's manufacturing sector contributed 10.7% of GDP.The main industries are food processing, construction, consumer goods, cement, fertilizer, ginning, furniture production and cigarette production.
The government's attempts to diversify the agriculture sector and move up the global value chain have been seriously constrained by poor infrastructure, an inadequately trained work force and a weak business climate. In order to help companies adopt innovative practices and technologies, theNational Export Strategyadopted in 2013 affords companies greater access to the outcome of international research and better information about available technologies; it also helps companies to obtain grants to invest in such technologies from sources such as the country'sExport Development Fund and the Malawi Innovation Challenge Fund. In parallel, the government has raised its investment inresearch and developmentto 1% of GDP.
Most fruits and vegetables are exported raw, while processed food is imported mainly from South Africa.Carlsbergopened its first brewery outside of Denmark in Blantyre in 1965. The brewery also bottles Coca-Cola products under licence.  A mango processing plant for the export of fruit concentrate opened inSalimain 2013. Universal Industries operates several food factories in Blantyre, where it produces sweets, crisps, biscuits, milk powder, soy products and baby food. Coffee and tea are processed by half a dozen of different companies in the regions ofThyolo,Mulanjeand aroundMzuzu.
Malawi has four pharmaceutical companies. They manufacture a limited range of drugs, particularly those that are in great demand on the local market.These are Pharmanova Ltd.,which is the biggest pharmaceutical manufacturer in Malawi, followed by SADM, Malawi Pharmacies (Pharmaceuticals Limited) andKentam Products Limited.
Large man-made pine tree forests are located in the Viphya Mountains, around Mulanje and Zomba. Timber production for building materials and furniture is an important industry for these regions. However, most areas in Malawi suffer from deforestation due toillegal loggingfor charcoal production and the use of firewood.
Malawi's sole power supplier is the state ownedElectricity Supply Commission of Malawi(ESCOM), which generates almost all its power from hydroelectric plants along the Shire River. The installed is approximately 351MW.About 12% of the country's population has access to electricity, according to 2014 World Bank figures.
The country has been suffering from intermittent power outages as a result of an ongoing drought that has halved power output as water levels of the Shire river dropped significantly.The river usually generates 300MW of electricity, accounting for 98% of Malawi's total supply. However, the drought reduced that capacity to 160MW, according to ESCOM.
The service sector accounts for 51.7% of Malawi's national GDP. Notable industries aretourism, retail, transport, education, health services, telecommunication and the banking sector.  The Government of Malawi holds shares in many important companies, such asMalawian Airlines(51%) and Press Corporation Limited. Press Corporation Ltd. is the country's biggest company, with subsidiaries in the tobacco, banking, sugar, fishing, ethanol production, steel production, retail, telecommunication and petrol sectors.
Malawi has undertaken economicstructural adjustmentprograms supported by theWorld Bank(IBRD), theInternational Monetary Fund(IMF), and other donors since 1981. Broad reform objectives include stimulation of private sector activity and participation through the elimination of price controls and industrial licensing, liberalization of trade and foreign exchange, rationalization of taxes, privatization of state-owned enterprises, and civil service reform. Malawi qualified forHeavily Indebted Poor Country(HIPC) debt relief and is in the process of refining its poverty reduction strategy.
Malawi has bilateral trade agreements with its two major trading partners,South AfricaandZimbabwe, both of which allow duty-free entry of Malawian products into their countries. The government faces challenges such as the improvement of Malawi's educational and health facilities — particularly important because of the risingrates of HIV/AIDS — and environmental problems including deforestation, erosion, and overworked soils.
In 2006, in response to disastrously low agricultural harvests, Malawi, through an initiative by the late PresidentBingu Mutharika, an economist by profession, began a program offertilizersubsidies that were designed to re-energize the land and boost crop production. It has been reported that this program, championed by the country's president, is radically improving Malawi's agriculture, and causing Malawi to become a net exporter of food to nearby countries.
Economic grievances though took a downward slide during Mutharika's second term. Economic grievances were a catalyst that resulted in the2011 economic protests in Malawi in July.
The following figures are taken from the CIA World Factbook,unless otherwise indicated.
GDP:purchasing power parity = $22.37 billion (2017 est.)
GDP - real growth rate:4% (2017 est.)
GDP - per capita:purchasing power parity - $1200 (2017 est.)
GDP - composition by sector:agriculture:28.1%industry:15.8%services:56.1% (2016 est.)
Population below poverty line:50.7% (2010 est.)
Inflation rate (consumer prices):23% (2014 est.)
Labor force:7 million (2013 est.)
Labor force - by occupation:agriculture 76.9%, industry and services 23.1% (2013 est.)
Unemployment rate:NA%
Budget:revenues:$1.346 billion (2017 est.)expenditures:$1.556 billion (2017 est.)
Public Debt59.3% of GDP (2017 est.)
Industries:tobacco,tea,sugar, sawmill products,cement, consumer goods, cotton, consumer goods, uranium and coal mining
Industrial production growth rate:2.8% (2013 est.)
Electricity - production:1.973 billion kWh (2010 est.)
Electricity - consumption:1.835 billion kWh (2010 est.)
Agriculture - products:tobacco,sugar cane,cotton,tea,maize,potatoes,cassava(tapioca),sorghum,pulses;cattle,goats
Exports:$1.427 billion (2013 est.)
Exports - commodities:tobacco,tea,sugar,cotton,coffee,peanuts, wood products, apparel, uranium and its compounds
Exports - partners:Canada 10.6%, Zimbabwe 9.3%, Germany 7.3%, South Africa 6.6%, Russia 6.5%, US 6.1%, China 4.2% (2012)
Imports:$2.42 billion (2013 est.)
Imports - commodities:food, petroleum products, semimanufactures, consumer goods, transportation equipment
Imports - partners:South Africa 27%, China 16.6%, India 8.7%, Zambia 8.5%, Tanzania 5.1%, US 4.3% (2012)
Current account balance- $280.1 million (2013 est.)
Debt - external:$1.556 billion (31 December 2013 est.)
Economic aid - recipient:
$575.3 million (2005)
Foreign direct investment - inflow$129.5 million (2014)
Currency:1 Malawian kwacha (MK) = 100 tambala
Exchange rates:Malawian kwachas per US dollar -730.00 (20/June/2016), 460.00 (20/Jan/2015), 360.00 (6/Feb/2013), 165.961 (1/Sep/2011), 145.179 (2009), 135.96 (2006), 108.894 (2005), 108.898 (2004), 97.433 (2003), 76.687 (2002)
Fiscal year:1 July - 30 June
This article incorporatespublic domain materialfromThe World Factbook.CIA.