The year businesses fought to stay afloat – The Times Group

Navigating Resilience: How Malawi’s Business Landscape Weathered the Storm

Post was last updated: January 8, 2026

Key Business Points

  • Forex shortages and inflation were major challenges for Malawi’s businesses in 2025, with 74% of firms surveyed by the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) affected by forex scarcity.
  • SMEs demonstrated resilience by adapting to local sourcing, import substitution, and digital platforms, while large companies focused on cost containment and working capital management.
  • Structural reforms and sectoral productivity are expected to drive 3.8% GDP growth in 2026, with improved forex availability, access to finance, and support for local production and skills development.

The year 2025 was a challenging period for Malawi’s private sector, with both large companies and small and medium enterprises (SMEs) facing a fragile and constrained business environment. Despite some macroeconomic indicators suggesting slight stability, businesses continued to operate under heavy strain due to persistent forex shortages, high inflation, weak consumer demand, and rising operational costs. The broader economy grew modestly, with real GDP projected at 2.7 percent, driven by agriculture, mining, and parts of the services sector. However, growth was insufficient to ease pressures on businesses.

Forex scarcity remained the most critical challenge, affecting 74 percent of firms surveyed by the MCCCI. Limited access to forex caused delays in importing raw materials, spare parts, and machinery, with manufacturing, construction, and agro-processing firms being the hardest hit. Many SMEs reported production interruptions and operated at below 50 percent capacity. The zinthu zopusazi (business environment) was particularly tough for SMEs, which bore the brunt of these challenges, including weak consumer demand, eroded household purchasing power, and high interest rates.

In response to these challenges, many SMEs turned to kujitenga (import substitution) and local sourcing, while agro-processing and light manufacturing firms explored value addition using locally available materials. Digital platforms became vital for online marketing and sales, and associations and cooperatives enabled collective procurement and market access. The enactment of the MSME Bill in 2025 boosted the SME ecosystem by providing a framework for advocacy, collaboration, and structured dialogue with government and stakeholders.

The outlook for 2026 is cautiously optimistic, with projected GDP growth of 3.8 percent supported by structural reforms, improved sectoral productivity, and easing supply-side constraints. SMEs anticipate better harvests to improve food security and reduce inflationary pressures. Forex availability is expected to improve gradually, though challenges may persist. Access to finance is expected to expand, with affordable credit tailored to SME needs. Collaboration with universities and higher education institutions could support local machinery fabrication and import substitution.

To build a stronger, more inclusive business environment, ukongwe (stakeholders) must prioritize SMEs in forex allocation, expand access to affordable finance, stabilize the macroeconomic environment, strengthen public-private dialogue, and support local production, skills development, and digitalization. Large companies will also need to adapt, with collaboration between SMEs and larger firms offering potential synergies, particularly in supply chains. As Malawi moves into 2026, the determination shown in 2025 provides a foundation for cautious optimism, and addressing forex shortages, improving finance access, supporting local production, and fostering dialogue can unlock the private sector’s potential.

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Vanessa Banda
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