Revitalizing Malawi’s Economic Growth: Turning Around Declining Wholesale and Retail Sectors
Key Business Points
- Foreign exchange shortages have significantly impacted Malawi’s wholesale and retail sector, leading to a decline in sector output and economic activity.
- Policy changes, such as temporary import bans, have affected the sector, but the government and business associations are working to address the challenges and ensure local industries meet demand.
- Inflation and high operational costs are major obstacles for businesses, with rising prices of raw materials and stiff competition from imported goods affecting production and sales.
Malawi’s wholesale and retail sector has been experiencing a decline in output over the past five years, largely due to foreign exchange shortages. According to the Malawi Government Annual Economic Report for 2024, the sector’s contribution to the gross domestic product (GDP) has consistently decreased from 12.4 percent in 2021 to 11 percent in 2025. The decline has been attributed to persistent foreign exchange shortages, which have affected the availability of intermediary inputs vital for manufacturing and retail operations.
The Malawi Confederation of Chambers of Commerce and Industry is working with the government to address the challenges facing the sector. Director of business environment Lucky Mfungwe said that the sector has been affected by several policy changes, including the recent temporary import ban on some goods. He emphasized the need to work on the supply side of the equation, ensuring that local industries meet the demand for the banned goods in terms of quantity, quality, and timely supply.
Consumers are also feeling the pinch, with high prices and low consumer demand affecting everyday shopping. Esther Jere, a consumer based in Blantyre, said that prices have gone up everywhere, especially for basic household items, and that ordinary Malawians are forced to adjust their spending. To address these challenges, the government needs to focus on producing for export and reducing expenditure, as suggested by Consumers Association of Malawi executive director John Kapito.
The devaluation of the kwacha has also had a significant impact on the economy, with a 25 percent devaluation in May 2022 and a 44 percent devaluation in November 2023. Business operators are struggling with rising operational costs, inconsistent power supply, and foreign exchange shortages, making it difficult to maintain production levels. Robray Malawi Limited and Candlex Limited have implemented production adjustments in response to the situation, but consumer demand remains low.
Despite the challenges, there are some positive signs, with the year-on-year headline inflation rate dropping for the second month in a row to 29.2 percent in April. The Reserve Bank of Malawi has stated that the monetary policy tightening cycle has likely come to an end. However, inflation remains elevated, compounding the cost of living crisis, and businesses need to find ways to adapt and thrive in this challenging environment. As the saying goes in Chichewa, "ngamage ndi ngonjezera" – we are in a time of difficulty, but with perseverance and determination, we can overcome it.
What are your thoughts on this business development? Share your insights and remember to follow us on Facebook and Twitter for the latest Malawi business news and opportunities. Visit us daily for comprehensive coverage of Malawi’s business landscape.
