Revitalizing Malawi’s Industrial Sector: Why a Production Driven Economy is Key to Sustainable Growth

Key Business Points

• Local manufacturers are shifting from production to distribution due to a harsh operating environment, which may lead to job losses and a distribution-based economy.
• Government support is crucial to address bottlenecks such as foreign exchange shortages, rising production costs, and non-tariff barriers to boost the manufacturing sector.
• Innovation and expansion are key to the government’s industrialisation drive, with existing support mechanisms like the Industrial Rebate Scheme and Public Private Dialogue forums available to manufacturers.

The manufacturing sector in Malawi is facing significant challenges, with persistent foreign exchange shortages, rising production costs, and non-tariff barriers constraining production. According to Manufacturers Association of Malawi President Gloria Zimba, these bottlenecks are pushing investors from manufacturing into distribution, which may lead to a distribution-based economy that exports jobs to neighbouring countries. Zimba noted that 2025 has been a difficult year for the sector, with many investors changing their business models from manufacturing to distribution.

The harsh operating environment has also forced firms to freeze hiring, pursue voluntary exits, and retrench workers. To address these challenges, local producers are appealing to the government for meaningful engagement sessions to achieve productive outcomes. Zimba emphasized the need for the government to change how it engages the private sector, citing the importance of kugwiritsa ntchito mawu (effective communication) and kulonjeza masiku (creating opportunities) for local businesses.

In response to the concerns, Ministry of Industry, Business, Trade and Tourism spokesperson Patrick Botha stated that support mechanisms already exist to ease pressure on manufacturers. He highlighted the Industrial Rebate Scheme, which allows duty-free importation of raw materials, and the Public Private Dialogue forums, which provide a platform for direct dialogue between the government and the private sector. Botha also urged manufacturers to embrace innovation and expansion, citing the government’s industrialisation drive as a key opportunity for growth.

The manufacturing sector is projected to grow by 1.8 percent in 2025, down from the initial forecast of 2.4 percent, but an improvement from the 0.2 percent growth recorded in 2024. The Reserve Bank of Malawi attributed the revision to persistent foreign exchange shortages and electricity supply disruptions. However, the sector’s performance is expected to strengthen further in 2026, with growth estimated at 2.5 percent, supported by improved agricultural output. As the government continues to engage with the private sector, zinthu zitathe (things will get better) for local manufacturers, and the sector is likely to play a key role in driving malawi’s economic growth.

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