US Tariffs Pose Significant Risk to Malawi’s Export Driven Growth

Key Business Points

• Malawi’s export earnings and foreign exchange stability are at risk due to new US tariff measures, which could lead to a 27% decline in US imports from Malawi.
• The country’s heavy dependence on raw agricultural exports, such as tobacco, tea, sugar, and oilseeds, makes it highly exposed to shifts in global trade conditions.
• To mitigate the risks, Malawi should consider a two-track policy response, including short-term measures to stabilize foreign exchange and manage export proceeds, and medium-term reforms to support value addition and industrialisation.

The recent US tariff measures pose a significant threat to Malawi’s export earnings and foreign exchange stability, according to a Commonwealth analysis. The report reveals that the country’s undiversified export structure, concentrated product basket, and limited negotiating capacity make it one of the most vulnerable economies in Africa. Malawian economist Veri Nyirongo notes that the country’s export basket is dominated by unprocessed agricultural goods, leaving it highly exposed to shifts in global trade conditions. Even if Malawi is not directly targeted by the tariffs, a decline in global demand or commodity prices could tighten liquidity, weaken the kwacha, and make it harder to finance essential imports.

The Common Market for Eastern and Southern Africa (Comesa) has also expressed concern over the tariffs, cautioning that eight of its member states, including Malawi, face serious trade challenges. Comesa is urging its members to pursue cooperative strategies, including open negotiations and binding agreements with East Asian and European partners to diversify export markets and reduce vulnerability. In Chichewa, this concept is known as "kujitengera katangale", or diversifying one’s market basket. By doing so, Malawian businesses can reduce their reliance on a single market and mitigate the risks associated with the US tariff measures.

To mitigate the risks, Nyirongo recommends a two-track policy response. In the short term, the government should focus on stabilizing foreign exchange and managing export proceeds. This could involve implementing measures to kutengera dziko la forex, or stabilize the foreign exchange market, and kugwira ntchito malipiro a ku Export, or manage export proceeds effectively. In the medium term, the government should implement reforms to support value addition and industrialisation, such as investing in ufundi wa kuzalitsa, or manufacturing skills, and kutengera ujenzi, or industrial development. By taking a proactive approach, Malawian businesses can reduce their vulnerability to external shocks and kufikira patsogolo, or think ahead, to capitalize on new opportunities in the global market.

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