Malawi needs strong political will supported by merit-based appointment approach to effectively addressing structural challenges of the economy—DCG Chief Economist Chifipa Mhango

Chifipa Mhango

* Malawi is at a crossroad in which the choice is either a path towards continued destruction or economic prosperity

* To which the electorate has a key decision to make in the coming September 16 general elections

By Duncan Mlanjira

Leaders that will take over the Malawi government administration after the September 16, 2025 elections are being advised that to effectively address the structural challenges facing the country’s economy, it will need “a strong political will to deliver, supported by a merit based appointment approach into key positions”.

This is suggested by South Africa’s Don Consultancy Group (DCG) Chief Economist, Chifipa Mhango in a press statement copied to Minister of Finance & Economic Affairs, Minister of Trade & Industry, Reserve Bank Governor and his Deputy Governor and the country’s political party leadership.

Mhango, who is DCG’s director of economic research & strategy, observed that “Malawi is at a crossroad in which the choice is either a path towards continued destruction or economic prosperity — to which the electorate has a key decision to make in the coming September 16 elections”.

“Latest data as sourced from various institutions, including the Reserve Bank of Malawi (RBM), points to a country facing significant structural challenges with a heavy reliance on rain-fed agriculture, macroeconomic instability and a challenging business environment.

“Malawi continues to be on a path of a narrow export base, inadequate infrastructure to support economic development as well as limited access to resources.”

The Chief Economist further indicated that “a large portion of Malawi’s population continues to depend on agriculture, which is highly vulnerable to climate change and weather patterns”.

“This dependence has led to food insecurity and escalating poverty levels when harvests are poor. This has been an on-going trend in Malawi, and at times used as a scapegoat against lack of delivery on economic promises made during election campaigns.

“The economic landscape in Malawi has been characterised with fiscal slippages, governance failures, and high public debt contributing to macroeconomic instability.

“This instability has undermined economic growth and at large, discouraged investment into the Malawi economy,” observes Mhango, adding that coupled with the above, “Malawi has continued to have a very weak business environment, with elements of high corruption, poor infrastructure (water, energy, roads, transport, and ICT), and limited access to finance, making it difficult for businesses to thrive — hence limiting economic development.

“Unless there is more diversification of the export basket, Malawi economy will also continue to be vulnerable to price fluctuations on its current export products in the global market.”

He presented the worrisome picture of the Malawi economic based on latest key data from the RBM and Malawi National Statistics Office (MNSO) as follows:

* A Gross Domestic Product (GDP) in current market prices of US$14.13 in April 2025 (equivalent to only 0.01% of the global GDP), with Real GDP growth rate of 3.2% in April 2025 (Data source: RBM);

* Real GDP per capita of US$695.78 in April 2025, which is only 4% of the global average (Data source: RBM);

* An elevated headline inflation rate of 27.7% in May 2025, with food inflation rate of 32.7%, which has eroded the purchasing power of most Malawians and also hindered investment into the country (Data source: RBM).

* As of April 2025, a decline to a total of MK927.8 billion (US$530 million) in total foreign exchange reserves (gross official reserves — MK176.1 billion plus total held by commercial banks — MK751.7 billion), limiting access to essential imports such as fuel, machinery, medicines, fertilizer among other products, with official import cover now at only 0.4 months or less than 15 days (Data source- RBM);

* Total Government expenditure of MK2.2 trillion just within the first four months of 2025, with April 2025 being the highest at MK565.5 billion, with a revenue total of MK1.6 trillion during the same period.

Of concern is that only MK457.1 billion (21.1%) expenditure in total towards development projects and a massive MK1.7 trillion (78.9%) in recurrent (administrative) expense. (Data source: RBM);

* A high public debt, reaching 87.7% of GDP in 2024, fuelled by deficits and massive borrowings, thus putting a massive burden on the economy (Data source: RBM);

* Malawi’s trade deficit widened to MK395.7 billion in April 2025, from MK315.9 billion in the corresponding month of the previous year, as exports decreased by 17% year-on-year to MK44.9 billion, while imports increased by 19.1% to MK440.6 billion.

Among commodities, the largest exports were tea (26.5%) followed by tobacco (13.4%) and macadamia nuts (12.8%). In terms of imports, the main commodities were nuclear reactors, boilers and machinery (17.4%), petrol (10.5%), and vehicles other than railways (10%).

Exports are declining month on month in the whole of 2025, since the month of January, cementing the fact that devaluations of the Malawi kwacha never support the trade position of the Malawi economy (Data source: RBM, MNSO);

* Since 2020, the level of Foreign Direct Investment into Malawi has never surpassed a US$250 million level on an annual basis, which was last achieved in 2020 (US$252.2 million) — Data source: RBM.

In his concluding remarks, the DCG Chief Economist Chifipa Mhango says: “The choice for Malawi electorate should be towards a Government that will offer Malawi with a new direction on the economy through implementation of the following:

1. A more diversified Gross Domestic Product base, away from heavy dependence on agriculture;

2. Offer conductions for macroeconomic stability, with an aligned approach towards monetary policy, fiscal discipline, and viable trade and industry policy framework;

3. High quality infrastructure investment in transportation, roads, energy, water, railway, ICT;

4. Human capital development, focused on youth and women, with more investment in the health sector;

5. Enhanced Institutional Capacity and Governance, with policy consistency;

6. Enhanced access to markets and finance for SMMEs and women/youth;

7. A merit-based appointment approach in Government and key agencies’ positions.

“Malawi will need to focus on the above economic strategic objectives in order to be on a path towards economic prosperity that is sustainable and inclusive for the entire nation,” advises Mhango.