The Economics Association of Malawi (Ecama) and the World Bank have reignited calls to diversify the economy away from tobacco, the country’s main foreign exchange earner.
They say dropping prices of the leaf on the country’s auction floors and continued anti-tobacco smoking lobbies could potentially undermine the market’s growth.
The Bretton Woods institution highlighted this concern in its Malawi Economic Monitor for July 2025, which indicate that the dropping tobacco prices this year are a sign of the saturated market with limited opportunities for growth; hence, the need to diversify exports.
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The report titled ‘Navigating Uncertainty’, noted that tobacco earnings this far are low compared to last year despite selling more tobacco, dampened by low prices hovering at an average of $2.54 (about K4 447) per kilogramme (kg) from last year’s $2.97 (about K5 200) per kg.
The earnings this far are recorded at $373 million from $386 million during the same period last season.
Reads the report in part: “Given that tobacco is Malawi’s main source of foreign exchange among exports, the reduction in sales is concerning, especially since the country’s official foreign reserves currently cover less than one month of import.
“Tobacco has a negative market development gap. This gap derives from the difference between observed and adjusted costs and exchange rate misalignments.”
In an interview on Wednesday, Ecama president Bertha Bangara-Chikadza described the World Bank’s recommendation as both timely and necessary, not only due to reduced tobacco sales, but also increasing global anti-tobacco campaigns that could further threaten the sustainability of the country’s main foreign exchange foreign earner.
She said although Malawi has taken deliberate steps to diversify, most notably through the second National Export Strategy (NES II), the export growth has remained dismal.
Said Bangara-Chikadza: “The strategy targets an increase in exports as a percentage of gross domestic product from 14.6 to 20 percent, with a focus on high-value strategic sectors, including agriculture, manufacturing, services, and mining.
“Despite these efforts, the export growth has been dismal.”
National Statistical Office data shows that tobacco accounts for about 50 percent of total exports while sugar, tea and pulses account for only five, eight and two percent respectively.
Tobacco Commission board chairperson Godfrey Chapola is quoted as having said during the launch of the 2025/26 strategic plan in June that they remain satisfied the industry will continue to be the driver of the country’s economy for many years to come despite the global anti-tobacco forces.
“We have in fact been failing to satisfy the demand. It is an opportunity we want to make good use of. We are aware that we will be pursuing that ambitious goal amidst competition with many global forces against tobacco,” he said.
Ministry of Trade and Industry Principal Secretary Christina Zakeyu earlier said trade balance issues are affected by many factors outside its trade facilitation role and applauded the ministry for reducing the time and costs of doing business for cross-border traders.
