Malawi’s continued reliance on a handful of agricultural commodities for export earnings is putting renewed focus on the need to add more value to what the country produces before it reaches the export market.
The country’s merchandise exports were valued at about $1.3 billion (about K2.2 trillion) in 2014, but have remained at roughly $947 million (about K1.6 trillion) to $966 million (about K1.69 trillion) in 2023 and 2024, according to data from the United Nations Conference on Trade and Development (Unctad) Data Hub and the World Bank’s World Integrated Trade Solution (WITS).
The composition of those exports has also changed. Between 2021 and 2023, commodities accounted for about 91 percent of Malawi’s merchandise exports, with agricultural products making up 89.5 percent of the commodity basket. Tobacco remains the leading export.
Ironically, this means that the country misses opportunities to earn more from the same products through processing, manufacturing, packaging and branding, while also creating jobs along those value chains.
This is a gap government and the private sector are now seeking to close, particularly as Malawi continues to grapple with foreign exchange shortages and a large import bill.
For businesses such as Step Right Handmade Shoes in Limbe, this is already becoming a reality.
The company takes leather and turns it into shoes, belts, book covers and other products, seeking to prove that locally manufactured goods can compete with imported products.
The firm’s director, Daniel Mkama says the business was established partly in response to the perception among some consumers that products made in Malawi are not durable.
“Most Malawians think that we can’t produce durable products. That’s why we are here; to cut that trend of importing,” he says.
Mkama says the leather value chain can start with farmers selling hides and skins, move through tanneries and eventually reach manufacturers such as his company.
“In all the sectors, the supply chain of leather products can employ a lot of young Malawians,” he says.
It is the kind of value chain the Ministry of Industrialisation, Business, Trade and Tourism wants to see develop across the economy.
The ministry’s chief value addition officer Master Mzuzi says government is encouraging farmers and cooperatives to work together, improve their products and find better markets.
“We want farmers and cooperatives to network with fellow farmers to learn from each other, market their products and find better markets,” he says.
The ministry sees this as part of the country’s wider Malawi 2063 agenda, particularly the push for industrialisation and increased value addition.
There are already examples of cooperatives moving in that direction.
Mzuzi points to cooperatives that have achieved Malawi Bureau of Standards certification, secured markets with major local outlets and, in some cases, started exporting products such as honey to Japan.
For Maluso Cooperative Union, which brings together One Village One Product cooperatives, finding markets is just as important as producing value-added goods.
The organisation markets products including kilombero rice, brown rice, honey, baobab oil, moringa oil and soursop powder.
Maluso Coopeative Union representative Thom Nedi says Malawi needs to look beyond the domestic market if value addition is to make a meaningful contribution to the country’s foreign exchange position.
“We need to explore more markets to bring more forex, and improve Malawian lives,” he says.
However, it is one thing for a Malawian business to produce a finished product. It is another to move that product efficiently and competitively to a buyer in another country.
The Southern Africa Trade and Connectivity Project is seeking to address some of those constraints by reducing trade costs, improving transport corridors and expanding market access.
The project, which focuses on strengthening agricultural value chains and regional integration, provides opportunities for Malawian businesses to access markets along corridors such as Beira and Nacala, in Mozambique and Zambia.
Its importance to the value-addition drive is therefore clear. Better roads and trade corridors alone will not industrialise Malawi, but they can make it easier for a Malawian processor to get its products to regional markets.
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) chief executive officer Daisy Kambalame says moving towards value addition is important not only for increasing export earnings, but also for making Malawian businesses more competitive.
But she says this cannot happen without greater support for the manufacturing sector.
The Malawi Government has attempted to create the policy environment for this shift through initiatives such as the Malawi National Export Strategy 2021–26, which seeks to diversify the country’s exports by product and market and the Buy Malawi Strategy, which promotes locally manufactured goods.
But the continued dominance of primary commodities shows that the transition is far from complete.
The message was evident at the 22nd National Agriculture Fair held at the Chichiri Trade Fair Grounds in Blantyre from August 27 to 29 this year.
Organised by MCCCI, the fair brought together farmers, processors, small and medium enterprise, financiers, policymakers and other players in the agricultural economy under the theme ‘Transforming agriculture through innovation, value addition and market linkages.
The exhibition provided businesses with an opportunity to put locally produced and processed goods in front of consumers and potential partners, while the Agribusiness Forum held alongside it created space for discussions around financing, export readiness, value chains and markets.
