Malawian businesses are failing to thrive in the digital space with published government data showing that foreign-owned firms dominate the country’s e-commerce sector.
Data contained in the Digital Readiness Assessment Report published by the Ministry of Information and Digitisation in partnership with United Nations Development Programme (UNDP) on Friday, shows that 70 percent of survey respondents indicate that only a few locally-owned businesses exist.
Additionally, 10 percent reported that no locally-owned businesses exist at all, further emphasising the dominance of foreign players.
Reads the report in part: “This distribution suggests significant barriers for local entrepreneurs in entering and scaling within the e-commerce space.
“Possible challenges include limited access to digital infrastructure, lack of financing and regulatory hurdles.”
The Malawi Government has set measurable targets to bolster the digital economy with the information and communications technology sector’s contribution to gross domestic product projected to increase to seven percent this year from 5.7 percent in 2019.
Additionally, the domestic financial inclusion rate is expected to rise from 58 percent in 2019 to at least 65 percent by 2025.
In an interview yesterday, Chamber for Small and Medium Enterprises executive secretary James Chiutsi said persistent fraud towards online business is making the majority of such enterprises to shun e-commerce, consequently losing out on the digital evolution.
He said: “Small businesses are already facing challenges to benefit from e-commerce due to lack of capacity building and cost of information technology infrastructure.
“For those that have gone online to trade, they have met lots of fraudsters who are frustrating such trade.”
Speaking separately, entrepresnuer Teleza Nangoma said while e-commerce has presented her with several markets, Internet prices and fraud have been barriers.
She said: “Online business is good as it saves time and money, but there are also challenges, including fraud, technology costs and dishonesty.
“Sometimes people have trust issues because legitimate businesses need to have sponsored pages, which is also a cost.”
As of January 2024, there were approximately 5.86 million Internet users in Malawi, accounting for 27.7 percent of the total population, according to government data, a 24.4 percent increase from 5.04 million users in January 2023.
On the other hand, social media adoption in Malawi remains relatively low, with 1.3 million social media user identities, equivalent to 6.1 percent of the total population.
However, according to the World Bank, in Malawi, a mobile data plan of 300 megabyte per month costs $1.70 (about K2 976), which is 5.4 percent of the gross national income per capita per month.
The cost of a 20 gigabyte plan exceeds the monthly gross national income per capita, making it expensive for most Malawians
E-Government Principal Secretary Stephen Mjuweni is quoted in the report as having said that although Malawi has made commendable strides in strengthening its digital foundations, the work is far from complete.
UNDP resident representative Fenella Frost observed that as Malawi navigates the opportunities and challenges of the digital age, the report serves as a critical tool to accelerate the country’s journey towards a more inclusive, resilient and sustainable future.
The report aligns with Malawi 2063, the country’s long-term plans, and the United Nations Sustainable Development Goals.
