The African Development Bank (AfDB) says Malawi’s financial and business resources are not being fully exploited due to a constrained investment climate and ageing capital investments.
In a country analysis contained in the AfDB 2025 Macro Economic Outlook published on Friday, the bank notes that Malawi has limited capacity to mobilise and efficiently allocate capital with domestic resource mobilisation accounting for about 18 percent of gross domestic product (GDP), 70 percent of the budget allocated to recurrent expenditure while 60 percent of domestic credit goes to government.
The AfDB says this is limiting the resources available for private sector productive activities.
Reads the assessment in part: “High unemployment, especially for youth [27.4 percent for ages 15 to 24) and women, as well as high incidences of poverty [72percent] indicate limited use of the country’s human resources.
“The country’s renewable natural capital has been deteriorating largely due to poor management and inadequate regulations. Non-renewable natural capital per capita has risen thanks to the discoveries of new minerals.”
Published AfDB data shows that Malawi’s renewable assets or natural resources that, after exploitation, can return to their previous stock levels by natural processes of growth, declined by four percent in per capita terms between 1995 and 2018.
On the other hand, non-renewable assets such as coal and minerals and cannot be replaced quickly after consumption, increased by 231 percent, according to the report.
In an interview yesterday, Centre for Social Concern economic governance officer Agnes Nyirongo observed that despite being rich in resources and untapped potential, Malawi continues to face significant economic challenges.
She said: “High production costs, inefficient supply chains, and reliance on imported goods are just a few of the issues that contribute to the country’s ongoing struggles.
“While these problems are multi-faceted, there is growing consensus among economists, policymakers and business leaders that investing in manpower development may foster innovation and reduce production costs.
Meanwhile, the National Statistical Office (NSO) producer price index (PPI), which measures the average change over time in the selling prices received by domestic producers for their output, has been on the rise in recent years.
The PPI data shows that that total PPI, a combination of manufacturing, electricity and water supply increased by 20.6 percent between 2023 and 2024.
It further shows that manufacturing of food products alone increased by over 25 percent directly impacting food prices while manufacturing of beverages increased by 33.1 percent.
On the other hand, electricity, gas, steam and air conditioning supply increased, an indication of increased energy production costs, according to NSO.
Meanwhile, National Planning Commission (NPC), which is championing a wealthy and self-reliant Malawi by 2063, reported 43 percent progress in the roll-out of the First 10-year Implementation Plan (MIP-1) of Malawi 2063 catalytic interventions.
NPC indicated that Malawi’s progress boils down to wealth creation, adding the country is not doing well despite sitting on huge resources that can be used for development.
On its part, Treasury said MIP-1 continues to be the guiding policy in resource allocation and programme implementation with the aim of transforming the country into a self-reliant industrialised upper middle-income nation by the year 2063.
