Malawi Confederation of Chambers of Commerce and Industry (MCCCI) says the persistent high inflation rate combined with a large budget deficit and economic uncertainty pose significant challenges to businesses.
In its 2025 Quarter One Economic and Business Review, the private sector lobby group said strategic planning, cost control and adaptability will be critical for businesses to navigate the economic climate.
MCCCI observed that the unchanged policy rate of 26 percent, sustained for 11 consecutive months, signals a tight monetary policy stance aimed at containing inflation.
Reads the review in part: “For businesses in Malawi, this means that the cost of borrowing remains high, limiting access to affordable credit for investment and expansion.
“The inflation outlook faces several risks, including lower-than-anticipated agricultural output from the 2024/25 farming season.”
The 2025/26 National Budget has a deficit of K2.47 trillion, equivalent to 9.5 percent of gross domestic product, to be financed domestically, a situation MCCCI says is likely to put upward pressure on prices through the money supply channel.
National Statistical Office data show that inflation remained elevated in the quarter under review, rising to 28.5 percent from 28.1 percent in December before easing slightly to 30.5 percent in March, following the onset of the harvest season.
Inflation rate is currently at 27.7 percent as of May.
Ironically, in the quarter under review, businesses faced tightening access to foreign exchange following a dip in reserves, which according to MCCCI, meant that companies that import essential inputs faced longer delays in obtaining foreign currency, disrupting production timelines, especially in manufacturing, agro-processing and retail sectors.
This is despite Reserve Bank of Malawi (RBM), in the second Monetary Policy Report of 2025, indicating that the central bank’s forex sales into the market in the first quarter moderated foreign exchange pressure on the market.
RBM official foreign exchange sales to the market in the quarter reached $150.4 million (about K263 billion) from $76.4 million (about K133.7 billion] in the preceding quarter.
A Blantyre-based manufacturer, speaking on condition of anonymity, said the push for import substitution has been hard as forex scarcity and high inflation has made their products equally expensive.
“Consumers are not only poised to promote domestic markets, but they are also looking at costs and we have been beaten several times on this,” said the manufacturer.
Small Scale Business Operators Association of Malawi chairperson Tyson Mulumbira observed that foreign exchange scarcity, high inflation and interest rates and weather-induced calamities are making running small businesses difficult.
Malawi Union of Micro, Small and Medium Enterprises president James Chiutsi said the operating environment is tough, urging for joint collaboration between government and the private sector to address the economic challenges.
