Malawi’s wholesale and retail sector output has declined over the past five years largely due to foreign exchange shortages, significantly affecting economic activity and consumer confidence, a government report shows.
Data from the Malawi Government Annual Economic Report for 2024 indicates a consistent decline in the sector’s contribution to the gross domestic product (GDP) from 2021 to 2025.
In 2021, the sector accounted for 12.4 percent of GDP and it went down to 12 percent in 2022, 11.6 percent in 2023, 11.4 percent in 2024 and is expected to further decline to 11 percent in 2025, according to the report published by the Ministry of Finance and Economic Affairs.
Reads the report in part: “The decline has been attributed to persistent foreign exchange shortages, which have affected the availability of intermediary inputs vital for manufacturing and retail operations.
“These constraints have, in turn, stifled productivity and trade performance in the country while also limiting the availability and affordability of goods for consumers.”
In an interview on Tuesday, Malawi Confederation of Chambers of Commerce and Industry director of business environment Lucky Mfungwe said the sector has been affected by several policy changes, including the recent temporary import ban on some goods.
He said government introduced the policy intervention to empower Malawians, adding that the chamber is working with the government to ensure that local industries meet the demand for the banned goods.
Said Mfungwe: “We need to work on the supply side of the equation, ensuring that we meet the demand for the enlisted goods in terms of quantity, quality and timely supply.
“We need to bring in finance solutions that address the risk factors in the sector as most financial institutions are not willing to finance due to the high risks involved.”
He advised the Ministry of Trade and Industry to adopt a nuanced approach, recognising that some commodities cannot be supplied locally.
On his part, Consumers Association of Malawi executive director John Kapito blamed the economy’s failure to export and earn foreign exchange, saying it has impacted the retail trade that relies on imports for its operations.
“The devaluation of the kwacha has also had a huge negative impact on both businesses and consumers as many consumers have witnessed the depletion of their incomes due to the high cost of living,” he said.
The Malawi kwacha was devalued by 25 percent in May 2022 and by 44 percent in November 2023.
To address these challenges, Kapito suggested the need for government to focus on producing for export and reducing expenditure.
Business operators we interviewed in Blantyre, the country’s commercial city, stressed that rising operational costs, inconsistent power supply, foreign exchange shortages and stiff competition from imported goods, particularly from neighbouring countries, are major obstacles.
Robray Malawi Limited sales executive Dorica Wataya said the increasing prices of raw materials are disrupting the firm’s production processes, leading to higher prices for their products.
To keep the business afloat, he said they have implemented production adjustments in response to the situation.
“We have reduced the production of mattresses by roughly 20 percent and we are now focusing primarily on fast-moving goods,” said Wataya, adding that the declining stock level is a result of the drop in consumer demand.
In a separate interview, Candlex Limited brand manager Mozeo Malekezo shared similar concerns about low production, saying: “The production and sales of our items have decreased by approximately 40 percent compared to our past production.”
He said there is low capacity utilisation of its machinery.
Consumer Esther Jere based in Bangwe Township, Blantyre shared her perspective on how the economic strain is affecting everyday shoppers.
“Prices have gone up everywhere, especially for basic household items. As ordinary Malawians, we are forced to adjust our spending,” she said.
Malawi’s year-on-year headline inflation rate dropped for the second month in a row, hitting 29.2 percent in April, a development the Reserve Bank of Malawi said means the monetary policy “tightening cycle has likely come to an end”.
The National Statistical Office Consumer Price Index for April 2025 shows that the inflation rate dropped from 30.5 percent in March 2025, attributable to decelerating food prices although non-food inflation slightly picked up.
Inflation has over the years been elevated, compounding the cost of living crisis.
