Incentivise production for export to narrow trade deficit

In December 2025, data from the National Statistical Office (NSO) showed that Malawi’s cumulative trade deficit in the 11 months ending November last year jumped by 20 percent to $2.4 billion (about K4.2 trillion) from $2 billion (about K3.5 trillion) during the same period the previous year. The International Merchandise Trade Statistics recorded Malawi’s imports at $3.27 billion (about K5.7 trillion) from $2.91 billion (about K5 trillion) during the same period in 2024 while exports peaked at $875.4 million from $882.8 million (about K1.5 trillion). Fuel, fertiliser and pharmaceuticals imports continued to dwarf exports that include tobacco, tea and pulses.

Nothing surprising, I must say as the statistics reflect Malawi’s position in international trade. For years, the country has implemented strategies aimed at stimulating local production to increase its export base while at the same time striving to cut on imports through import substitution with nothing much to show for. During the swearing in of entrepreneur and retired corporate executive Simon Itaye as the new Minister of Industrialisation, Business, Trade and Tourism at Kamuzu Palace in Lilongwe on Tuesday this week, President Peter Mutharika lamented Malawi’s failure to break into the international market.

He expressed his desire to turn this country from importing to exporting, consuming to production. What struck me in the President’s address was his recollection of a panel discussion during the UK-Africa Trade and Investment Summit in January 2020 where he was asked if he was excited about the African continental common market and replied: “They asked me if I was excited about the African common market and I said no, I was not excited about it. Everyone looked at me like ‘what’s wrong with this guy?’ I said I was not excited because I have nothing to sell on that market because I don’t produce anything.” To reap from global economic framework, a country has to produce quality stuff and export.

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It is not that Malawi doesn’t know this; the problem has been translating the beautiful strategies into reality to achieve desired results. Back in 2019 or thereabouts, the National Export Strategy II (NES II) was launched to boost the share of Malawi’s exports in the gross domestic product (GDP) to 20 percent by 2026. What is depressing is that despite the numerous efforts over the decades, exports continue to dwindle with Reserve Bank of Malawi data showing that in 2023 the trade deficit, the difference between the values of imports and exports, widened by $800 million to $2.1 billion.

To break it down, the country exported goods and services valued at about $1 billion against $3.1 billion worth of imports. NES II’s focus is on markets which present good opportunities to products and services made in Malawi, the so-called “low-hanging fruits”. The targets include neighbouring countries, regional markets, the European Union market, USA, Russia, the Middle East, Asia and emerging markets such as Canada, Australia and Switzerland.

They say charity begins at home. While exploring or sustaining overseas markets, it will be important for Malawi to incentivise local manufacturers to produce to feed the regional and continental markets. In a 2024Malawi Economic Monitortitled ‘A narrow path to prosperity’, the World Bank acknowledged that Malawi’s trade performance has been declining in recent decades.

The enactment of Special Economic Zones Bill to facilitate construction of industrial parks is touted as one of the strategies expected to push the country’s production capacity to catch up with the NES II targets. However, in international trade, dependence on primary commodities makes countries such as Malawi vulnerable to economic and political shocks on global markets, including the post-Covid-19 pandemic impact and other geopolitical conflicts based factors. Exports growth is critical to attainment of aspirations of the Malawi 2063, the country’s long-term development strategy which envisages diversification of export products within the agricultural sector and towards other sectors such as mining and tourism that have the potential to make a difference.

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