Malawi cannot borrow its way to prosperity: Needs exports and investments

Malawi’s economic recovery cannot rest indefinitely on external borrowing, donor assistance and negotiations with international financial institutions. The country must answer a more basic question: how will it build a productive, competitive and export-oriented economy that generates its own prosperity?

Beyond the IMF

Public debt, foreign exchange shortages, inflation and currency stability dominate the economic debate, and the IMF’s latest mission, which ended on 6 October 2026 without a final agreement on a new lending programme, brought those vulnerabilities into sharp focus. The Fund acknowledged progress on fiscal discipline, domestic revenue mobilisation and reform. Those are encouraging signs.

But stabilisation is not transformation. A country can improve its fiscal position without creating enough jobs. It can secure external finance without expanding exports. It can steady its currency for a while without addressing the structural weaknesses behind persistent shortages of foreign exchange.

Malawi must shift from asking how much financing it can secure to asking how much economic value it can create. Borrowing can finance development. It cannot be the development model.

The numbers point to a structural problem

The World Bank’s September 2026 Malawi Economic Monitor, Building Stability to Unlock Growth, describes persistent macroeconomic and structural challenges. Growth is too weak to lift living standards, and foreign exchange constraints, infrastructure gaps and limited private investment continue to hold back productivity.

According to UNCTAD, Malawi exported about US$947 million in merchandise in 2024 and imported US$3.26 billion, a trade deficit of roughly US$2.32 billion. For every dollar earned from merchandise exports, the country spent about US$3.45 on merchandise imports. An earlier World Bank assessment found that only about 6 per cent of surveyed firms were exporting. Foreign exchange reserves, according to the Bank’s 2026 assessments, cover less than one month of imports.

The effects are felt across the economy. Businesses struggle to buy machinery and inputs. Manufacturers run below capacity. Import-dependent firms face rising costs, investment decisions stall and jobs go uncreated.

Foreign exchange shortages are therefore not only a monetary problem. They are a problem of production, competitiveness and export development.

Aid must complement production

Development assistance has played an important role in health, education, infrastructure and humanitarian support, and it remains necessary. But it should increasingly complement productive activity rather than substitute for it.

My experience in economic development and inward investment in the United Kingdom has reinforced one lesson. Investment does not follow ambition alone. Investors weigh the credibility of opportunities, regulatory predictability, infrastructure, workforce skills, market access and the responsiveness of institutions. They want to know not only why a country needs investment, but why their investment will succeed there.

Malawi has real opportunities in agriculture, agro-processing, tourism, renewable energy, mining and selected manufacturing. Opportunities, however, do not become bankable projects by themselves.

Investment promotion must move beyond conferences, brochures and memoranda of understanding towards commercially viable propositions. That means properly assessed projects, reliable sector data, transparent approvals, infrastructure planning and proper aftercare for existing investors. Through the Malawi Investment and Trade Centre (MITC), working with ministries and the private sector, the country should identify a focused portfolio of priority projects, each with clear requirements, commercial potential, responsibilities and measurable outcomes.

Success should be judged by investment delivered, businesses established, exports generated and jobs created. An investment announcement is not an investment outcome.

Exports must become a national priority

Foreign exchange shortages will not ease until Malawi substantially increases its export earnings. For decades, exports have depended heavily on a narrow range of agricultural commodities, above all tobacco. That leaves the economy exposed to shifts in demand, commodity prices and climate shocks. Diversification is now an economic necessity, not just a preference.

Consider agriculture. Malawi produces tea, sugar, macadamia nuts, groundnuts and other crops with potential for greater value addition. Considerable value can be captured through processing, packaging, branding, quality assurance and distribution. Malawi should do more than export raw materials. It should build industries that turn farm produce into higher-value goods that compete in regional and international markets.

The same principle applies to minerals. Extraction may generate revenue, but its wider benefit depends on transparent governance, commercially viable processing, local supplier development, skills transfer and effective environmental management.

Regional access also matters. Malawi should make fuller use of the Southern African Development Community and the African Continental Free Trade Area. Diversification requires investment in standards compliance, certification, trade logistics, market intelligence and reliable production capacity. The objective is simple: more Malawian businesses selling more competitive products to more customers abroad.

SMEs: the missing link

Large investments matter, but transformation cannot depend only on multinationals or major infrastructure. Small and medium-sized enterprises must be central to growth. The World Bank estimates that about 270,000 young people enter Malawi’s labour market each year, which makes productive employment urgent.

SMEs can create jobs, drive innovation, develop suppliers and diversify the economy. Yet many face overlapping constraints: expensive finance, unreliable infrastructure, weak management capacity, technology gaps and limited market access.

Finance alone will not fix these problems. A loan without sound financial management, market access or operational skills may not produce sustainable growth. Successful SME development also depends on leadership, management capability, technology adoption and a supportive business environment.

Digital tools should not be treated as a luxury for large firms. Affordable accounting, inventory, electronic payment, online marketing and customer management systems can help small businesses become more efficient and reach new markets, provided they come with the right skills and practical support.

Malawi should strengthen its SME programmes by combining finance, business advice, digital training and links to domestic and international supply chains. Universities, chambers of commerce, financial institutions and business development organisations should all play a part. The test is whether supported businesses become more productive and keep people employed.

Turning the diaspora into an asset

The diaspora is another underused resource. Remittances support households and bring in foreign exchange, but Malawians abroad can offer far more: professional expertise, commercial relationships, technical knowledge and access to international networks. These can connect Malawian enterprises with buyers, investors, technology providers and partners.

My work supporting UK–Malawi commercial engagement has shown the value of practical links between businesses in both countries. Those links need sustained follow-through. Malawi needs mechanisms that connect diaspora professionals and investors with credible opportunities and export-ready businesses. These could include sector investment networks, export mentoring, introductions to international buyers and technology transfer partnerships. The aim should not simply be to send more money home, but to let Malawians abroad help build the country’s productive economy.

From policy to delivery

Malawi does not lack strategies, policy documents or ambition. Its weakness has been implementation. Rather than creating more initiatives or bureaucracy, the priority should be to strengthen existing institutions and make established policies deliver measurable results. Five areas need particular attention.

First, accelerate export development. Trade-support bodies should focus resources on sectors with proven export potential and help firms overcome barriers in standards, certification, logistics, finance and market access.

Second, improve investment promotion and delivery. MITC and government agencies should work more closely with investors to develop credible projects, resolve implementation problems and turn commitments into operating businesses.

Third, strengthen domestic productivity. SME programmes should prioritise management skills, technology adoption, market access and integration into supply chains.

Fourth, build a more predictable business environment. Reliable electricity, efficient administration, transparent regulation and better access to foreign exchange are essential for long-term private investment.

Fifth, strengthen accountability. Government should regularly report on investment realised, export growth, businesses supported, jobs created and obstacles resolved.

These steps do not require reinventing Malawi’s development architecture. They require better coordination, institutional discipline and sustained commitment. Malawi 2063 and its implementation plans already provide a foundation for productive growth and diversification. The task now is to turn those ambitions into results that businesses, workers and households can see.

From recovery to independence

Malawi’s challenges are serious but not insurmountable. The country has entrepreneurial talent, natural resources, a young population and access to regional and international markets. What it needs is a more disciplined approach to turning those advantages into productive activity.

Long-term transformation will require hard choices. Not every proposed investment will be viable, and not every firm can compete internationally right away. Public resources are limited, and reform must protect vulnerable households while encouraging productivity and private investment. Those realities make the case for prioritisation, institutional coordination and evidence-based decisions.

Government should be judged not only by its ability to negotiate finance or announce reforms, but by whether those reforms help businesses invest, produce, employ and export. The private sector must raise productivity, improve standards and pursue new markets. International partners should back the capabilities and infrastructure that let Malawi create sustainable value.

The true measure of recovery will not be the size of the next loan. It will be the strength of the economy built with the resources and partnerships available. Malawi needs the IMF, development partners and responsible access to finance. Above all, it needs productive businesses, competitive exports, credible investment and institutions that deliver.

We cannot borrow our way to prosperity. We must produce, compete, invest and trade our way there.

Hannington T. Gondwe is Chief Executive Officer of the UK–Malawi Chamber of Commerce and an economic development and inward investment practitioner based in the United Kingdom. He writes on international trade, investment, enterprise development and economic transformation. The views expressed are personal.

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