Reserve Bank of Malawi Deputy Governor for Economics and Regulations Dr Kisu Simwaka has warned that the country is underperforming by regional standards and remains vulnerable as global economic growth weakens.
Don Consultancy Group Chief Economist and Director of Economic Research and Strategy Chifi Mhango said Malawi’s difficulties reflected long-standing structural weaknesses. “The biggest issue that Malawi is facing is a weak domestic revenue base, low growth, a narrow formal tax base and a widespread informal sector,” Mhango said.
Limited industrialisation has left Malawi heavily dependent on agriculture, with insufficient progress in manufacturing, agro-processing and mineral development.
Weak exports, inefficient public spending and expenditure commitments that repeatedly exceed domestic revenue have added to fiscal pressures.
Mhango said foreign-currency and fuel shortages demonstrated the seriousness of the economic situation.
Malawi’s 2025/26 Budget included almost $642 million in foreign grants, representing about 14.1% of total spending. Foreign-financed development expenditure reached approximately $800 million, or 71.3% of the development budget. “Something has to change in terms of how Malawi’s economy moves forward,” Mhango said.
Reducing donor dependence would require agricultural commercialisation, stronger manufacturing, formalised mining operations and greater investment in agro-processing.
Malawi has traditionally relied on tobacco, sugar and tea for foreign-exchange earnings. Mhango said the country should diversify exports and capture more value from uranium and rare-earth minerals. “There is more opportunity for Malawi to formalise the mining sector and ensure there is no leakage in revenue,” Mhango said.
“With uranium and rare earths, a country cannot be having shortages of foreign exchange.”
Mhango also called for tourism development to extend beyond leisure travel into business, medical and sports tourism.
Strengthening tax collection, reducing revenue leakages and directing public expenditure towards productive sectors could improve fiscal sustainability.
Over the next 12 months, the government should prioritise fiscal stabilisation, productive-sector expansion and economic resilience.
“When I talk about economic resilience, I’m talking about strengthening export earnings, domestic revenue capacity, foreign-exchange reserves and fiscal sustainability,” Mhango said.
–ChannelAfrica–
