Economics

What Are The Biggest Industries In Malawi?

Food processing is an important industry in Malawi.

Officially known as the Republic of Malawi, Malawi is a country that is located on the African continent. The landlocked country is located in the continent’s south central area in a region that was once known as Nyasaland. Malawi has an area of about 45,560 square miles and a population of about 18,091,575 people. Unfortunately, from an economic standpoint, the country is among the least developed on the planet. Accordingly, agriculture is the nation’s biggest sector with a huge chunk of the population (about 80%) residing in rural areas. As of 2017, the estimated gross domestic product (GDP) of Malawi stood at around $6.206 billion. To make up for the deficiencies in the economy, the country is forced to rely on economic aid from sources such as the World Bank, the International Monetary Fund, and other donors (such as other nations). Dealing with these issues has proven an almost insurmountable challenge for the government due to a number of reasons including environmental issues, HIV/AIDS, and illiteracy.

Agriculture

Malawi grows a number of crops although the main one is undoubtedly tobacco. In 2012, the plant accounted for around 50% of the total value of the exports whereas, in 2000, Malawi was the tenth global producer of tobacco. Unfortunately for Malawi, an over-reliance on tobacco is not that conducive for the economy since the international prices of tobacco always fluctuate. In addition, several countries have campaigns and plans for limiting intake and production of tobacco in the coming years. Despite this, the dependence has only increased as tobacco generated 70% of the export revenue in 2008 compared to the 53% of 2007.

Aside from tobacco, other revenue-generating crops include tea, coffee, and sugarcane. Together with tobacco, these plants contribute a whopping 90% of the total exports value of Malawi. Tea has been present since its introduction back in 1878. Today, most of the tea plantations are located at Thyolo and Mulanje. Other crops include cotton, sorghum, potatoes, and corn (maize). Livestock farming, which includes goats and cattle, is also practiced.

Historically, the country produces enough food to feed its population with the main food being maize or corn. In fact, back in the 1980s, the country was able to produce excess food with the extra being exported to its neighbors who were going through a major drought. Sustaining itself through agriculture is easy since about 90% of the population engages in small-scale farming. These small-scale farmers produce a wide array of crops such as cassava, groundnuts, small amounts of tobacco, rice, beans, and cassava. The remaining 10% represents the truly wealthy people of Malawi, which shows the wide margin between the wealthy and the poor.

In addition to crop and animal rearing, the country depends on lakes like Lake Chilwa and Lake Malawi for fishing. For the bigger chunk of the population, the most crucial protein is fish. Some of the fish is exported to countries nearby. Most of the fishing is done by traditional small-scale methods although a few companies such as Maldeco Fisheries have fishing boats for commercial fishing in Lake Malawi’s southern area.

Services

The service sector is another major contributor to the GDP of Malawi. Presently, the sector contributes about 51.7% of the country GDP. Some of the notable industries in this sector include tourism, health services, the banking sector, telecommunications, and retail. The government of Malawi holds a majority of shares in most of these sectors. For example, the government owns 51% of Malawian Airlines as well as Press Corporation Limited. The latter firm is the largest in Malawi with its dealings extending to things such as tobacco, fishing, steel production, ethanol production, the petrol sector, and retail.

Among these sectors, tourism is among those that show a significant amount of potential. This potential is seen by the steadily improving sector since the middle stages of the 1970s. For this reason, the government has been working hard to ensure that the sector grows. Unfortunately, the sector was affected negatively by the economic recession that hit South Africa in the 1980s. The recession affected Malawi because a huge number of tourists to Malawi are from South Africa. Aside from the recession, the sector was also affected by the general instability in Zimbabwe.

Despite the challenges, the growth of tourism has been realized in recent years. For example, in 2014, the sector contributed about 4.5% of the nation’s GDP and accounted for about 3.8% of the total number of jobs. Some of the major attractions for tourists include Lake Malawi, Mulanje Mountain, Zomba Plateau, and many more. National parks in the country include Kasungu National Park, Liwonde National Park, and Nyika National Park.

Industry

Some of the industries in the country include food processing, consumer goods, furniture production, cigarette production, and construction. This sector has some significance as evidenced by the 10% contribution to the country’s GDP back in 2013. To improve its agricultural produce, the government has also tried coming up with ways of embracing the latest technologies in production. Unfortunately, several challenges have impeded these efforts. Challenges include lack of well-developed infrastructure, poor business climate, and an unskilled labor to operate machinery.

Exported fruits and vegetables are usually raw although the country has to import processed food from countries such as South Africa. One of the companies involved in this sector is the internationally known Carlsberg, which has a branch in Malawi’s Blantyre. The company has a brewery that produces mango juice as well as package Coca-Cola products. In Salima, there is a mango-processing firm that deals with exporting mango products. Another company in Blantyre, Universal Industries, produces a number of products including sweets, milk powder, baby food, and soy products. Companies in places such as Mulanje, Mzuzu, and Thyolo are involved in the processing of tea and coffee.

The pharmaceuticals industry is also present with the country having four companies dealing in the sector. The companies do not make a wide range of drugs with production focused on those drugs that are in demand in the local market. Ordered by size, these four companies are Pharmanova Ltd., SADM, Malawi Pharmacies, and lastly Kentam Products Limited.

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