|Overview : |
Malawi’s economy is dominated by agriculture, which accounts for over 30% of the country’s Gross Domestic Product (GDP). This over-reliance on agriculture has been a leading cause of high volatility in Malawi’s GDP growth, as poor harvests coupled with regular droughts have significantly impacted on agricultural output. The manufacturing sector is relatively small and contributes just over 10% of Malawi`s GDP. Furthermore, it is concentrated around the cities of Blantyre, Lilongwe and to a lesser extent, Mzuzu, leaving most of the country with very limited or no industrial development. The manufacturing sector is critical for an economy’s growth potential and balance of payments. The lack of a thriving manufacturing sector and over-reliance on primary agriculture increases the need to import value-added goods, whether for consumption or as industrial inputs, and decreases the potential to develop a sustained comparative advantage of the local industry for exporting such goods.
While Malawi has made some important strides in its economic development agenda, it has suffered economic setbacks that are characteristic of a country with a weak productive base. The intermittent weakening of the local currency and a huge trade imbalance speak of an economy that has an enormous appetite for imported goods and services, even those which are efficiently produced locally. Malawians generally prefer imported over locally produced products and consider goods made in Malawi as second-class products. The consequences of ignoring consumption of and patronizing locally produced goods and services have been well documented. The net effects are lost jobs, unstable exchange rate, stagnating industrial development, high inflation and worsening trade balances just to mention a few. This trajectory is undesirable and unsustainable for the country hence the need for a change to support home grown industries.