Guidance

Overseas business risk: Malawi

Updated 21 February 2022

1. General overview

Malawi, a land-linked country in Southern Africa, has enjoyed long years of peace and political stability coupled with a vibrant democratic political system. Recently, the country ushered in a new Government following elections in June 2020. Under the new administration, the country has continued major economic reforms to spur increased investment and trade. Priority investment areas include energy (especially green energy), mining (including rare earths), agriculture/agro processing and tourism. Currently, agribusiness continues to be the largest sector with tobacco, tea and sugar being principal exports, but other fast growing sectors include energy, services and mining. Malawi continues to host over 50 FDI companies with some major ones from the UK mainly operating in manufacturing, agriculture (including agro-processing) and mining.

2. Political risk

Malawi has remained politically stable and free of both internal and external conflict since its independence in 1964. Internal political repression was prevalent under one-party rule, but receded following the peaceful introduction of multi-party democracy in 1994. Following contested general elections held in May 2019, a court challenge, accompanied by widespread protests, led to the courts annulling the Presidential poll results and ordering fresh elections. These were successfully held in June 2020. A new administration from the opposition alliance emerged victorious with around 60% of the vote, under the President, Dr Lazarus Chakwera. He has pledged “to clear the rubble of corruption”, reduce presidential powers and promote institutional independence as part of efforts to strengthen governance and the rule of law in Malawi. Further information on political risks can be found on FCDO Travel Advice.

3. Economic risk

Malawi, a low-income country (US$637 GDP per capita in 2020) has an estimate/forecast real GDP growth of 0.9% in 2020, 2.2% in 2021 and 3.5% in 2022 according to the IMF. The economy is dominated by an agriculture sector that employs the majority (87%) of the population. Around 85% of exports are provided by tobacco, sugar and tea - which can be vulnerable to global price and demand shocks. Tobacco, accounting for around 70% of exports, faces decline as international demand falls. However, there is increasing investment in high value crops like macadamia nuts, horticulture and more recently medicinal cannabis and industrial hemp, offering further avenues for diversification. Positively for exporters, the Central Bank has incrementally devalued the kwacha from its overvalued historic levels, where Monetary Policy shifted to gradually depreciate the ‘super stable’ exchange rate (especially between July 2020-July 2021). However, the rate has been recently flat since then as there are concerns about further devaluation which might increase inflation.

IMF predicts that the Malawi economy is projected to recover gradually to reach 4.5% growth by 2023. Headline inflation remained in single-digit most part of 2021 but moved into double-digits in the last quarter of 2021 (~11%) mainly driven by increases in prices for fuel, fertilizers, and food. The policy interest rate was reduced to 12% since November 2020 and continues to be maintained since then. Malawi has a large structural current account deficit (15% of GDP in 2021). Energy supply remains low and unreliable, coupled with limited infrastructure and regional connectivity, and relatively high transportation costs. However, the new administration has taken some bold steps including ratifying the Africa Continental Free Trade Agreement, leading a strong anti-corruption drive and reinvigorating relationships with the region, including driving progress on connection to the Southern African Power Pool.

4. Human rights

The Constitution of Malawi firmly protects and promotes civil and political rights and most economic, social and cultural rights. A report by the Human Rights Institute of the International Bar Association commended the strength of the Constitution, particularly in relation to its guarantee to protect freedom of expression and ensure freedom of information. However, a 2016 cybersecurity law that criminalizes the posting of “offensive” content online puts online journalists and social commentators at risk of persecution. The Judiciary is broadly generally free from executive influence. However, the judiciary has significant backlog of cases due to understaffing and underfunding. The commercial courts are generally effective but can lack capacity. The new administration has placed an emphasis on ensuring the Judiciary is more independent.

In recent years, authorities have reported several attacks against people with albinism. The government has condemned these attacks, the police have made over 80 arrests, and trials are underway. Overall, there is a declining trend in attacks but persons with albinism continue to live in fear. An increase in incidents of violence against women and children had been recorded over the last year during Covid-19 lockdowns.. Long detentions in police custody, delays in cases being brought to court and poor/congested prison conditions have also been observed.

5. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or as Scottish partnership to bribe anywhere in the world. In addition, a commercial organization carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case, it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Corruption in Malawi fuels instability by undermining trust in democracy and the rule of law, reducing service delivery and deepening inequality. Indicators of government effectiveness, control of corruption, service delivery and trust had declined over the past years. The current President under the new Administration has prioritized an anti-corruption drive, is increasing funding for anti-corruption agencies, and has publicly expressed his intention to create an environment attractive to investors. Although Malawi’s global ranking on corruption has improved, negative perceptions about corruption are moderately rising.. The UK government under the FCDO continues to actively support the fight against corruption in Malawi.

6. Terrorism and security

Although there is no recent history of terrorism in Malawi, please read our FCDO Travel Advice on the terrorism threat in Malawi.

7. Protective Security/Organized crime

Read our FCDO Travel Advice on safety and security in Malawi.

8. Intellectual property

The importance of Intellectual Property Rights (IPR) for businesses cannot be overemphasized. Since IPRs are territorial and therefore only give protection after being granted by a host country, UK businesses should consider registering their IP rights in Malawi. Malawi has in place the National Intellectual Property Policy (2018) that provides overall policy guidance on IP issues in the country and is coordinated by the Department of Registrar General. The major intellectual property laws in Malawi are the Patents Act, the Trade Marks Act, Registered Designs Act, the Trade Descriptions Act and the Copyright Act. Some of the laws remain outdated and currently under review.

Intellectual property laws in Malawi cover such areas as domain names, traditional knowledge, transfer of technology, and patents/copyrights. However, piracy, IPR infringement and counterfeiting are a challenge, cutting across all forms of goods and services. Malawi does not have adequate enforcement of trademark laws, exacerbated by weak punitive measures and the high cost of goods and services. Malawi is party to several international intellectual property agreements.

Read the information provided on our Intellectual Property page.

9. Contact Us

The Department for Business and Trade (DBT) does not have representation in Malawi, but for further information please contact BHCLilongwe@fco.gov.uk.