Malawi’s Trade Slump: Why Zambia is Thriving with the UK and What Malawi Must Do to Catch Up

Trade between Malawi and the United Kingdom has seen a significant decline, dropping by 36.4% in the past year to a total of £56 million. This stands in stark contrast to Zambia’s thriving trade relationship with the UK, which saw exports worth £900 million in 2023.

Malawi’s struggle to compete in the global market is evident, despite its rich agricultural resources and untapped potential.

The decline in trade is partly due to Malawi’s over-reliance on raw agricultural exports, such as tea, coffee, and sugar, which fetch lower prices compared to processed goods.

For instance, Malawi’s tea and coffee exports to the UK fell by 75.1% in the past year, earning only £2.2 million, while Zambia’s higher-value exports, particularly minerals, have driven its trade success.

Malawi’s landlocked geography further exacerbates the challenge, as high transport costs account for 40% of export expenses, making its goods less competitive internationally.

Additionally, Malawi attracted only $125 million in foreign direct investment (FDI) in 2023, far behind Zambia’s $2 billion. This lack of investment limits opportunities to develop industries, create jobs, and boost exports.

Bureaucratic inefficiencies also play a role, with Malawi ranking 109th on the Ease of Doing Business Index (2023), indicating hurdles like red tape and inefficient policies that deter both local and foreign investors.

To reverse this trend, Malawi must focus on adding value to its exports. Instead of exporting raw materials, the country could process its agricultural products, such as producing packaged tea or tea-based goods, which could increase export revenues by up to 120%.

Improving infrastructure is another critical step. The Liwonde rail corridor, which connects to Mozambique’s Nacala port, offers a key route for exports. By optimising this infrastructure and reducing transport costs, Malawi could enhance its competitiveness. Attracting foreign investment is equally important, and this requires creating a more investor-friendly environment through streamlined regulations, incentives, and targeted promotion of high-growth sectors like renewable energy, mining, and tourism.

Malawi’s renewable energy sector holds immense potential, with only 18% of the population connected to electricity. Investing in solar, wind, and hydroelectric projects could address this gap while aligning with global trends in clean energy.

The mining sector, with untapped reserves of rare earth minerals, uranium, and gold, could contribute significantly to the economy, especially as global demand for minerals used in green technologies surged by 26% in 2023.

Tourism, currently contributing just 6% to GDP compared to 17% in Tanzania, also offers opportunities for growth. With attractions like Lake Malawi and its wildlife reserves, the sector could generate $1 billion annually with improved infrastructure and marketing.

The UK-Malawi Chamber of Commerce (UKMCC) is playing a pivotal role in fostering stronger economic ties between the two nations. Through initiatives like trade missions, networking events, and policy advocacy, the UKMCC is connecting UK investors with opportunities in Malawi.

At a recent event in London, participants discussed how to boost investment in renewable energy, tourism, and mining, highlighting the potential for collaboration. Looking ahead, the Chamber plans to host a series of events in 2025, both in the UK and Malawi, to further strengthen this partnership.

Malawi’s youthful population, with 70% under the age of 30, and its strategic position in southern Africa position the country for economic transformation.

By addressing challenges like high transport costs, bureaucratic inefficiencies, and limited access to finance, Malawi can unlock its potential. With support from the UK and other international partners, Malawi has the opportunity to build a stronger, more prosperous economy, creating shared benefits for businesses and communities in both nations.

The decline in UK-Malawi trade, while concerning, serves as a call to action for Malawi to rethink its strategies and take bold steps towards sustainable growth.

Hannington Gondwe is the CEO of the UK-Malawi Chamber of Commerce and an advocate for trade and investment between the two nations. Hannington is a Business and Investment Advisory Specialist with over 20 years International experience. Linkedln profile https://www.linkedin.com/in/hanningtong?utm_source=share&utm_campaign=share_via&utm_content=profile&utm_medium=ios_app

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