By Benadetta Chiwanda Mia:
Growth projection for Malawi’s manufacturing sector has been revised downwards to 0.3 percent in 2024, a significant decrease from the 2.1 percent growth forecast made in May 2024.
But the outturn would remain higher, albeit slightly, than the 0.1 percent growth rate of last year.
In its Financial and Economic Review issued last week, the Reserve Bank of Malawi (RBM), said the downward adjustment is largely due to on-going foreign exchange shortages, which affects importation of vital raw materials for production.
“The sector’s performance has also been adversely affected by the poor output from the agricultural sector during the 2023-24 season, which was lower than initially anticipated,” reads the report.
But RBM projects a rebound in the manufacturing sector’s growth to 3.9 percent in 2025, driven by positive developments in agriculture due to anticipated favourable weather conditions.
Conversely, the mining and quarrying sector is expected to grow by 4.8 percent in 2024, up from 3.1 percent in 2023, supported by stable electricity supplies.
The report adds that the government’s expedited road construction projects for the 2024-25 fiscal year have also heightened demand for quarry materials.
It says the formalisation of the Artisanal and Small-scale Miners Act is expected to further enhance gemstone and mineral production, with a growth rate of 5.6 percent anticipated for 2025.
Meanwhile, the agriculture and fisheries sector is projected to experience a negative growth of -0.2 percent in 2024, down from the 0.7 percent growth estimated in May 2024.
The RBM attributes this downward trend to the El Niño-induced low agricultural output, affecting producers across all scales.
However, the sector is expected to recover with a projected growth of 4.5 percent in 2025, driven by improved weather conditions and enhanced implementation of Mega Farms.
Economic expert Mavin Banda highlighted the significant deviation from initial projections, noting that the manufacturing sector’s contribution to Malawi’s GDP remains minimal due to the economy’s reliance on agriculture and raw material exports.
“It is not surprising that the manufacturing sector is struggling. What Malawi manufacturers do not take advantage of are the gaps in the global value chain. Even when they do, the impact is too small to boost GDP significantly,” Banda said.
Banda emphasized the challenges posed by underdeveloped infrastructure and funding constraints, which hinder progress in industrialisation, a process that demands substantial foreign exchange.
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