Written by: US Commercial Services
Malawi is one of the poorest nations on earth, with over 15 million inhabitants and a population growth rate estimated at approximately 2.8%.and a population growth rate estimated at approximately 2.8%. Annual per capita Gross National Income (GNI) for 2010 was approximately USD 330.
Agriculture is the major sector in Malawi accounting for over 30% GDP. The agricultural sector employs nearly half of those in formal employment, and directly or indirectly supports an estimated 85% of the population (including subsistence farming). Tobacco, tea, and sugar are Malawi’s principal exports; together generating over 80% of export earnings.
Malawi’s industrial base is very small and developing slowly. There are a few plants/factories processing sugar, tea, tobacco, rubber, and other agro-products.
Mining is becoming an important sector for Malawi. Malawi’s first uranium mine was commissioned in late 2008 and started production for export in 2009. The mine is expected to add more than 5% to GDP and over 10% to export revenue over the next decade. In the long term, the Government of Malawi expects the mining sector to contribute 25% of total export earnings and about 10% to GDP.
Malawi has a relatively free investment environment, but poor infrastructure (particularly unreliable electricity and water), high transport costs and bureaucratic hurdles tend to inhibit investors. Malawi has a fairly independent, albeit overburdened, judiciary that derives its procedures from English common law.
Agricultural Opportunities Overview
Agriculture is the sector in which Malawi competes most successfully in international markets. Tobacco, tea, sugar and coffee are Malawi’s most important cash crops, but exporters have registered growing success with groundnuts, macadamia nuts, paprika, and chilies.
Given the uncertain long-term outlook for tobacco sales, agricultural diversification is important for Malawi. U.S. goods or technical knowledge that could be adapted in a cost-effective manner to Malawi’s agricultural conditions and boost the quality, quantity, or diversity of crops might find a profitable market.
Opportunities for investment in irrigation exist in Malawi’s still largely rain-fed agricultural sector. Horticultural products such as vegetables, flowers, and fruits including rice can be grown using surface, gravity, pump, river diversion or sprinkler irrigation systems. Out of the 400,000 hectares of land suitable for irrigation, only 62,000 hectares are under irrigation.
Soy Bean Processing Opportunities
Malawi grows significant quantities of soy beans. This high protein value crop is currently being processed for breakfast cereal for infants and HIV/AIDS patients, additives for meat, bakery and animal feed, for soy milk, and for the manufacture of soap. Current processing is at a small scale and there is great potential for additional investment to supply the local and regional markets.
The central and northern Malawi districts of Kasungu (17,000 tons/year), Ntchisi (17,000 tons/year) and Mzimba (18,000 tons/year) are significant soy bean growing areas. Kasungu town has adequate infrastructure to support potential processing investments.
Dairy Industry Opportunities
Malawi’s milk consumption is the lowest in Africa at 5 liters per capita compared with Africa’s average of 80 liters and the World Health Organization’s (WHO) recommended intake of 200 liters per year. There are about 17,000 dairy farmers in Malawi (members of MMPA), approximately 8,800 or 52% of whom have dairy animals. Average production of milk in Malawi is 67,000 liters per day for the formal market. This translates to about 24 million liters per year for both commercial and small scale farmers. Even at this level Malawi imports 50% of its dairy products. This shortfall underlines the opportunity for investment in the industry. Key areas for investment at the primary production level include:
- Cattle breeding;
- Feed growing and feed production;
- Hay production through growing of Rhodes grass and stocking it for sale to farmers;
- Manufacture cooling tanks and collection equipment (e.g. milk churns);
- Service provision (e.g. artificial insemination, operation of dipping tanks, administration of drugs, and transportation of raw milk to processing plants).
Livestock Farming Opportunities
The livestock industry as a whole is not well developed in Malawi. In addition to the dairy sector, opportunities exist for investment in cattle farming for beef and meat products. The existing cattle population, livestock culture and available land in Mzimba District in Northern Malawi make it a suitable area for investment in cattle farming.Mzimba town, Champhira and Euthini have the basic power, transport and water to support investment in processing industries. In the poultry industry there is a potentially significant market for day-old chicks.