Malawi’s industrial strategy has achieved only 40 per cent of its targets, while core industrial capacity continues to weaken.
By Collins Mtika
Five years into Malawi’s flagship long-term development plan, government data shows a widening gap between the country’s industrial ambitions and actual progress.
Malawi has completed 87 percent of the activities outlined in its national industrialisation plan. But only 40 percent of the plan’s targets are on track to be met.
That gap, now officially documented, defines the central failure of industrial policy in one of the world’s poorest countries.
The finding is recorded in the Economic and Fiscal Policy Statement 2026, a government document reviewing progress under Malawi 2063 (MW2063), the national development blueprint launched in 2021.
The distinction between completing activities and achieving results has long been obscured in official communications. The 2026 statement makes it visible.
MW2063 identifies industrialisation as one of three transformational pillars of Malawi’s long-term development strategy, alongside agriculture and urbanisation. Together, they are intended to drive the country toward becoming a productive middle-income economy by 2063.
A separate continental assessment published in 2025 reinforces the concern. The Real Economic Development Index, produced by the Business Council for Africa, evaluated all 54 African economies on their structural readiness for large-scale industrialisation.
It measured factors including infrastructure, energy supply, economic adaptability, growth potential, and institutional barriers such as corruption and policy instability.
Malawi ranked among the least prepared countries on the continent. Only four economies, Morocco, Egypt, South Africa, and Mauritius, were considered structurally ready for industrial take-off.
Malawi was not among them.
The index found that Malawi continues to struggle with weak industrial capacity, persistent energy shortages, limited infrastructure, and policy inconsistencies. Manufacturing capacity utilisation remains below optimal levels because of power outages, foreign exchange shortages, and logistical bottlenecks.
These constraints reduce productivity and weaken the competitiveness of locally produced goods against imports. One of the most significant structural weaknesses is the absence of an operational industrial policy.
In May 2023, a validation meeting held in Lilongwe, with support from the United Nations Economic Commission for Africa, aimed to advance a successor national industrial policy to replace an expired framework. Two years later, the new policy had still not been formally adopted. No public record exists showing final approval, implementation guidelines, or budget allocation.
Frederick Changaya, Director General of the National Planning Commission, the body coordinating MW2063 implementation, offered a candid public assessment of industrial stagnation.
He argued that Malawi’s problems stem less from infrastructure shortages and more from deeper political and institutional failures, and that major reforms, including industrial policy development and stronger private sector participation, continue to face political constraints.
The Commission had already warned Parliament in May 2024 that Malawi was unlikely to achieve lower middle-income status by 2030 without major corrective action. At that time, slow implementation was described as the central problem.
The 2026 fiscal statement presents a harsher conclusion: the issue is no longer only about speed. It is about the failure to produce results at the required scale.
Changaya’s call for “aggressive state intervention to industrialise, beginning with proper development of industrial policy followed by best-practice institutions, including accountability frameworks” effectively acknowledges that neither the industrial policy nor the accountability mechanisms are currently in place.
Official statistics reveal a pattern that has received little public attention.
Malawi’s industrial production index recorded average year-on-year growth of 41.7 per cent between the third quarters of 2023 and 2024. During the same period, the manufacturing sector grew by 47.8 per cent, according to Treasury data. At first glance, those figures suggest momentum.
A closer reading tells a different story. The Malawi Government Annual Economic Report 2025 shows that industrial output declined by 14.4 per cent during 2024, reversing earlier gains. Manufacturing output fell by 9.3 per cent. Nearly all manufacturing sub-sectors recorded declines, with the exception of beverages, tobacco, and rubber and plastics.
A sharp rise followed almost immediately by a sharp decline within two years is a pattern consistent with a sector driven by commodity volatility, not stable industrial growth.
The Reserve Bank of Malawi subsequently projected manufacturing growth of only 1.8 per cent for 2025, revised downward from an earlier estimate of 2.4 per cent because of continuing foreign exchange shortages. The projection for 2026 stands at 2.5 per cent.
These are not growth rates associated with industrialising economies. Development economists generally consider six percent annual growth the minimum required to reduce poverty meaningfully in countries at Malawi’s stage of development.
The effects of industrial stagnation are visible in the private sector.
A 2025 business survey by the Malawi Confederation of Chambers of Commerce and Industry found that 74.1 percent of firms ranked foreign exchange shortages among their top three operational challenges, making it the most commonly cited obstacle across the private sector. Only 3.7 percent of firms said they were unaffected, while 63 percent reported being severely and frequently affected.
More than 51.9 per cent of surveyed firms operated below 50 per cent of their installed capacity. A further 37 per cent operated between 50 and 75 per cent capacity. In effect, nearly nine out of ten businesses were producing significantly below their potential.
The long-term decline in manufacturing exporters deepens the concern. The number of companies exporting manufactured goods fell from 849 in 2009 to 399 in 2025, a decline of more than 53 percent over sixteen years.
Each company that exits the export market represents jobs not created, skills not developed, and foreign exchange not earned. Taken together, the figures describe a country moving away from industrialisation rather than toward it.
The electricity deficit is central to all of these failures.
Malawi’s national electricity generation company, Egenco, has a maximum generating capacity of 444.67 megawatts, most of it drawn from ageing hydropower stations on the Shire River. Key generating units at the Tedzani and Kapichira hydropower stations suffered structural failures in 2025, removing more than 70 megawatts from the national grid.
At the height of the shortages, the deficit reached 111 megawatts. On April 22, 2025, Malawi experienced a complete national grid shutdown.
Malawi could theoretically import up to 1,000 megawatts from Mozambique through a regional interconnection, but currently imports only 50 megawatts. Escom, the state electricity distributor, lacks sufficient foreign currency to pay independent power producers for additional supply.
MW2063 had set a target of 1,000 megawatts of installed electricity capacity by 2025. Malawi entered 2026 with less than half that amount. No public accountability process has examined why the target was missed or who bears responsibility for the shortfall.
These findings carry implications that extend well beyond Malawi.
Malawi receives substantial financing from institutions including the World Bank, the International Monetary Fund, the African Development Bank, USAID, and the European Union. Much of this financing is linked to MW2063 as the country’s national development framework.
If the programme is achieving only 40 percent of its intended outcomes after five years, development partners may increasingly question whether resources are being directed through a credible and realistic strategy.
Regionally, the weakening of Malawi’s manufacturing base reduces its participation in value chains under the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA), two continental trade blocs designed to deepen economic integration across the region.
A declining manufacturing sector weakens Malawi’s bargaining position in trade negotiations and limits its ability to benefit from regional markets.
Aliko Dangote, whose Dangote Group holds major industrial investments across Africa, contributed the foreword to the Business Council for Africa index. He argued that industrialisation across much of the continent has too often relied on declarations and policy statements rather than the disciplined execution required to produce results.
The UN Malawi Technology Needs Assessment 2026 stated that the country still has the potential to accelerate industrialisation if it strengthens local manufacturing and assembly capacity. The opportunity to achieve this within MW2063’s first implementation phase is, however, closing.
Malawi was expected to reach lower middle-income status by 2030. The National Planning Commission now projects this milestone may not be achieved until 2045 unless major reforms are introduced.
The National Planning Commission’s Accelerator Programme, a mechanism intended to fast-track high-impact MW2063 interventions, was still under development in early 2026, with no specific priorities publicly identified.
The Ministry of Trade and Industry had not published an official response to the index findings at the time of publication.
MW2063 has political support, a national identity, and an ambitious timeline. What the accumulated evidence shows it still lacks is the policy framework, energy infrastructure, and institutional accountability needed to make it work.
