Malawi's manufacturing employment rate has dropped from 4.3 percent in 2010 to 3.9 percent in 2024, highlighting a worrying decline in the country's industrial sector, according to the African Development Bank (AfDB).
The Africa Industrialisation Index 2025 Report warns that the situation could worsen further due to weak manufacturing capacity, poor industrial expansion, electricity shortages, and limited investment in value-added industries.
The report shows that Malawi is lagging behind neighbouring countries in manufacturing employment, with Mozambique recording 4.8 percent and Zambia reaching 5.7 percent in 2024.
Despite performing better than Malawi, the two neighbouring countries still remain far below the global average manufacturing employment rate of 13.74 percent.
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According to the AfDB, Malawi's industrial sector continues to struggle because of persistent structural challenges, including unreliable electricity supply, limited access to financing, low technological advancement, and overdependence on low-productivity economic sectors.
The report also found that Malawi's manufacturing industry remains heavily concentrated in low-value production.
Food and beverages account for 38.4 percent of Malawi's manufactured exports, while basic metals contribute 37.4 percent, showing limited diversification into higher-value industrial products.
"Countries that fail to expand manufacturing capacity risk prolonged unemployment, lower productivity, and weaker economic competitiveness," the report warns.
The AfDB says Malawi needs to urgently strengthen industrial growth through agro-processing, regional trade integration, and increased value addition under the African Continental Free Trade Area (AfCFTA).
Government has acknowledged the concerns raised in the report.
Ministry of Industrialisation, Business, Trade and Tourism spokesperson Patrick Botha said authorities are implementing policies aimed at promoting local manufacturing and boosting exports.
"We recognize the challenges highlighted in the report. Government is prioritizing industrialization under Malawi 2063, with focus on value addition, export growth, and creating an enabling business environment," said Botha.
He added that government has already introduced measures such as restricting the export of certain raw materials to encourage local processing and industrial growth.
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Labour expert Bright Limani described the findings as a sign of a shrinking industrial base and called on government to introduce stronger tax incentives and support systems for manufacturers.
"The country needs deliberate policies that support industries, attract investment, and create jobs for young people entering the labour market every year," Limani said.
The report comes at a time when unemployment remains a major concern in Malawi.
According to the World Bank's 2026 Malawi Economic Monitor, the country is currently creating only about 40,000 formal jobs annually against nearly 270,000 young people entering the labour market every year.
Economic experts warn that unless Malawi accelerates industrial growth and manufacturing expansion, the country risks worsening unemployment, slower economic growth, and continued dependence on imports and low-productivity sectors.
