Malawi relies on neighboring countries for port access and brings goods in via road or rail. Both road and rail present their own challenges; the country has approximately 3,125 miles of paved roads and very limited but improving railway infrastructure connecting the country to the Nacala Port in Mozambique. Formal and informal trade boundaries restrict movement of both imports and exports. Malawi enjoys a strong commercial relationship with South Africa, its primary import partner. Although U.S. products are well regarded, a lack of historical business ties between the United States and Malawi, together with comparatively high product and transport costs, disadvantages U.S. suppliers. Malawi’s trade balance remains negative, and the country relies heavily on rain-fed agriculture for its export base. As of 2024, fuel constituted more than 30 percent of the country’s total imported goods. Tobacco, maize, and sugar account for more than 30 percent of the GDP, making the country susceptible to extreme weather, climate shocks, and unpredictable economic fluctuations. Global demand for Malawi’s key cash crop, tobacco, is declining, further eroding the country’s ability to generate foreign currency. Years of deficit financing have pushed Malawi’s total debt stock to 85.4 percent of GDP in 2024. Annual debt service accounts for one-third of expenditures and in January 2025 the World Bank deemed Malawi’s contingent liabilities “a significant risk to fiscal sustainability.”  

The country’s limited electric grid was damaged during tropical storms in January 2022, and the main hydroelectric dam was knocked off-line but has since been restored. Extreme weather events are known to damage critical energy and transport infrastructure, and repair efforts are often slowed by the lack of finances. Approximately 23 percent of the population has access to electricity; seven percent in rural areas and 54 percent in urban areas; however, only 11 percent are connected to the national grid. In 2018, Malawi completed a Millennium Challenge Corporation Compact focused on the power sector. The compact expanded the power infrastructure, but despite this investment, the grid’s reach is still limited, and the country suffers frequent power outages, load shedding, and blackouts. 

A shortage of skilled and semi-skilled laborers is an impediment to business development. Shortages are most acute in financial management, economics, engineering, law, IT, and medicine/health. The government of Malawi often makes capricious changes to key policies and regulations that hinder the operations and profitability of private enterprises. Government leadership offers serious talk about tackling corruption, but entrenched interests and a corrupt business environment disadvantage foreign companies bidding on government tenders. In 2020, the government enacted the Micro, Small, and Medium Enterprises (MSMEs) Participation Order that requires government ministries, departments, and agencies (MDAs) to allocate procurements below certain thresholds to local MSMEs.