Malawi used to be African North Korea, today it’s African Colombia.
In 1980th all Malawian governmental buildings was required to have a portrait of Kamuzu Banda — President for life of the Malawi Congress Party or MCP — with no other picture or even clock be placed higher on the wall. At any of Banda’s arrivals in airport a band of female dancer must be present. When the presidential cartage rode trough Malawian cities street all citizens were ordered to keep their windows shot and everybody must be out on streets to cheer for Banda’s passing car. Men’s hair wasn’t allowed to hang over his collar. All male foreigners arrived into Malawi were checked on the compliance with that rule. An obligatory haircut on the spot was prescribed for violators. Government issued approvals were required for publishing a book, making a movie or practicing a religion.
At the same time, contrary to other totalitarian states, Malawi acquired the nickname of “heavens” for African refugees because of its open door policies and the internal political stability. On top of that, Banda became one of the few dictators in the World who actually allowed the relatively peaceful transition from dictatorship to multi-party democracy. In 1993Malawian people held a referendum voting ‘yes’ to abolish the one-party system. In 1994 Banda lost the election and the leader of newly formed, liberal, pro-Western party the United Democratic Front or UDF — Bakili Muluzi — became the next President.
Today Malawi is the presidential republic with 193-members National Assembly where Democratic Progressive Party or DPP (maintains all-inclusive or so called “big tent” ideology) holds the majority with 50 seats. Second largest Parliamentary party is MCP (48 seats) with its “ubuntu” (human centric) slogans. Two other major Malawian party represented in the Assembly are conservative, center-right People’s Party with 26 seats and UDF with 14 seats.
Dr. Banda had not brought the economic prosperity for its country neither did its successors. Malawi with its per capita less than $350 remains one of the poorest countries in the World. 85% of Malawian population is rural. Agriculture products’ share in country’s GDP exceeds 35% with tobacco being the major item of Malawian export (around 40%).
However, another (illicit) cornerstone of country’s economy is so-called ‘Malawi Gold’ — one of the finest species of cannabis. Estimated production of ‘chamba’ is for about 70 tons a year or 0.2% of total Malawi’s GDP. Not surprisingly, thought, that corruption, specifically those among police force, is today among the most serious political as well as economic issues for the Country. International help organization even suspended their funds transfers to country’s budget because of those concerns.
Malawi today is a country which is parted with its totalitarian history but still needs much help to move forward with its semi-functioning democratic system, population’s disastrous health issues, struggling economy, a flourishing drug trade and the growing corruption.
Despite country’s progress made in the past couple of decades, still, Malawi is not a homey place for startups founders. On top of harsh socio-economic realities, unfriendly regulatory regime, rising inflation as well as fluid political situation, Malawian basic infrastructure (including telecommunication) is largely out-dated and Internet remains inaccessible for 93% of local population. It makes mobile networks the only viable option there.
Agriculture industry — the major pillar of Malawian economy — is not tech-intensive and either small-scale or monopolized by several big corporations, which make B2B business module very difficult to follow for local startups. Although Malawian population is relatively large (exceeds 16 million), the actual number of people, which are able to pay for commercial web or mobile-based mass-services, is small and localized in country’s most developed cities — Lilongwe and Blantyre.
Generally speaking, although local startup ecosystem has showed some promising sings of growth (with several incubators announced in a past couple of years) local consumer base cannot serve as a basis for profit-orientated startups sustainable growth.
Business Notes for Startups Founders:
- political climate: not friendly;
- economic climate: not friendly;
- regions to focus: locally;
- industries to focus: mobile commerce, FinTech, e-jobs;
- major limitations: poor population, high administrative barriers for SME, high inflation (11%) and interest rate (at 18%), over-concentrated economy, deficit of qualified personnel, outdated infrastructure;
- stimulus: low costs, low competition, large population;
- opportunities: to find a local niche market protected from outside competitors.