The African Continental Free Trade Area: Opportunities, Threats, and Challenges for Agriculture in Malawi

Malawi faces persistent rural poverty, malnutrition, inequality, and social exclusion, primarily due to its agro-based economy. The country also struggles with a negative trade balance because it heavily relies on exporting raw materials while importing value-added products. To address these challenges, Malawi must focus on sustainable agricultural productivity growth, commercialization, and boosting export earnings. In pursuit of enhancing export volume and diversification, Malawi ratified the African Continental Free Trade Area (AfCFTA) agreement on January 15, 2021. However, there is limited understanding of how Malawi can benefit from this new trade agreement. The passage reveals that Malawi predominantly exports six products, including tobacco, oilcake, black fermented tea, groundnuts, raw cane sugar, and soybeans, to fewer than 25 of the 54 African countries. Key destination countries for these exports are South Africa, Tanzania, Zimbabwe, Mozambique, Kenya, and Zambia. Notably, black tea, raw cane sugar, and legumes (such as groundnuts and soybeans) hold significant export potential under the AfCFTA agreement. Realizing these trade opportunities necessitates various policy interventions, investment proposals, and institutional arrangements. For instance, subsidizing legume seeds could enhance farm productivity and export earnings, benefiting the entire value chain, including processors and exporters. Other critical policy suggestions include improving access to finance for national producers, reducing transport costs to domestic and regional markets, and implementing an efficient taxation system. A business-friendly environment and better coordination between public and private stakeholders are also crucial for attracting investments and fostering competition in Malawi's economy, particularly among farmers, processors, and exporters along the production chain.