E-Commerce options are not widely available in Malawi but there have been significant improvements in recent years.  Internet penetration is estimated at 30 percent in cities and 15 percent nation-wide (Digital 2020 Malawi Report).  Almost 85 percent of connected Malawians access internet on their mobile devices.  Malawi ranks 114th on the 2021 Inclusive Internet Index.  Mobile phone operators aggressively market mobile phone subscriptions and cover approximately 39 percent of the internet market.  The mobile money services market continues to grow.  There are over 10.1 million registered mobile money subscribers with over 60 percent of subscribers using the services routinely.  Commercial banks have begun replacing ATM cards with VISA credit or debit cards, further increasing access to e-commerce.  The 2020 United Nations Conference on Trade and Development (UNCTAD) E-commerce Index ranked Malawi 141 out of 152 countries for e-commerce and digital economy development.

Legal & Regulatory

The Electronic Transactions and Cyber Security Act of 2016 provides the foundation for developing e-commerce-related services.  Malawi is implementing the World Trade Organization Trade Facilitation Agreement and is working toward setting up a National Single Window to foster paperless trade and e-payments (UNCTAD).  The Central Bank is the main regulator on e-commerce.  The primary complaint associated with e-commerce in Malawi is the high cost of connection fees, approximately US$50,000 to establish and acquire permits and connections to conduct e-commerce businesses.  MACRA is also a key player in the conduct of e-commerce in Malawi.

The government continues to monitor implementation of e-money regulations through the central bank and the Payments Systems Act of 2019.  The e-regulations provide a regulatory framework to govern operations of e-money services, including consumer protection and protection of customer funds.  MACRA is the main regulator of Information Communications and Technology in the country while the Central Bank champions implementation of government policies aimed at supporting the sector.

E-commerce has the potential to help move Malawi closer to achieving development goals, but the sector needs additional structure, regulations, and enforcement.  The government adopted the National ICT Policy to facilitate the efficient, effective, and sustainable utilization, exploitation, and development of ICT solutions in all sectors of the economy.  The National ICT Policy is focused on improving the ICT infrastructure by extending the fiber-optic backbone, improving cross-border interconnections, launching 4G capabilities, and establishing a universal service fund.  

Consumer Behavior

Consumers in Malawi have been comparatively slow to embrace the internet and e-commerce in general.  Poor infrastructure and high taxes make internet access prohibitively expensive for most Malawians.  High costs and slow or unreliable connections contribute significantly to the country’s low access rates, especially in rural areas.  The installation of an inter-country fiber optic cable through Tanzania will increase broadband penetration and usage of smart mobile devices are hopeful indications that e-commerce will improve and expand in the years to come.  As bank and mobile network operator-led mobile payment schemes improve and increase, more Malawians are using the services to pay bills, purchase airtime, and transfer cash.  The RBM reported approximately mkw 5,041 billion (US$4.89 billion) was transacted through mobile payments in the fourth quarter of 2022.

Business to consumer e-commerce has not fully taken off due to low internet penetration.  Increased development of ICT infrastructure is leading more companies to realize the potential for e-commerce, and many are beginning to incorporate it into their business strategies.  Malawi is a net importer of goods and services, and Malawians increasingly shop online for goods and services abroad.  Primary purchases are used vehicles, electronic equipment, and accessories, building materials, vehicle parts, and clothes from Japan, China, the United Kingdom, and the United States.

E-commerce services are dominated by commercial banks and mobile network companies through bank-led mobile payments and internet banking schemes, and mobile network operator-led mobile payment schemes.  E-commerce transactions are usually high during the peak shopping periods mostly from mid-December until early-January.  During the holiday season, many government offices and large organizations are closed, large retailers run promotional campaigns, and it is common for individuals to spend a significant portion of their yearly disposable income.

 Intellectual Property Rights

Malawi accepts the importance of intellectual property protection and enforcement but lacks the capacity to police it effectively.  Enforcement of intellectual property rights is inadequate.  General awareness of the importance of protecting intellectual property in all forms (copyrights, trademarks, patents, trade secrets, and others) has improved.  The Copyright Society of Malawi (COSOMA) administers the 2016 Copyright Act, which protects copyrights and “neighboring” rights in Malawi. 

Digital marketing is not popular in Malawi due to low internet penetration.  Most large firms serving a connected customer base realize the potential of digital marketing and are increasingly incorporating it into their marketing strategies.  Malawi through the ICT Association of Malawi (ICTAM) hosts international ICT conference annually.  The government, with support from the World Bank, is implementing a Digital Malawi Project which aims to improve the digital ecosystem, connectivity, platforms, and services.

Local service providers overview

Malawians are slowly beginning to sell and advertise goods on online platforms, mainly through blogs, Facebook, WhatsApp groups, Instagram, and Twitter.  However, most companies have limited capabilities for supporting online sales transactions.  The Central Bank supports the national switch system (NATSWITCH) to facilitate electronic payments by linking ATMs, point of sale (POS) devices, and mobile money services.  Commercial banks are linked via the Malawi Interbank Transfers and Settlement System (MITASS).  These developments facilitate electronic payments and make payment processing much easier and faster.

• Online payments are not common in Malawi, but banks are increasingly offering online banking services.  Subscribers mainly use internet banking services for high value transactions.  In December 2022, the combined membership of all mobile network, operator-led, and mobile payment schemes was 10.1 million with 60 percent of users actively using the service.  Low financial literacy levels are likely a key factor for the low usage of mobile payment schemes, as well as the lack of sufficient cash collection points.  Most mobile money subscribers use the services for airtime purchases and cash transfers.