The Competition and Fair Trading Commission (CFTC) has said it is facing challenges in enforcing fair trade practices in the sugar market due to the dominance of informal traders.
CFTC Chief Executive Officer Vincent Lloyd Nkhoma said the commission has been conducting market investigations into the persistent scarcity of sugar, despite major sugar producer, Illovo Sugar Malawi, having started its production season over two months ago.
“The problem is that shelves in formal retail shops are empty, yet vendors continue to sell sugar at inflated prices. While we can monitor and regulate registered distributors whose locations we know, the informal vendors present a major enforcement challenge,” Nkhoma said.
He said the competition laws are primarily designed to regulate formal sector activities, making it difficult to apply them to informal operations.
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Malawi’s informal economy—characterized by businesses that are neither taxed nor monitored by the government—is estimated to constitute 32.1 percent of the economy, according to World Economics.
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This comes at a time when the country is grappling with low domestic revenue mobilization—at just 18 percent of the GDP as of 2024—widening budget deficits, and rising public debt.
Economist Marvin Banda observed that Malawi’s economy where a small formal sector coexists with a much larger informal sector, presents an imbalance that hinders inclusive economic development.
“In a developing economy like Malawi, the revenue-to-GDP ratio is a crucial quality-of-life indicator. Decades of economic deterioration are reflected in high inflation, mounting debt, and weak growth.
“Although there are signs of recovery, the economy remains vulnerable to structural and policy shocks,” Banda said.
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He said the informal sector exists for a reason and should not be dismissed outright.
