Malawi Digital Economy Strategy

Supporting inclusive wealth creation
February 2021
Malawi'sDigital
Economy Strategy

Malawi Digital Economy Strategy 2021-2026
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Table of Contents
Acknowledgements.................................................................................................................................................4
Introduction................................................................................................................................................................5
Framework..................................................................................................................................................................7
Vision............................................................................................................................................................................8
Digital Core.............................................................................................................................................................. 12
Network Access................................................................................................................................................. 13
Device Access..................................................................................................................................................... 17
Skills and Education......................................................................................................................................... 22
Digital Services....................................................................................................................................................... 26
e-Trade................................................................................................................................................................. 27
Digital Financial Services................................................................................................................................ 31
Digital Government ......................................................................................................................................... 36
Digital Solutions .................................................................................................................................................... 43
Agriculture........................................................................................................................................................... 44
Health.................................................................................................................................................................... 49
Digitally Traded Services................................................................................................................................ 53
Appendix .....................................................................................................................................................................1
Digital Core: Network Access..........................................................................................................................2
Digital Core: Device Access..............................................................................................................................4
Digital Core: Skills................................................................................................................................................6
Digital Services: e-Trade ...................................................................................................................................8
Digital Services: Digital Financial Services............................................................................................... 10
Digital Services: Digital Government......................................................................................................... 12
Digital Solutions: Agriculture ....................................................................................................................... 14
Digital Solutions: Health ................................................................................................................................ 16
Digital Solutions: Digitally Traded Services ............................................................................................ 18

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LIST OF ACRONYMS
Abbreviation Definition
2FA Two-factor Authentication
AIP Affordable Input Programme
BPO Business Process Outsourcing
CPFL Consumer Protection and Financial Literacy
DQM Department of Quality Management
EDRMS Electronic document and records management system
EHR Electronic Health Records
ESW Electronic Single Window
FDI Foreign Direct Investment
G2P Government-to-Person
GBS Global Business Services
GDPR General Data Protection Regulation
GNI Gross National Income
HDI Human Development Index
ICT Information and Communication Technology
IoT Internet of Things
IPP Independent Power Producer
ISP Internet Service Provider
IT Information Technology
ITO IT Outsourcing
KYC Know-Your-Customer
MACRA Malawi Communications Regulatory Authority
MERA Malawi Energy Regulatory Authority
MITA Malawi Information Technology Authority
MNO Mobile Network Operator
MoEST Ministry of Education Science and Technology
MoF Ministry of Finance
MoI Ministry of Information
MOOC Massive Open Online Course
MPC Malawi Postal Corporation
MRA Malawi Revenue Authority
MSCTP Malawi’s Social Cash Transfer Programme
MUST Malawi University of Science and Technology
NAMIS National Agriculture Management Information System
NRB National Registration Bureau
NRIS National Registration & Identification System
NSO National Statistics Office
ODL Online Distance Learning

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OPC Office of the President and Cabinet
PHC Primary Healthcare Facilities
PKI Public-Key Infrastructure
POS Point of Sale
PPPC Public Private Partnership Commission
PV Photovoltaics
RBM Reserve Bank of Malawi
SPV Special Purpose Vehicle
UBR Unified Beneficiary Registry
USF Universal Service Fund

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Introduction
The traditional pathways to development and prosperity are becoming outdated1
, and
developing countries increasingly look to technology to leapfrog to success. Developing
countries have a new advantage as they can avoid technological lock-in and antiquated
systems to deploy new innovations at scale. This brave new digital world presents a range of
opportunities for countries like Malawi to forge new pathways to inclusive growth. Malawi can
bypass traditional development pathways by utilising the latest technologies to solve the
toughest development problems. Leveraging these technologies, however, requires a
concerted and coordinated effort at unlocking the digital economy to galvanise growth in
‘traditional’ sectors like agriculture, industry and services. It is also in the universal extension
and use of ‘basic’ digital technologies like mobile phones and broadband internet that
significant impact can be achieved through systems that leverage network effects.
Malawi in the Digital Age sets out a national digital economy strategy covering the 5 year
period of 2021 to 2026. This strategy was crafted based on the digital economy toolkit
developed by Digital Pathways at Oxford which seeks to shift the digital technology discourse
away from automation-based job destruction and towards a more practical discussion on how
developing countries should prepare to forge new tech-enabled pathways to inclusive growth.
The strategy was laid out after extensive research and a rich consultative and collaborative
process led by Malawi’s National Planning Commission, the Office of the Chief Secretary and
the Reserve Bank of Malawi. These entities, stakeholders and advisors ensured the process and
its outcomes are aligned with local development priorities. This process was supported by
Genesis Analytics and Digital Pathways at Oxford’s Blavatnik School of Government.
This strategy comes at a crucial time as Malawi’s long-term development aspirations have
been revisited and defined. Malawi has entered into a new long-term economic planning
cycle given the conclusion of ‘Vision 2020’. Malawi 2063 expresses the Vision and development
aspirations for Malawians. By 2063, Malawians aspire to have a Malawi that is an inclusively
industrialized upper middle-income country with wealthy and self-reliant citizens. Much is at
stake: Malawi must overcome its development challenges to achieve shared prosperity for all.
While the Malawian economy has seen exports rise over the years, this has largely been in
unprocessed agricultural products as the sector is largely made up of low-productivity
smallholder farmers. Economic diversification has fallen dramatically since the 1990s while the
manufacturing sector has also seen significant de-industrialisation since the 1990s, partly due
1
For example, low-cost manufacturing was a rapid pathway to inclusive growth for many developing
economies in South-East Asia during the 1970s and 80s. However, this pathway is now largely closing
off for developing economies due to the impact of automation displacing low-cost labour, and due to
the reshoring of value chains to more developed markets.

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to privatization of State Owned Enterprises. Urbanisation has accelerated, but this is also
driving the proliferation of slums. Trade is constrained by significant barriers, due in no small
part to Malawi’s landlocked status, and the high cost of doing business making it difficult to
attract domestic and foreign direct investments. Provision of public services inefficient, and
capacity to track implementation of national development plans is one of the biggest
challenges that derail development. A holistic approach is required to address these pressing
challenges.
This strategy was guided by an initial opportunity and digital readiness assessment and the
formation of working groups to collect input and guidance on the strategy’s contents. The
opportunity assessment identified key opportunities for Malawi to achieve its development
objectives by leveraging digital technologies. This yielded six core thematic areas of
opportunity upon which the working groups were established. These were: human capital
development; agricultural productivity and commercialisation; private sector dynamism;
economic infrastructure; enhanced public sector performance; and industrialisation and
urbanisation. These working groups included stakeholders from relevant sectors and industries
across the public sector, private sector and development partner community to give their
expert opinions on the subject matter. Alongside this process, a digital readiness assessment
was conducted to assess the capacity of Malawi’s digital economy ecosystem to enable the
identified opportunities. The strategy builds on these inputs by outlining the actions and
interventions needed in the short to medium term to support the digital economy and
ultimately accelerate achievement of Malawi’s aspirations of inclusive wealth creating and self-
reliance.

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Framework
The digital world is made up of many parts that cut across the economy and society in
different ways. This has resulted in a number of conceptions and models of the digital
economy. Focus is often on the highly technical digital elements such as networks, devices and
data. However, the underlying structures of the economy, physical elements such as
infrastructure, and the availability of skills required to interact with the digital economy are
equally relevant. Rather than supplant existing areas of the economy, digital technologies
augment and streamline existing processes to support more efficiency across economic
activities. Moreover, digital technologies have unique properties to connect sectors and
markets that may not traditionally be interlinked. The diversity of the digital economy and
differences in maturity across different markets require a framework that best reflects Malawi’s
needs and objectives.
This strategy views the digital economy as composed of three components: the digital
core, digital services and digital solutions.
The Digital Core provides the foundations
upon which the digital economy
operates. This includes skills and
education, device access, and network
access needed to facilitate safe and
affordable participation in the digital
world.
Digital Services offered by the public and
private sector enable the operation of the
digital economy. This includes digital
government which enhances public
sector performance, digital financial
services that enable transaction and financial inclusion, and eTrade that provides access to
local and international markets.
Digital Solutions transform the performance of established sectors to improve competitiveness
and create new areas of opportunity. This includes the application of digital technologies in
agriculture, health, and in the rise of digitally traded services.
The following strategy is divided into these three layers. Within each of these layers, three
priority areas and their targets are specified. These targets reflect the outcomes the strategy
would like to achieve by 2026. Achieving each of these targets requires execution on a range
of actions that overcome blockages that currently prevent their realisation. Each action should
be implemented in one of three time-frames all within five years. The strategy furthermore

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details the parties responsible for implementation and proposes potential financing sources.
Moreover, the long-term vision for the strategy as captured by the strategy’s targets is
captured below.
Vision
Looking into Malawi’s future reveals a country ablaze with potential for economic
development and prosperity. Malawi means ‘flame of fire’, embodied in the incandescent
national flag which is evocative of the rising sun on the waters of Lake Malawi. While for some
time Malawi’s economic fire has cooled, it is once again sparking to life at the possibilities
presented by new digital technologies and their application for development.
Digital technologies hold the promise to exponentially transform all sectors of the
economy. There are innovations in irrigation that use Internet of Things (IoT) to monitor water
usage and plant growth; simple internet searches that give a child access to all the knowledge
of the world; medical diagnosis with a cell phone; 3D printers that can make complex
components for production in minutes; and, new clean energy sources that can power a home
through sunshine. These inventions, at scale, have the power to transform economies and
societies, unlocking massive value.
The new core of Malawi’s digital development agenda is inclusive wealth creation which
offers Malawians access to a prosperous economy. This objective is at the centre of
Malawi’s revised long-term development plan, MW2063. Underpinning this is a focus on three
overarching and interdependent objectives:
commercialisation of agriculture,
industrialisation and urbanisation.
• Commercialisation of agriculture targets
the transformation of the smallholder-
dominated agricultural sector,
increasing productivity and efficiency
which will catalyse change across the
broader economy.
• Industrialisation is the focus on the
emergence of secondary and tertiary
sectors to enhance domestic value
addition and create new sources of
economic opportunity.
• Urbanisation encompasses the creation of new jobs in urban centres and secondary
cities, increased incomes and improved living standards.

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Executing on this vision will result in a structural transformation of the economy and
improved outcomes for Malawians. At present, Malawi’s economy ranks poorly in global
rankings of GDP per capita, a low Human Development Index (HDI) value and high measures
of inequality. Moreover, domestic debt is rampant while Malawi is highly donor dependent
with nearly half of the national budget deriving from foreign aid. Inclusive wealth creation will
increase GNI per capita, HDI and distribution of income and will allow Malawi to become a
more self-reliant country. The following figure illustrates the significant gains expected from
Malawi’s long-term national development plan.
Figure 1: Key indicators for economic development in Malawi2
Digital technologies will radically transform the economy and, if correctly leveraged, will
forge new pathways to inclusive growth. Technologies like AI, the Internet of Things (IoT),
blockchain, data analytics and digital platforms will have applications across all sectors from
agriculture and manufacturing to services, law and governance to finance and trade. Contrary
to the commonly expressed anxiety around technology change, this can unlock potential for
more inclusive economic development rather than destroying it.
The first step towards achieving this is ensuring that the foundations of the digital economy
are sound and inclusive. This relates to core enablers like network access, power, devices and
skills that ensure that all Malawians can participate in the digital economy. Internet usage and
broadband coverage must be increased to a majority of Malawi’s population by 2026.
Concurrently, device ownership is to be increased from 51% to 80% of the population, with
2
Targets from Malawi’s High Level Vision Indicators (2020-2063).

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energy access accelerated by the adoption of renewable energy. Interventions in digital
education will raise the pass rate of secondary school examinations from 50% to 80% and
increase the availability of digitally relevant skills for all Malawians.
Next, digitisation in financial, trade, and government services must enable Malawians to
transact, access markets and benefit from critical public services. E-commerce will flourish
as digital interventions reduce trade compliance costs and time by over a third. As goods
become more affordable, increasing mobile money accounts by 30% will mean more
Malawians can transact electronically, helping businesses thrive and new products to emerge.
Underpinning all of this is universal use of the National ID which will enable both the private
and public sector to integrate seamlessly with banks, government services and national
databases - realising government digitization objectives and greatly improving service
delivery.
A strong digital core and well-developed digital services will enable critical sectors such as
agriculture, and health, and support the rise of digitally traded services to ignite rapid
economic growth and create employment opportunities. In agriculture, the use of digital
extension services, digital platforms and access to data on the agricultural sector will help
modernise farming practices and commercialise the sector - raising the average farm family
earnings from USD 1,800 to USD 2,250. mHealth applications will allow Malawians to access
life-saving information without traversing the long journey to the nearest hospital, and health
care workers will be supported by digital diagnostic applications that may even be more
effective than humans at diagnosing ailments - increasing life expectancy by an average of 2
years. The information and communication sector has been fast growing in Malawi. Further
exploration of digitally traded services opportunities will see the creation of an additional
50,000 jobs in digitally traded services and a doubling of ICT service exports to 4% of total
exports by 2026.

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Malawi’s vision of an inclusive and thriving digital economy by 2026 is critical to
achieving the country’s inclusive wealth creation objectives in agriculture,
industrialisation and urbanisation. To seize the opportunities presented by the digital
economy, Malawians must be supported to meaningfully participate in the digital economy.
This must be, ultimately, affordable. In this, the country will go a long way towards its new
long-term development objectives. These sparks will light the hot flame of Malawi’s economy.

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Digital Core
The digital core layer relates to the foundational technologies and skills that enable the
digital economy. These are the basic requirements that allow for digital services and
applications to be deployed. This entails network and ICT infrastructure; device and energy
access; and, skills and education. It is called the core as it is the nucleus of the digital economy,
from which all connections and linkages must stem. Individuals, businesses and governments
operating in the digital economy rely on networks to connect with others, use devices as the
primary interface, and must hold the skills required to safely and effectively participate. Only
upon this solid core, digital services and digital solutions can be realised.
The three priority areas of the core layer seek to increase digital inclusion, promote
access to the digital economy and establish the basic foundations of the digital
economy. The targets for each of these priorities are highlighted in the following graphic and
explained below.
To enable the digital core, firstly internet usage and broadband coverage will be increased,
allowing more Malawians to access the internet affordably. This will be achieved through
regulation, stimulating investment into necessary ICT infrastructure and correcting market
conditions to ensure service providers can offer more affordable data.
Secondly, device access, along with energy access, is a prerequisite for digital inclusion.
Increasing device ownership by reducing the purchase costs of devices lower barriers to entry
and drive high value participation in the digital economy. Ensuring these new participants have
access to affordable energy to support these devices is critical. This will be driven by widening
access to off-grid, renewable energy charging solutions that support individuals and their
households. These solutions are more cost-effective and faster to deploy than extension of the
national-grid and complement the Malawi Energy Regulatory Authority ongoing efforts to
drive micro-grid investments.
Thirdly, the digital core will deliver on improving digital literacy and increasing the availability
of relevant skills needed to participate in a modern and digital economy. The skills component
of the core will support remote education and up-skilling opportunities, and increase support

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to current learners. These activities will crowd-in resources and people to rapidly achieve a
critical mass of digital participation to stimulate Malawi’s digital economy. This critical mass
will create spill over effects throughout the economy, stimulating demand and enabling
additional layers of the digital economy, which ultimately enable economic development
through increased competitiveness, accelerated growth, and the creation of jobs.
Network Access
Network access is a critical enabler for facilitating digital access across all aspects of
Malawi’s society and economy. Network access enables people, government and businesses
to connect with one another and provides the foundation for a digital economy. Network
access needs to be universal, affordable, high-quality and provide bandwidths that meet the
needs of a wide variety of stakeholders. This access furthermore needs to be extended
inclusively to ensure it contributes meaningfully to improved employment outcomes, higher
incomes and greater access to opportunity. Mobile network coverage is critical to achieving
universal coverage as it enables connectivity through mobile devices whilst broadband
coverage is more important for data intensive activities. Although Malawi has decent levels of
network coverage, fixed broadband coverage remains low. Network quality can also be
volatile, as many cables running cross-border consistently require maintenance. Data prices
are favourable when compared to neighbouring countries but remain unaffordable for the
majority of Malawians. There are several regulatory and structural issues that underpin these
costs and constrain the efficacy and development of affordable and fully accessible networks.
Table 1: Malawi’s 2026 Digital Economy objectives for Network Access
2026 Objective Actions required
Potential
Financing
source
Responsible
parties
Timelines
USD 2.10 per GB of
prepaid mobile data
Establish a special purpose
vehicle (SPV) to build a fibre
backbone from Nacala to
Lilongwe and purchase the
ESCOM’s domestic fiber.
SPV; World
Bank
ESCOM; MITA;
Private Sector;
ISPs
3 years
Mandate infrastructure
sharing of ICT providers
MACRA MACRA 1 year
Optimise the allocation of
spectrum
MACRA MACRA 1 year
Phase-out MACRA’s 3.5%
tax on ICT provider turnover
MACRA MACRA 1 year

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Phase-out the 10% excise
on data and text package
purchases
MACRA MACRA 1 year
Enforce a 30-month
graduated price path
through MACRA to achieve
USD 2.10 per GB by 2026
MACRA MACRA 5 years
95% of the population
have broadband
coverage
Subsidise OPEX and CAPEX
of targeted infrastructure
extensions through the
Universal Service Fund (USF)
USF
USF; MACRA;
MNOs
5 years
Stimulate demand with data
vouchers for end-users in
newly covered areas
through the USF
USF USF; MACRA 5 years
Malawi’s 2026 Digital Economy target for network access is increasing internet usage to
80% of the population and broadband coverage to 95% of the population by 2026. Realising
this target requires executing on 8 actions to achieve 2 objectives, as captured in Table 1.
Objective 1: The cost of prepaid mobile data is USD 2.10 per GB. Mobile data needs
to be affordable to support wide participation in the digital economy. When compared to
peers, prepaid mobile data in Malawi is inexpensive at USD 4.76 per GB, however this remains
unaffordable for many people who have low levels of disposable income. The unaffordability
of mobile data not only prevents effective participation in the digital economy but excludes
the most vulnerable in society. These high costs are partly attributable to the structure of the
market which is overcapitalised due to high levels of market concentration, low levels of
infrastructure sharing, high maintenance costs due to low quality terrestrial cables, and
significant levels of redundancy. In addition, steadily rising taxes are a consideration for firms,
amongst them a 3.5% tax on turnover. This particular tax strains smaller players in a thin market
with ICT providers transferring these costs onto consumers. Above this, consumers pay hefty
VAT and excise taxes relative to comparator countries. Finally, Malawians tend to ‘pay retail’
and not buy in bulk, this means they do not get the benefits of economies of scale in pricing.
By resolving a number of these binding constraints, the actions contained in this strategy will
move the average price of data significantly closer to the A4AI target cost of 1 GB of data at
less than 2% of monthly income.
● Action 1: Establish an SPV to build a fibre backbone from Nacala to Lilongwe and
purchase the ESCOM’s domestic fiber. High data landing costs are a significant driver
of the costs of mobile data in Malawi. The costs of data imported from Dar es Salaam

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or Beira is driven by their long distribution distances from the coast, and inadequate
regional agreements for infrastructure-sharing with neighbouring countries. While in-
country backbone infrastructure is nearly on par with regional leaders like South Africa,
last mile connectivity remains an issue particularly in rural areas. ESCOM has the most
widespread fibre network in Malawi distributed along its high voltage lines. ESCOM
has however been noted as lacking the capacity to maintain and commercialise the
network effectively and lacks the mandate to serve as a catalyst for drawing down
national prices.
A fibre backbone should be built from Nacala in Mozambique to Lilongwe alongside
the recently built Nacala-Lilongwe railway line. This backbone will help to reduce
domestic prices if owned by a body able and committed to controlling landing costs.
Additionally, this will also improve the quality of service as the area around the railway-
line will be frequently cleared and maintained. An SPV composed of smaller players,
interested larger players, and the public sector such as ESCOM and the planned Malawi
Information Technology Authority (MITA), should finance and own the Nacala-
Lilongwe backbone. This entity should furthermore purchase ESCOM domestic fiber.
This SPV will help to balance interests, pool expertise and drive down pricing. Critically,
fibre network operation must be contracted to the private sector with a provision for a
loan or financing vehicle for smaller players.
● Action 2: Mandate infrastructure sharing of ICT providers. Infrastructure sharing is
limited in Malawi. This is in part driven by perverse market behaviour where large ICT
infrastructure providers respond to high prices charged by public infrastructure
providers by building their own infrastructure and recuperating the expenditure by also
charging high prices. The subsequent duplication of infrastructure, high operating
costs, and high costs to lease for smaller players have resulted in an inefficient market
that is hostile to competition. In order to bring down prices, encourage the proliferation
of smaller ISPs and to create a more efficient market, the regulator needs to mandate
infrastructure sharing of ICT providers. Moreover, The Communications Act 2016 states:
“The Authority shall regulate the implementation of interconnection, access, co-
location and infrastructure sharing, based on the catalogues, interconnection
agreements and framed tariffs enforced by licensees”. Thus, MACRA already has the
power to mandate infrastructure sharing to reduce costs. Savings for infrastructure
sharing can be up to $300m per operator per length of 1000km of cable (for fibre).
● Action 3: Optimise the allocation of spectrum. The effective allocation and
management of spectrum is key to increasing access to cost-effective mobile networks.
The allocation of spectrum should seek to ensure sustained competition while fostering
investment and network extension. More efficient use of spectrum, especially
frequencies that offer a higher quality of service or coverage in rural areas, is critical.
MACRA should meet the needs of industry by optimising the allocation of spectrum

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and offering bands such as 900 MHz to the market. Moreover, a clear long term
strategy for spectrum allocation should be devised. The Communications Act 2016
states: “The Authority may designate bands of frequency spectrum to be used under a
frequency spectrum license, as well as bands of frequency spectrum to be used without
a frequency spectrum license”. Thus, MACRA already has the power to optimally
allocate spectrum and was undertaking this activity to some extent in 2017/18.
● Action 4: Phase out MACRA’s 3.5% tax on ICT provider turnover. There is currently
a 3.5% tax on the turnover of ICT service providers and network operators. As this tax
directly impacts revenues, the costs are often transferred onto customers and add to
an already high tax burden facing businesses in the sector. Moreover, studies have
shown that fees on revenues discourages investment and innovation as they affect
operators equally regardless of investment spend. Furthermore, sector-specific taxes
can lack transparency and often serve as government revenue raising instruments.
Reducing these sectors specific taxes can lead to increases in penetration and usage
which naturally extends the tax base, affecting overall tax revenues in the long term.
MACRA should phase-out the 3.5% tax on ICT provider turnover to support the
emergence of new players, increase the capacity for providers to invest in services and
infrastructure, and enable reductions in consumer facing prices. Concurrent to the
phasing out of the tax on turnover should be the phasing in of a tax on profits equating
3.5% by 2026. MoF should furthermore commit to allocating annual budgetary support
to MACRA that offsets any revenue losses induced by the transition. This should be
funded through expected increases in VAT created by expanding participation in the
digital economy until the 3.5% profit tax is a sustainable source of revenues.
● Action 5: Phase out the 10% excise on data and text package purchases. Usage
taxes and levies account for approximately 26% of the purchase price of mobile data.
This is a significant contributor to the unaffordability of mobile data and compounds
the effects of high network operation costs. MACRA and the MRA should phase out
the 10% excise on data and text package purchases to bring usage taxes and levies to
levels comparable with peers. Eliminating this tax should increase consumption and
offer service providers’ revenues needed to support price reduction and drive profits
to further increase MACRA and MRA earnings.
● Action 6: Enforce a 30-month graduated price path through MACRA to achieve
USD 2.10 per GB by 2026. The preceding interventions will result in significant
reductions in the cost of data. MACRA should enforce a price plan that gradually
reduces the price of mobile data from USD 4.76 per GB to USD 2.1 per GB by 2026.
This is conditional on two factors: firstly, a preliminary study to affirm the validity of the
target price; secondly, that the preceding tax related actions of the strategy have been
executed upon or are in acceptable stages of rollout. This is to ensure that prices are
in line with changing market conditions.

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Objective 2: 95% of the population have broadband coverage. While 88% of the
population have broadband coverage, far fewer access the internet due to affordability of both
data and devices, indicating that there remains more to be done in achieving universal access
to broadband networks. Only 39% of the population has a mobile phone subscription. The
majority of the population are yet to enjoy access to high-speed mobile networks as
underserved communities are not commercially viable for network operators. The majority of
the population is covered by 2G mobile networks, 77% of the population have access to 4G
networks while fixed line coverage is low at around 6% of the population. The lack of affordable
and universally accessible ICT infrastructure has slowed digital development in Malawi. It is
critical to translate access into usage.
● Action 1: Subsidise OPEX and CAPEX of targeted infrastructure extensions
through the Universal Service Fund (USF). The National Broadband policy aims to
implement solutions to fill gaps in last-mile connectivity and deepen access across rural
areas in Malawi. The USF can be leveraged to selectively extend infrastructure to
underserved areas that offer the highest potential for commercial sustainability. To
achieve this, the CAPEX should be directly subsidised and complemented by a 5 year
OPEX subsidy. Ensuring investments service communities that are or will become
commercially sustainable will prevent continued reliance on OPEX subsidies that
consume USF resources which could otherwise be targeted at more impactful
interventions. Therefore, the USF should sequentially prioritise investments from lowest
to highest OPEX requirements. This should be conducted over the course of the
strategy's life.
● Action 2: Stimulate demand with mobile data vouchers for end-users in newly
covered areas through funding by the USF. While the preceding action will support
suppliers of mobile networks, providing newly connected communities with data
vouchers can stimulate demand. These data vouchers offer more affordable access to
newfound mobile connections and offer would-be participants an opportunity to
engage in the digital economy and understand the value it can bring to their lives.
Temporarily lowering barriers to entry for newly connected communities will help to
create long-standing participants that support the commercial sustainability of these
new sites.
Device Access
Devices - and the energy that powers them - are essential for accessing networks and
participating in the digital economy. Affordability is the largest barrier to uptake of mobile
services in Malawi with device costs contributing significantly to this. The UN Broadband
Commission recommends that the total cost of mobile ownership - including a handset and
500 MB of data per month – should be 5% or less of monthly income. The cheapest device

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would still cost the average Malawian 24% of their monthly income. However, many Malawians
do not have access to even a basic mobile feature phone which thereby excludes participation
in the digital economy and the innovative services and applications that could improve their
livelihoods and well-being. Stable and reliable access to energy sources is critical for charging
these devices. Access to affordable and clean energy form part of Malawi’s sustainable
development goals and will enable the country to protect the environment while achieving
urbanisation and industrialisation.
Table 2: Malawi’s 2026 Digital Economy objectives for Device Access
Potential
Financing
source
Responsible
parties
Timelines
Lowering device costs
by 22.5% in 2021 and
15% after 2021
Zero rate device taxes from
2021 to 2023
MRA MRA; MoI; OPC 3 years
Lower VAT on devices to
10% from 2022 (until 90%
ownership achieved)
MRA MRA; MoI; OPC 5 years
Eliminate storage device
levy (5%)
MRA; COSOMA
MRA; MoI; OPC;
COSOMA
1 year
Cost effective device
packages lead to
purchase of 3 million
additional devices by
Malawians
Subsidise 50% (USD 80) of
the costs of 15,000 entry-
level device package
purchases through the USF
each year
USF
USF; MRA;
MERA
3 years
Subsidise 15% (USD 1.20) of
the costs of 400,000 entry-
level device purchases
through the USF each year
USF USF; MRA 3 years
Pilot a procurement
programme for tablets for
10% of total teachers
National
Budget; USF
Ministry of
Education
3 years
have access to electricity
of which 5% is derived
from home solar PV
Subsidise the sale of
household solar PV systems
through pooled
development partner
financing
Ministry of
Natural
Resources,
Energy and
Mining; OPIC;
USAID; Nordic
Development
Fund
ESCOM; MERA;
MRA
3 years

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Deploy public device
charging stations in off-grid
communities
Ministry of
Natural
Resources,
Energy and
Mining; OPIC;
USAID; Nordic
Development
Fund
Ministry of
Lands, Housing
and Urban
Development;
City and
Community
Councils; MNOs
1 year
Revise import standards for
solar PV to ensure
acceptable longevity
Malawi Bureau
of Standards
Malawi Bureau
of Standards
1 year
Malawi’s 2026 Digital Economy target for device access is increasing device ownership
from 51% to 80% of the population and energy access to 20% of the population by 2026.
Realising this target requires executing on 10 actions to achieve 3 objectives.
Objective 1: Lowering device costs by 22.5% in 2021 and 15% after 2021. The
high cost of basic feature phones in Malawi severely impacts device access. The cheapest
feature phones in Malawi cost approximately USD 8 and 4G enabled devices cost about USD
25. The main driver behind the high cost of devices are taxes and tariffs at approximately 23%
of the device purchase price. This limits the majority of the population from accessing essential
communication platforms that could improve their income status and facilitate wealth
creation. Scaling phone ownership is potentially the most important component of achieving
a critical mass of digital participation. The actions that follow target a significant temporary
cost reduction in phones in 2021 and a persistent reduction thereafter.
● Action 1: Zero rate device taxes from 2021 to 2022. In order to significantly reduce
the cost of devices in Malawi, the Malawi Revenue Authority needs to temporarily
mandate the complete zero-rating of device taxes. Zero-rating device taxes will lower
the tax burden on low-income households, allowing them to have more affordable
access to basic mobile devices. This will help to rapidly accelerate purchases and
participation in the digital economy.
● Action 2: Lower VAT on devices to 10% from 2022 onwards until the target of
90% device ownership has been achieved. VAT expenses of 17.5% on mobile phones
are an attractive source of government revenues however make mobile phones
unaffordable for cost-sensitive consumers on the verge of being able to afford a device.
The Malawi Revenue Authority should lower VAT on devices to 10% following the total
zero-rating period until 90% phone ownership has been achieved.
● Action 3: Eliminate the Private Copy Levy. The Malawi Revenue Authority and the
Copyright Society of Malawi introduced a levy on media storage devices, including

20
mobile phones, in 2019. This 5% levy adds another source of device purchase costs
that negatively impacts consumers, inhibits the growth of the ICT sector and obstructs
efforts of making ICT universally accessible.
Objective 2: Cost effective device packages lead to the purchase of 3 million
additional devices by Malawians. The majority of Malawians have low purchasing power
and cannot afford the upfront costs of device purchases. Subsidising the costs of mobile
devices would assist in increasing the number of Malawians who use mobile phones, and by
extension, increase their access to the digital economy. Low electricity coverage - especially in
rural areas - requires supplementary support in the extension of solar PV solutions which are
touched on below and engaged with in more detail in Objective 3.
● Action 1: Subsidise 50% (USD 80) of the costs of 15,000 entry-level device
package purchases through the USF each year. This device package will include a
phone, solar panel, a radio and torch, and some bulbs much like offering by the
business M-Kopa. The whole package costs USD 173 with a two year warranty. Product
packages like these are a means to improving access to both power and devices by
offering an alternative to the lengthy process of connecting to the national grid. Access
to devices and power will ensure that Malawians have greater access to the digital
economy. These packages will be disbursed through MNOs that can claim for the
subsidy by presenting evidence of sales.
● Action 2: Subsidise 15% (USD 1.20) of the costs of 400,000 entry-level device
purchases through the USF each year. This subsidy will ensure that more Malawians
gain access to an entry-level handset at USD 8. Access to affordable devices will ensure
that the amount of people with access to the digital economy reaches a critical mass,
stimulating demand and driving growth across sectors. The disbursement and claims
process should operate similarly to Action 1.
● Action 3: Pilot a procurement programme for tablets for 10% of total teachers.
There are reported to be 37,554 teachers in Malawi in 2019. Access to affordable
devices for teachers (within primary schools) is a necessity that will ensure successful
adoption of the teacher training curriculum proposed within the Skills & Education
section of the strategy. Worryingly, particularly in light of the impact of Covid-19 on
delivery of education globally, many teachers do not have access to tablets or devices
in Malawi. This inhibits adoption of modern teaching methods. Successful rollout of
this pilot will enable the Ministry of Education to test the feasibility of tablet-based
education for school teachers, provide relief to disrupted schools, and accelerate
student's exposure to new technology. Depending on the impact of this initiative, a
further review of the programme can be undertaken after 3 years with a view to scale
nationally.

21
Objective 3: 20% of the population have access to electricity, of which 5% is
derived from home solar PV. Currently, only 11% of the population has access to
electricity, local production falls short of estimated peak local demand, and for many, electricity
is unaffordable. Costly and slow national grid extensions exclude non-urban populations, while
the majority of Malawians still live in rural areas. Constraints in access and stability create
challenges for individual and business productivity and participation in the digital economy.
Since 2017, the energy market in Malawi was reformed resulting in increased investment in
the private energy generation from IPPs. The Renewable Energy Strategy and National Energy
Policy 2018 set out the strategy for renewables which offer significant opportunity in Malawi.
Alongside IPPs feeding into the national grid, micro- and nano- grids are supporting energy
access. While a framework was developed to attract micro-grid investment into Malawi, few
investors have emerged in the space. Ensuring individual access to modern energy to support
charge devices therefore remains a cornerstone of the digital core. Extending access to off-
grid solutions will help to ease the long connection times Malawians face.
● Action 1: Subsidise the sale of household solar PV systems through pooled
development partner financing. Renewable energy sources like solar power are a
promising solution to electrifying rural or otherwise remote communities. Although
there are some solar energy providers operating in Malawi, these systems remain
unaffordable for the majority of the population. In order to make alternative sources
of energy more affordable for Malawians, the Government needs to subsidise the
provision of solar energy systems through pooled development partner financing.
● Action 2: Deploy public device charging stations in off-grid communities.
Community charging stations powered by solar or other energy sources can offer a
cheap and reliable means for people to charge their devices regardless of household
access to electricity. Innovators in Rwanda, Uganda and Tanzania have demonstrated
that carts with solar panels that can charge devices can be commercially viable micro-
businesses. Investments in the rollout of these carts and other forms of solar-powered
community device charging solutions should be prioritized.
● Action 3: Revise import standards for solar PV to ensure acceptable longevity.
There are import duties and VAT waivers for solar PV and solar equipment imports for
households. Imported solar PV’s are however often of a sub-standard quality resulting
in frequent breakages which require replacements and ultimately increase long term
costs. The Malawi Energy Regulatory Authority in conjunction with the Malawi Bureau
of Standards should define and enforce Solar PV import quality standards that meet
the needs of Malawians and ensure consumers are protected.

22
Skills and Education
Skills and education are the determining factors of human capital. Levels of human capital
are strongly correlated with income. A well-structured education system produces students
that have received a high-quality education with relevant, practical skills required to grow the
economy. Participation in the digital economy requires a range of skills from basic digital
literacy for the use of devices and applications, to skills in coding and software development
for their production, or emerging advanced skills like data analytics and artificial intelligence.
Malawi’s education system has several factors that have limited its performance such as high
attrition rates for school enrolment from pre-primary through to tertiary, a national curriculum
with no clear focus on digital skills resulting in low levels of digital literacy, and a lack of device
access that enables access to digital learning and content. At the tertiary level, Malawi suffers
from brain drain out of academia and the country itself while teachers are not adequately
trained on ICT and digital during their degrees. Innovative digital learning solutions will
contribute to improved education and skills development especially in light of the new
challenges posed by Covid-19 and inadequate space for learners, especially in secondary
schools and tertiary institutions. These solutions will furthermore help to close the divide
between rural and urban areas, and between public and private schools.
Table 3: Malawi’s 2026 Digital Economy objectives for Skills and Education
Potential
Financing source
Responsible
parties
Timelines
Students obtain high
quality skills with an
80% pass rate in
secondary school exams
Provide open access to
digital content and support
for teachers and students in
all of Malawi’s schools (solar
powered, offline WiFi)
Department of
Education,
Science and
Technology;
FCDO; GIZ;
PPPC
DoEST; PPPC 5 years
Revise teacher training
curriculum to include
blended learning, device
usage for education and
LMS3
Department of
Education,
Science and
Technology;
FCDO; GIZ;
PPPC
DoEST; PPPC 3 years
Malawians have the
practical skills needed to
produce and consumer
digital products and
services
Develop a community
digital champion
programme to deepen
digital literacy and skills
across Malawi
Department of
Education,
Science and
Technology;
MoI; FCDO; USF
Programme
Manager (MoI);
DoEST
3 years
3
LMS- Learning Management System

23
Introduce mandatory
learnerships and project-
based testing in technical
curricula in secondary and
post-school
Department of
Education,
Science and
Technology;
FCDO
DoEST; MUST 1 year
Develop open online
distance learning (ODL)
certificates in areas of
scarce technical skills.
Department of
Education,
Science and
Technology;
FCDO; GIZ
DoEST; MUST 3 years
Malawians have wider
access to higher
education
Pilot community computer
labs that support ODL to
university graduates
Department of
Education,
Science and
Technology;
PPPC; MACRA;
World Bank
PPPC; MoI;
DoEST
1 year
Malawi’s 2026 Digital Economy target for skills and education is raising the pass rate of
secondary school examinations from 50% to 80% and increasing the availability of
digitally relevant skills. Realising this target requires executing on 7 actions to achieve 3
objectives.
Objective 1: Students obtain high quality skills with an 80% pass rate in
secondary school exams. The World Bank ranked Malawi’s overall quality of education as
3.13 out of 7 with the quality of science and math education scored 2.7 out of 7.4
Compounded
by high pupil to teacher ratios at 69:1 and a worryingly low rate of throughput from primary
to secondary school, current pass rates reflect poor schooling outcomes at only 50% of
secondary school students. Digital technologies can support student and teacher access to
relevant materials and offer new and effective forms of teaching.
● Action 1: Provide open access to digital content and support for teachers and
students in all of Malawi’s schools. To expand access to educational resources, which
are often expensive, digital repositories may provide scaled digital content and support
for students. Given that electricity and network access in Malawi remains low, a solar
powered offline solution may be a ‘nut-shell’ device that casts an open wifi network
with a router. This basic device can be used to store and share educational materials,
class notes and tasks, and a host of empowering materials. A number of tertiary
institutions across the globe have consolidated eLibraries of educational content that
can be openly used. Deploying these in Malawi’s schools will not only empower
4
WB TCData360 (2016)

24
students and teachers but also community members interested in learning. The content
of these devices should harmonise with the national curriculum.
● Action 2: Revise teacher training curriculum to include blended learning, device
usage for education and LMS. The teacher training curriculum, particularly in ICT and
digital literacy, has remained ‘analog’ despite new applications of digital technology
and new methodologies to teach traditional subjects. This has resulted in a shortage
of teachers with ICT qualifications and skills. Digital content additions to the curriculum
must be preceded by adequate teacher upskilling and training in the relevant content
and supporting methodologies.
Objective 2: Malawians have the practical skills needed to produce and consume
digital products and services. Digital literacy skills are increasingly required to use devices
such as smartphones, tablets and computers as well as the apps, software and products that
run on them. These can include knowing how to download and use device applications or
transacting through mobile money. Additional skills may be in knowing how to connect to Wi-
Fi, send a file stored on a phone, or navigate the internet in a browser. This is the basic level
of skill required to use digital products and services, before advanced skills such as software
development and other computer science applications that allow people to create them
themselves.
● Action 1: Develop a community digital champion programme to deepen digital
literacy and skills across Malawi. Levels of trust for digital technologies are low -
particularly amongst those who have not been significantly exposed to digital. A
community digital champion can foster engagement and interest in the digital
economy through fun demonstrations of useful applications, training programmes,
guest appearances on radio broadcasts and friendly discussions to convert digital
sceptics to digital believers. This aims to accelerate uptake of digital technologies
amongst first time users. A community digital champion should be a local resident of
a particular community who professes an interest in and can demonstrate familiarity
with digital technologies. Programmes such as these have been highly successful in
Rwanda which transformed into a regional digital player in a short period of time.
● Action 2: Introduce mandatory learnerships and project-based testing in
technical curricula in secondary and post-school. Many Malawians leaving school
and post-school institutions lack the practical skills needed to deliver on the needs of
recruiting businesses. To directly address the lack of practical skills in ICT and the digital
economy, mandatory learnerships with ICT or digital companies will provide new
graduates and learners with work experience that may further streamline entry into the
labour market. Curricula in technical courses should furthermore make use of project-
based testing where students must solve real-world problems relevant to Malawi’s
private sector to better replicate the nature of technical skills needed in the job world.

25
● Action 3: Develop open Online Distance Learning (ODL) certificates in areas of
scarce technical skills. ODL can be a cost-effective and affordable way to offer high
quality courses at scale to any Malawians who require up skilling. These courses could
be developed in partnership with well renowned Malawian universities such as Malawi
University of Science and Technology (MUST), or the University of Malawi. MUST for
example is already exploring the digital delivery of curricula. These certificates can
rapidly scale the availability of skills in high demand in Malawi. In particular, focus
should be placed on cross-cutting technical skills such as IT, database, software
engineering, user interface design, data analytics and cloud computing. In addition, a
course on IP, entrepreneurship and commercialisation of new innovation should
integrate with existing innovation hubs to support the design of new solutions for the
market by graduates. It is critical that these certificates are accepted within the
university community and with the National Council for Higher Education. This has
already been successfully implemented in South Africa at scale through online
universities such as UNISA which currently boasts a third of all higher education
students in South Africa. Other successful examples of scalable online distance learning
are international platforms called massive open online courses (MOOCs) like Coursera,
EdX, Udemy and Khan Academy. At 11 million enrolled students (in 2015), Coursera
enrols far more students than traditional universities for a fraction of the cost.
Objective 3: Malawians have wider access to higher education. Malawians have
limited access to higher education and employment after graduation from secondary
school due to income constraints and difficulties in balancing work and study
requirements. Tertiary education enrolment is low and the perceived quality of vocational
training is poor. Educational gaps continue at a tertiary level where the curriculum is
outdated with many students learning irrelevant skills and software. Broadening access to
higher education will increase the supply of skilled labour and graduates which in turn will
improve opportunities for Malawians and grow the economy.
● Action 1: Pilot community computer labs that support online distance learning
(ODL) to university graduates. Given the significant shortfall in device access,
community computer labs may provide shared facilities, particularly in rural areas
where device access is particularly low, for more Malawians to be able to go online and
enrol in online distance learning courses. MACRA’s Connect A- Programme already has
provisions for internet connectivity across Malawi particularly for community centres
like schools and libraries which can be leveraged for this goal. These community
computer labs will enable Malawians to remain in their local communities and access
full-time courses allowed for the same opportunities as those who can attend university
in person. Increased flexibility to up skill may also allow some to work and study full-
time. There are already some pilots in the works through individual university
programmes.

26
Digital Services
The second layer reflects the most critical public and private sector services that can
stimulate Malawi’s economy. Participants in the digital economy can access a wide range of
products and services regardless of their location. Whereas services such as banking or
business registration would have relied on physical service points, they can now be seamlessly
provided through low cost channels. This access unlocked by the digital core enables
Malawians across all walks of life to use a diverse range of services that support their
livelihoods and wellbeing. This might relate to storing and transferring money through digital
financial services, engaging in trade with non-localised businesses and consumers through e-
commerce, or accessing critical government services.
The three priority areas of the digital services layer seek to improve domestic and
international trade flows, increase access to financial services and scale the reach and
effectiveness of public services. The targets for each of these priorities are highlighted in
the following graphic and explained below.
Digital services will firstly improve the efficiency of cross border trade processes and promote
the emergence of a rich domestic e-commerce ecosystem. These outcomes are critical to
supporting the competitiveness of Malawi’s domestic industries and offering Malawian’s new
sources of income opportunity. This will be achieved through reduction of trade compliance
costs and time, scaling the adoption of e-commerce solutions, and ensuring regulation meets
the needs of the digital economy.
The digital services layer will secondly increase uptake of digital financial services and increase
the sophistication of the financial services sector. This will be achieved by improving the
affordability and range of digital financial services offered in the market and significantly
increasing the adoption of digital payments. A well-functioning digital services sector is a
critical partner to a thriving e-commerce ecosystem.
The digital services layer will thirdly promote the scaling of ID infrastructure while supporting
service delivery and government digitisation efforts. This will support individual and business
access to critical government services and support. This will be achieved by promoting

27
universal utilisation of the National ID for identity verification, digitising critical government
services and ensuring digitisation efforts and interventions are successfully maintained and
upgraded. These outcomes will not only support the delivery of government services but also
improve the government performance and transparency.
e-Trade
E-trade and e-commerce can enable the scaling of businesses, improve market linkages
and create new employment opportunities. While Malawi has made headway in reducing
the time and costs of border compliance, digitisation of cross-border processes can bring
Malawi’s trade processing performance into alignment with, or even surpass landlocked
African peers such as Rwanda and Uganda, and leaders such as Kenya5
. Likewise, e-commerce
platforms and solutions are increasing in popularity but remain nascent with only 2% of the
population making online purchases in 20176
. E-commerce can grow businesses’ networks of
customers quickly and cost-effectively - critical to wealth creation through the informal and
emerging businesses that dominate Malawi’s private sector.
Table 4: Malawi’s 2026 Digital Economy objectives for e-Trade
Potential
Financing
source
Responsible
parties
Timelines
Compliance costs of
USD 312 for export and
USD 250 for import
Compliance time of 100
hours for export and 80
hours for import
Expedite deployment of the
Electronic Single Window
(ESW) with a focus on
process automation and
border agency integration
UNCTAD MoT; MRA 1 year
Introduce an import duty
and tax exemption for low
value goods imports
UNCTAD;
World Bank
Malawi Trade
and Investment
Centre; MRA
1 year
Pilot a cargo monitoring
programme for pre-emptive
processing
Ministry of
Trade and
Industry;
UNCTAD
Malawi Trade
and Investment
Centre; MRA;
MoT
5 years
590,000 Malawians use
the internet to buy
goods online
Expedite implementation of
the national addressing
system
UNCTAD
Ministry of
Lands, Housing
and Urban
5 years
5
OECD. 2020. Global Trade Facilitation Index
6
Global Findex Database, World Bank, 2018

28
Development
Pilot a parcel locker service
to support last mile delivery
GIZ
Malawi Posts
Corporation
(MPC)
3 years
Forthcoming regulation
that facilitates e-
commerce and the
digital economy is
contextually relevant
Develop agile approaches
to regulation that can help
to quickly close identified
regulatory gaps
MoI; GIZ
RBM; MoT; MoI;
MACRA; MERA;
MUST
3 years
Develop a data protection
act with small business
exemptions
GIZ
Ministry of
Information
3 years
Malawi’s 2026 Digital Economy target for e-trade is reducing trade compliance costs by
37% and time by 31% to increase competitiveness and e-commerce adoption. Realising
this target requires executing on 7 actions to achieve 3 objectives.
Objective 1: Compliance costs of USD 312 for export and USD 250 for import,
and compliance time of 100 hours for export and 80 hours for import. Malawi
currently faces document and trade compliance costs of USD 585 for export and USD 305 for
import, and 153 hours for export and 110 hours for import7
. High compliance costs and long
compliance time is driven by reliance on manual processes for trade facilitation where Malawi
underperforms in indices measuring automation in cross-border processes and border agency
cooperation8
.
● Action 1: Expedite deployment of the Electronic Single Window (ESW) with a
focus on process automation and border agency integration. Malawi is in the late
stages of planning for the deployment of a national ESW following completion of
feasibility studies. An ESW is critical to improving trade efficiency and reducing costs
by enabling paperless processing and the facilitation of e-payments9
. It is vital that the
deployment of the ESW is expedited to support the forthcoming scaling of Malawi’s
7
World Bank. 2020. Global Doing Business Report
8
OECD. 2020. Global Trade Facilitation Index
9
UNCTAD. 2020. Malawi Rapid eTrade Readiness Assessment.

29
domestic economy. This was observed in Rwanda where the ESW contributed to a fall
in import release time of almost 40% in its first four years of operation10
.
● Action 2: Introduce an import duty and tax exemption for low value goods
imports. High relative import costs for low value goods impedes the uptake of e-
commerce. Import duty and tax exemption for low-value imported goods should be
introduced to widen business and consumer imports for consumption and resale in
Malawi11
.
● Action 3: Pilot a cargo monitoring program for pre-emptive processing. The East
African bloc has scaled the Regional Electronic Cargo Tracking System (RECTS). First
developed by Uganda, this system monitors the movement of goods from their offload
at coastal ports in neighbouring countries until delivery in Uganda. This system enables
pre-processing of these goods to reduce cross-border processing times and offers
real-time tracking of supply chains to enable responsive measures to accidents and
theft. Developing a similar system would offer Malawi the same trade enabling benefits
and opportunities for innovation in domestic and cross-border logistics services.
Objective 2: 590,000 Malawians use the internet to buy goods online. Currently
only 190,000 Malawians use the internet to buy goods online and few businesses offer formal
e-commerce channels, instead (and infrequently) relying on sales through communications
applications such as WhatsApp and Facebook12
. In addition the Malawi Postal Corporation
(MPC) is not yet positioned to enable e-commerce and there are few logistics providers13
.
Although access to and the affordability of devices, network connectivity and digital financial
services are critical impediments, the nascent logistics and undeveloped physical address and
postal code system is an additional barrier to uptake. By offsetting these challenges, Malawian
businesses and consumers will be better positioned to participate in e-commerce.
● Action 1: Expedite implementation of the national addressing system. The lack of
street addressing is one of the main barriers to investment in the e-commerce and
logistics space in Malawi. This lack of an addressing system increases the operational
costs of couriers and logistics service providers14
. Although MACRA is implementing
the national addressing system, this has only been rolled out in some areas of Blantyre
and Lilongwe. It is critical that implementation across the entire country is expedited
10
C. Nizeyimana & L. De Wulf. 2020. Rwanda Electronic Single Window supports trade facilitation
11
12
13
14

30
in order to fully reap the benefits of e-commerce and increase investment in the e-
commerce sector.
● Action 2: Pilot a parcel locker service to support last mile delivery. Universal
addressing in Malawi will likely be an extensive process. A parcel locker service would
support last mile delivery for e-commerce orders without the need for universal
physical addresses. Parcel lockers consolidate deliveries to a single, secure and easily
accessible location. This can significantly reduce the complexity of reaching clients and
decrease costs where last-mile delivery can account for 50% of total parcel delivery
costs. These solutions allow consumers to track their parcels via a mobile application
or SMS and alert consumers when the parcel has been delivered to the locker, and have
been successful in markets like South Africa and in East Asia. This solution should be
piloted to explore its role as a cost-effective and efficient means to scaling e-commerce
while addressing is underway.
Objective 3: Forthcoming regulation that facilitates e-commerce and the digital
economy is contextually relevant. Digital technologies, rapid innovation and their ever-
quickening adoption will continue to create new and unforeseen risks in Malawi and across
the globe. Regulators are therefore faced with the challenging task of balancing the need to
protect consumers, businesses and the economy without impeding businesses aspiring to
deliver innovative products and services. Malawi has many of the regulatory foundations in
place needed to support e-commerce and the digital economy. However, agile and responsive
approaches to regulation will be needed to ensure the regulatory environment’s continued
adaptation to changing conditions. These approaches should support the design of context-
relevant regulation that speaks to the specific needs and desires of Malawian businesses,
consumers and the economy as a whole.
● Action 1: Develop agile approaches to regulation that can help to quickly close
identified regulatory gaps. Regulators are often slow to adapt regulation to emerging
technologies and often at a distance from innovators who have a firm technical grasp
of how these technologies work. Likewise, innovative digital products and services
often cut across multiple regulators’ areas of supervision creating uncertainty. This can
lead to uncertainty in emerging technologies - the financial services sector offers key
examples of these challenges as it relates to mobile money, cryptocurrency,
crowdfunding, or even AI-enabled automated decision making. Safely identifying and
closing regulatory gaps without impeding innovation in e-commerce specifically, and
other areas of digital innovation, requires collaborative approaches amongst regulators
and between regulators and innovators. Malawi’s financial services and e-commerce
sectors offer an excellent opportunity to test these approaches. Effort should be
targeted at establishing a cross-regulator working group from relevant regulators in
these two areas to identify and close emerging and regulatory gaps. Adopting risk-

31
based approaches to the design of regulation will also reduce the risk of over
regulating. This working group should also consider participation from the private
sector to close any gaps in understanding between the two stakeholder groups.
● Action 2: Develop a data protection act with small business exemptions. Stringent
data security and privacy regulation is critical in the development of e-commerce
specifically and the digital economy generally. Protection of personal data in Malawi
needs to reflect the impending growth of individual participation in the digital
economy and support trust in participating in the digital economy without depending
on unnecessarily onerous compliance requirements on Malawian businesses. Malawi is
in the process of designing an explicit data protection law. This will close gaps left by
the Electronic Transaction and Cyber Security Act of 2016 which contains some of the
foundational elements needed to protect personal data. Malawi’s data protection
legislation should reflect the maturity and specific needs of the domestic digital
economy. While GDPR provides a global standard for data protection, adapting some
of these principles to the context of Malawi is critical. Malawi’s data protection law
should therefore be finalised and enforced as soon as possible. This framework should
ensure complete independence of a data protection regulator. It should also offer
exemptions for small businesses in appropriate areas such as documentation or
processing. Finally, compliance with data protection legislation is not only driven by
the regulator’s capacity for enforcement but also business knowledge of the legislation
and capacity for compliance. Sensitising the public to the legislation and providing
businesses with openly accessible data protection compliance training programmes
will be key in ensuring market-wide understanding of and compliance with the
legislation.
Digital Financial Services
Digital technologies are key to increasing access to affordable financial services needed
to support economic wellbeing and participate in the digital economy. Dynamic
economies are supported by a diverse range of relevant financial products and services. Micro-
businesses often rely on personal financing for working and growth capital. Financial services
which facilitate payments, transfers, savings and insurance are key to enabling individuals and
businesses to transact and operate on a daily basis. Digital financial platforms and services are
growing in adoption in Malawi - driven largely by the mobile money ecosystem. These mobile-
delivered and lost cost solutions allow formerly excluded and underserved customers to shift
from cash-based transactions to mobile-based applications that are easily accessible and
facilitate instant transactions. Modernisation of and increased access to financial services will
support the emergence of new sources of value and opportunity and enable inclusive wealth
creation in Malawi. These services are fundamental to enabling e-commerce and digital
government and enable businesses across all sectors of the economy.

32
Table 5: Malawi’s 2026 Digital Economy objectives for Digital Financial Services
Potential
Financing
source
Responsible
parties
Timelines
Malawians have
affordable access to a
diverse range of financial
services and products
Ensure transparency and timeous
revision to pricing for use of the
National ID for identity
verification.
UNCTAD RBM; NRB 3 years
Support standardisation of KYC
requirements of low-risk banking
clients.
FinMark
Trust; UNDP
RBM; BAM 3 years
Publicise all activities in the
regulatory sandbox and develop
formal participation
requirements and benefits
FinMark
Trust; RBM
RBM 1 year
made or received a digital
payment during 2026
Develop needs-based financial
literacy programmes that drive
positive behaviour and trust
FCDO
RBM; MoEST;
MoI
3 years
Mandate the zero rating of
USSD-delivered financial services
FinMark
Trust; UNDP
RBM 1 year
Leverage existing and pilot new
digital infrastructure to digitise
government and cash grant
payments.
FinMark
Trust; UNDP
RBM 3 years
Cap variable point of sale (POS)
fees at 0.5% of value
FinMark
Trust; UNDP
RBM 1 year
Malawi’s 2026 Digital Economy target for digital financial services is a 30% increase (2.1
million) in the number of mobile money accounts and a financial market development
index score of at least 5 out of 7. These mobile money accounts should furthermore have a
90% activity rate which would reflect increases in activity across all mobile money accounts
form the current 61% level. The financial market development index measures the efficiency
of the financial services sector as well as the trustworthiness and confidence of formal financial
institutions. A higher financial market development index score indicates a more efficient and
sophisticated financial sector where financial services are affordable and meet both individual

33
and business needs. Realising this target requires executing on 6 actions to achieve 2
objectives.
Objective 1: Malawians have affordable access to a diverse range of financial
services and products. There is limited access to financing for both businesses and
individuals in Malawi. The low level of financial inclusion in Malawi15
, in terms of availability of
credit and capital, has implications for economic growth. Entrepreneurs struggle to access
capital, while start-ups and more mature businesses struggle to access funding which slows
the rate of innovation. Individuals such as informal traders and farmers likewise have limited
access to debt facilities. Underdeveloped credit infrastructure and high identity verification
charges incur high costs and risks for financial service providers. The following actions will help
to reduce the costs of credit extension, improve customer access to the financial sector and
support innovation.
● Action 1: Ensure transparency and timeous revision to pricing for use of the
National ID for identity verification. Banks have been mandated by the Reserve Bank
of Malawi to use the National ID in the KYC process. Banks in Malawi have recognised
that the national ID provides the essential infrastructure to successfully offer financial
products and services, particularly credit products16 17
. The National Registration Bureau
(NRB) charges financial service providers a fee for identity verification using the
National ID. Failed transactions that require re-authentication are also charged for.
Market observers noted that these verification expenses were onerous. This led to the
development of a tiered pricing schedule and a general reduction of prices to levels
comparable with other countries while still ensuring commercial sustainability of the
NRIS1819
. To avoid future contention, data on usage of the NRIS should be publicised.
Pricing for identity verification should furthermore be revised annually to ensure that
increases in volume are matched by continued falls in unit prices.
● Action 2: Support standardisation of KYC requirements of low-risk banking
clients. Malawian banks have the freedom to tier and define identity verification
requirements based on client risk. This discretion is however narrow in so far as the
RBM issued a directive that all banks should make use of the national ID as the primary
mode of identity verification. Banks should be supported in developing verification
protocols that support them in safely and profitably servicing low-risk, low value (and
15
16
Malawi’s Journey Towards Transformation, Centre for Global Development, 2020
17
Malawi’s national ID offers a means for harmonising personal data across multiple systems and
businesses. This infrastructure is therefore core to establishing a well functioning credit scoring system.
Actions contained in the ‘Digital Government’ section of the strategy speak to how to scale adoption of
the National ID.
18
Stakeholder interviews, 2020
19
World Bank. 2019. Identity Authentication and Verification Fees: Overview of Current Practices

34
therefore low margin) customers. The RBM should mandate a common and simple
single page application for low-risk accounts and develop regulations governing the
use of offline and online KYC verification using the national ID and its card. These
regulations should detail the conditions under which offline KYC is permitted to reduce
verification costs and complexity for low-risk accounts.
● Action 3: Publicise all activities in the regulatory sandbox and define formal
participation requirements and benefits. Regulatory sandboxes offer innovators the
opportunity to experiment, leading to a more competitive and innovative market for
financial services. The RBM currently has a piloting facility for market testing and user
feedback. However, there is limited awareness or advertising of its existence - fintechs
often don’t know about it or how it can be accessed20
. The benefits of participation are
also little known. For example, RBM in selected cases is willing to waive licensing fees
which otherwise act as a significant barrier to entry for innovators. Increased usage of
the sandbox will not only support safe innovation but also promote the regulators’
awareness of innovation in the market. It is therefore critical that sandbox activities,
results and benefits are formally defined and actively publicised.
Objective 2: 50% of the population made or received a digital payment during
2026. As of 2017, only 28% of the population made or received digital payments21
, illustrating
Malawi’s continued dependence on cash. A fully interoperable national switch which facilitates
payments across a variety of financial service providers offers the foundation for a thriving
digital financial services market. The past decade has seen notable adoption of digital financial
services driven in particular by mobile money. Uptake remains commendable with an 8%
increase in the number of mobile money accounts between the third quarters of 2020 and
201922
. Activity on these accounts is below optimal at 62% while rural mobile money agent
density is dropping23
. While offering relevant financial services will be key in drawing
Malawians into the digital financial services ecosystem, additional actions are required. In
particular, this relates to improving public awareness of and trust in financial services, lowering
the costs of non-cash transactions, and driving adoption of digital payments.
● Action 1: Develop needs-based financial literacy programmes that drive positive
behaviour and trust. Knowledge of financial products and services and of consumer
protection remain limited in Malawi, and financial literacy programmes are fragmented
across development partners. Despite this, significant progress has been made with
the adoption of financial literacy in some school curricula and the existence of the
Consumer Protection and Financial Literacy (CPFL) Unit in the RBM. Low levels of
20
21
22
RBM. 2020. National Payments System Reports.
23
RBM. 2020. National Payments System Reports.

35
financial literacy not only depress adoption of financial services, but also create a
number of worrying outcomes. For example, some rural mobile money agents have
been noted for charging undue fees to mobile money users24
. Most Malawians also
consider mobile money solely as a means of transaction and engage in cash-in, cash-
out activity. A lack of awareness and usage of the network for savings results in a high
cost of network operation - most cash-in transactions are conducted in urban areas
and transferred to rural areas where they are cashed out by agents. Ensuring sufficient
cash floats for agents and operating the cash supply chain is therefore costly.
Needs-based financial literacy programmes should be developed to support adoption
and drive positive behaviour. These programmes should build on the RBM financial
awareness campaigns and harmonise with the digital champion programme detailed
in the skills element of this strategy. These programmes should educate priority
consumer groups - such as farmers - on the particular products available to them, and
prioritise educating consumers on expectant charges, mechanisms of dispute
resolution, and mobile money as a savings tool.
● Action 2: Mandate the zero-rating of USSD-delivered financial services. Digital
financial services delivered through USSD are arguably those most accessible due to
the low device requirements. It is imperative that this channel is as affordable as
possible for the majority of the population. The Reserve Bank of Malawi needs to
mandate the zero rating of USSD-delivered financial services in order to increase
uptake of mobile money and other digital financial services.
● Action 3: Leverage existing and pilot new digital infrastructure to digitise
government and cash grant payments. Despite significant progress, government
payments to businesses continue to rely on cheques while public works and Malawi’s
Social Cash Transfer Programme (MSCTP) continue to rely on physical cash. The MSCTP
is furthermore fragmented across a range of development partners who have
independent strategies and processes used for disbursement. The digitisation of
government payments can drive participation in the digital economy and reduce the
costs associated with cash and cheque infrastructure.
This should be achieved through three activities: firstly, the phasing out of cheques for
government payment to businesses should be expedited; secondly, the establishment
of a MSCTP payment working group where members commit to pursuit of the most
efficient and effective means of payment. This group may support the replication of
workable solutions across partners. For example, UNDP has developed a disbursement
process in collaboration with a domestic bank that obliges the bank to biometrically
validate beneficiary identity and requires the bank solve for digital last-mile payment
24

36
in the most suitable means possible25
. This process therefore significantly reduces the
risk of fraud and enhances transparency; thirdly, actioning development partner
interest in piloting a digital Kwacha in a closed community. This pilot will help to
understand the opportunities and risks presented by an additional payment
infrastructure that could deliver on government payments and facilitate P2P and P2B
payments without the need for an account with an MNO or a bank.
● Action 4: Cap variable point-of-sale (POS) fees at 0.5% of value. POS fees need to
be reduced significantly to improve business and consumer uptake of card payments.
Variable POS fees can reach up to 3%26
. These costs would either be passed down to
consumers or borne by the business - both of which depress adoption of the channel
and its infrastructure. The Reserve Bank of Malawi should cap variable POS fees to
support the uptake of card based payment channels. Digital payments - particularly
cards - play a crucial role in facilitating e-commerce transactions.
Digital Government
The digitisation of government operations will scale access to government services and
improve government efficiency, performance and transparency. Malawi is in the early
stages of government digitisation - manual processes are common, data collection and
utilisation is infrequent and access to government services often requires individuals to
physically present themselves at government offices. This is reflected in Malawi’s low (though
rising) global ranking of 165 in the e-Government Development Index and highly variable
stages of and appetite for digitisation between government ministries. Government
digitisation efforts are largely funded by development partners with priority being placed on
shared services and the digitisation of targeted G2P services. While an eGovernment strategy
has been developed and the forthcoming Malawi Information Technology Agency (MITA) is in
the process of being set up, it is critical for government digitisation efforts to focus on high
return areas, scaling current government digital infrastructure, and enhancing coordination
between government departments and the donor community.
Table 6: Malawi’s 2026 Digital Economy objectives for Digital Government
Potential
Financing
source
Responsible
parties
Timelines
25
This process ensures effective usage of available infrastructure and leverages private sector incentives.
It likewise can support effective usage of the Unified Beneficiary Registry (UBR) as discussed in the
Digital Government element of the strategy.
26

37
Malawi’s National ID is
universally used for
identity verification and
service innovation
Improve the performance of
the Affordable Input
Programme (AIP) and social
grant system through
integration with the Unified
Beneficiary Registry (UBR)
and adoption of the
National ID
World Bank
Department of
e-Government;
NRB; MoAIW
3 years
Improve health service
delivery by harmonising
health system individual
identifiers with the National
ID
FCDO; GIZ;
UNDP
Department of
e-Government;
NRB; MoH
3 years
Support the emergence of
innovative services built
using the National ID by
widening access to the
National ID API and
implementing a PKI
World Bank PPPC; NRB 1 year
Widen usage of the
National ID in the design
and delivery of government
services by establishing an
Enterprise Service Bus (ESB)
and regulating its use
World Bank PPPC; NRB 3 years
The digitisation of
procurement and three
additional services
improves service
delivery and
transparency
Develop an open
eProcurement and unified
eService platform with MPC
as a ‘one-stop-shop’ for
government services
GIZ; World
Bank; JICA
Department of
e-Government;
PPDA
3 years
Scope manual G2C services
in and prioritise digitisation
of three critical services
GIZ; PPPC
Department of
e-Government
(MITA); MoI
1 year
Improve government
efficiency and the
digitisation of back-office
processes through the roll-
out of an electronic
document and records
management system
(EDRMS) in the national
archives.
GIZ; PPPC
Department of
e-Government
(MITA); MoI;
PPPC
3 years

38
Impactful digitisation
interventions are
effectively maintained
and upgraded
Establish MITA as a
centralised coordinating
mechanism and elevate the
ICT Steering Committee to
a high-level forum on ICT
and the Digital Economy
under the VPO
JICA; PPPC; MoI MoI; OPC 3 years
Malawi’s 2026 Digital Economy target for digital government is that the National ID is
universally used for identity verification and supports government service delivery and
digitisation objectives. Realising this target requires executing on 7 actions to achieve 3
objectives.
Objective 1: Malawi’s National ID is universally used for identity verification and
service innovation. Malawi’s national ID is a modern system with wide uptake that offers a
single view of identity. Mass registrations began and were completed in 2017 with over 10
million Malawians currently being registered and more than 9 million holding biometric-
enabled ID cards27
. The system has proved its efficacy being successfully used for voter
registration and identification in Malawi’s 2019/2020 national election and adopted across a
host of government departments and agencies. The national ID is a critical part of Malawi’s
digital infrastructure that can promote the reach and interoperability of digital services
delivered by the public and private sectors. The actions contained in the digital financial
services element of the strategy will enhance its usage for KYC verification. However, those
contained below will drive adoption across fragmented government systems that continue to
rely on alternative person identifiers and deepen its use in the design and delivery of
applications, products and services, as with Aadhaar in India28
.
● Action 1: Improve the performance of the social grant system and the Affordable
Input Programme (AIP) by integrating the AIP and the Unified Beneficiary
Registry (UBR). Malawi has extensive social grant and agricultural support
programmes funded by the government and the development partner community. The
UBR provides information on household eligibility and uptake of social protection
programmes by consolidating information on household socioeconomic status. The
UBR has adopted the national ID for individual identification which will enable the
27
Malik. 2020. Malawi’s Journey Towards Transformation: Lessons from its National ID Project. Center for
Global Development
28
Aadhar is India’s national identity program. The system has on-boarded over a billion individuals who
are all uniquely identified through a 12 digit number and can now have their identities verified through
a range of means. The system is nearly universally used for verification in the public and private sectors,
has adopted open approaches to design and is integrated with national payments infrastructure. This
has supported the emergence of a rich ecosystem of products and services leveraging the system.

39
objectives of improved support targeting and monitoring, and enhanced coordination
amongst social support programme providers. Malawi’s AIP provides households with
fertilizer subsidies to reduce poverty and enhance food security. This extensive
programme relies on the national ID, however suffers from leakages as the system does
not discriminate between farmers and non-farmers to enable accurate disbursement29
.
Integration of the AIP with the UBR and inclusion of a ‘farmer’ data field in the UBR can
reduce leakages to make the AIP more cost-effective and support improved AIP
targeting. This set of data will also widen the information available in the UBR to
provide a more complete view of social support offered and needed across Malawi.
● Action 2: Improve health service delivery by harmonising health system
individual identifiers with the National ID. Malawi’s health sector continues to use
a variety of ways beyond the national ID to uniquely identify individuals in systems and
datasets. While the Ministry of Health and Population has expressed interest in
adopting the National ID as the universal patient identifier, this needs to be deployed
across a range of public and private systems30
. This will require translation of current
patient identifiers to the National ID and adoption of this as a field and means of
identity verification. Doing so would enable access to patient data across health
systems and enable the delivery of health services as discussed later in this strategy.
● Action 3: Support the emergence of innovative services built using the National
ID by widening access to the National ID API and implementing a PKI. Malawi’s
national ID offers the opportunity for developing a rich ecosystem of digital
applications and services that require identity verification. The national ID is
increasingly used in the public sector and has uptake in the private sector where
financial services interface through an API for KYC identity verification. A range of
complementary and value-adding products and services can be further developed
upon this infrastructure. The Aadhaar system in India illustrates this opportunity as a
rich suite of public and private sector services has emerged through wider access to
the platform31 32
. This includes a range of KYC methods including video, document and
data vaults for citizens, citizen background checks, verified digital signatures and
others.
Innovation should be spurred by improving the ID interface, providing technical
documentation detailing connection to the interface33
, and providing controlled access
29
Kenamu & Thunde. 2020. Op-Ed: How to make the AIP more cost-effective. IFPRI
30
For example, the BART system (now EGPAF), the EID/VL LIMS, the National LIMS and the DHIS2 all
utilize different patient primary IDs.
31
Nichol. 2017. A look at India’s biometric ID system: digital APIs for a connected world. CIO
32
Braverman & Kuntz. 2012. Innovation in government: India and Estonia. McKinsey and Company.
33
For example, please see the Aadhaar Authentication API Specification - Version 2.0 documentation

40
for entrepreneurs and innovators to experiment. This should be complemented by the
roll-out of a public-key infrastructure (PKI) to enable innovative products like those in
the Aadhaar example above, and enable alternative certification of identity through
mobile channels such as Two-Factor Authentication (2FA).
● Action 4: Widen usage of the National ID in the design and delivery of
government services by establishing an Enterprise Service Bus (ESB) and
regulating its use. Systems operated by government ministries and departments have
varying capacity for integration with the National ID and varying structures and
sophistication of API. While the national ID API provides for point-to-point
connectivity, an ESB will provide for a common point of integration across all systems.
This ESB will therefore allow ministries to leverage and connect to the national ID (and
other government systems) without the need to adapt or develop system-to-system
communication. Ensuring adoption and efficacy of the ESB will require the
development of a policy and regulatory framework that enforces ministry integration
with and usage of enterprise ICT solutions. This activity will support adoption of shared
products and services as discussed in the following objective.
Objective 2: The digitisation of documentation, procurement and three
additional services improves service delivery and transparency. Malawi has made
exceptional progress in the digitisation of business and customer facing services that provide
wider access without the need to present at government service points physically. This includes
Malawi’s emerging e-Tax system which has enabled the Malawi Revenue Authority (MRA) to
collect 75% of tax revenue online34
, improve efficiencies in revenue administration and ease
the task of paying taxes for citizens, as well as the digitisation of business registration
processes which has improved registration turnaround time and ease. Despite this, many
government services are manually applied for and disbursed and many Malawians are
furthermore without the digital access needed to realise the benefits that digitally delivered
government services offer. Malawi should therefore focus on the further digitisation of
business and citizen-facing government services and the back-office processes that support
them. Investment should furthermore be targeted at mechanisms to broaden access to these
services. These efforts will expand access to government services, reduce opportunity for fraud
and corruption and support government transparency and efficiency.
● Action 1: Develop an open eProcurement and unified eService platform with the
Malawi Postal Corporation (MPC) as a ‘one-stop-shop’ for government services.
Two critical platforms can enhance the performance of the government. Firstly, Malawi
is in the process of establishing a digital procurement platform which should be
expedited. This platform can improve the efficiency and record-keeping of
34
Mkwapatira. 2019. MRA collects 75% of tax through e-payment. Malawi News Agency Online.

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