The Inclusion and Recognition of the Informal Sector in Malawi


70% of Malawi’s population between 15 and 29 are not employed by formal organizations (Chamley, 2013). The heavy reliance on the informal sector to employ the majority of the young people in Malawi demonstrates the volatility of the nation’s economy and the desperate need for sustainable employment. However, due to an unstable government and a narrow economy, Malawi lacks the financial and governmental backbone to support an accessible and affordable education to its population. Therefore, residents have developed many employable skills through informal means.

This informal system of education explains the sprawling scene of unlicensed street vendors and businesses in Malawi. Since the majority of the population is unable to be certified by the formal education system, a different recognition framework is required.


Malawi is located in southeastern Africa. This region witnessed various waves of migrating tribes from the 3rd century onwards. In the late 15th century, these tribes built large city-states to consolidate their power and establish trade relations with other lands. Malawi also experienced a tremendous influx of immigrants during this period. Swahili and Yao groups fled persecution in the North and, despite being a minority, cemented themselves as the ruling class in Malawi. Islam spread to Malawi via trade and Christianity spread through Scottish missionaries (Mitchell, 2019). This vast cultural diversity must be taken into consideration to understand its political atmosphere after independence.

In 1891, the British Empire gained control of Malawi by establishing the Nyasaland Districts Protectorate and later combined it with the Rhodesian Protectorate to form the Federation of Rhodesia and Nyasaland, despite fierce opposition from the populace. This opposition formed an organized resistance to finally gain independence from colonial rule on July 6th, 1964 (Mitchell, 2019).  

The uplifting of an oppressive colonial power left the residents of Malawi to confront its fragmented social landscape. Centuries of immigration into the region by numerous groups led to a diverse population with many different interests. The relations between the various factions led to terrible levels of corruption and political instability. Many elections were fraudulent and led to frequent government collapses. In such an environment, the governmental structure was unable to pay due attention to education and infrastructure, leaving large swaths of the population to be self-reliant. This self-reliance led to the rise of the informal sector.


One-third of Malawi’s GDP comes from agriculture. Though the most farmers participate in subsistence farming, the majority of profits come from cash crops such as tobacco and maize (Export, 2019).

Malawi’s GDP per capita is $389.40, making its residents some of the poorest in the world (World Bank, 2011). Malawi’s emphasis on agriculture means that all other essential goods must be imported, leaving the country extremely vulnerable to supply shocks. Its unstable government and frequent election scandals has led to little foreign support and grants, widening the already large fiscal deficit of the nation (World Bank, 2018). The large national debt and inflation rate hinders the government’s ability to build a strong educational infrastructure and dissuades corporate investment to create formal employment. This combination leads to few job opportunities. The economic ecosystem of Malawi calls for self-development of skills and self-education, culminating in the massive informal sector.


Only 15.93% of the population aged 25 and above have completed secondary school (“Education in Malawi, Africa – General Information”). This is due to a vicious combination of lack of access and lack of affordability. The Malawi government does not provide a free secondary education, hindering massive portions of the poverty-stricken population from obtaining an education. The political turmoil inside the government and its massive fiscal deficits prohibit the government from building a sufficient number of schools and an adequate transport system, which means that the immense distances students have to walk every day pose an immediate physical barrier to sustained education.

A lack of access and affordability cuts down on the possibility of graduating secondary school and obtaining a formal certificate. This barrier forces the majority of the population to turn to the informal sector.

The Current Formal Recognition System

Malawi’s current system for certifying the completion of secondary education is the Malawi Secondary Certification of Education (MSCE) (“Education in Malawi, Africa – General Information”). Students receive this certification after passing a series of examinations on an array of topics. The very setup of this process works to undermine the ability of a student to obtain a certificate.

Students are required to pass English and mathematics. However, English is not the first language for most of the population. Malawi’s population speaks a range of tribal languages, which is reflective of its massively diverse population. From its independence to 1994, the Chewa language was designated as its official language. In 1996, a law mandated classroom instruction in English for grades 5 and above, despite not being understood by one-fifth of the population.

In addition, a subject such as mathematics requires a clean attendance record and constant practice to achieve proficiency. However, due to the aforementioned distances students have to travel and the high levels of poverty they endure, it is difficult to attain the rate of attendance and practice needed to excel in the subject. Therefore, the subjects that the MSCE requires to receive the certificate are inappropriate and disadvantageous to the context of the students’ lives and the circumstances in which they are educated.

Furthermore, many schools do not have science labs in which the students can practice their physical sciences curriculum. In the Nkhata Bay District, for example, only 9 out of 37 schools have a lab, out of which only 4 are functional, and out of those only 2 are test centers. Despite the absolute lack of infrastructure to support the sciences program, the MSCE requires candidates pursuing jobs in the sciences, which constitute a large part of the formal sector, to pass their lab examinations.

The very structure of the MSCE system seems to undermine the ability of students to receive a certificate of completion. Since the vast majority of the population cannot afford university education, the MSCE is the main formal recognition process in Malawi. But since this process probes at the economic and infrastructural weaknesses of the education system, it prevents capable candidates from entering the formal sector and opens the door for the informal economy. Therefore, it is necessary to re-envision an applicable and relevant model for formal recognition of the informal sector.


The first opportunity for reform is in regard to the MSCE system. Since students face a large language barrier in passing their examinations, oral examinations in the vernacular can be conducted in place of the usual written examinations in English. This will ensure a more accurate and complete assessment of a student’s abilities. Non-profit organizations and SMEs can employ educated individuals to serve as the assessors and translators between the various languages under a contract with the government. SMEs can also provide a similar service to corporations by conducting interviews in the vernacular and providing language training upon request of the corporation. These steps will ensure the clearing of the linguistic roadblock to the formal sector.

The second opportunity of reform addresses aligning formalization procedures to Malawi’s largest industry: agriculture. Since agriculture employs large portions of the informal sector through small land holdings conducting subsistence practices, it would seem appropriate to invest in formalizing the prominent industry rather than encouraging individuals to be employed elsewhere.

There are many investment opportunities in agro-processing and agricultural infrastructure. Agro-processing entails processing of agricultural products into commercial materials. SMEs could invest in producing textiles, garments, and bioplastics from agricultural produce. Such projects would encourage massive formal employment in the agricultural industry, which itself does not require high levels of academic knowledge to succeed in, only experience. Therefore, SMEs must consider not the academic level of the candidate but instead the experience and success in the field if they are to find suitable employees.

In addition, SMEs can also manufacture and sell irrigation equipment to farmers to assist them in the shift away from subsistence agriculture to profitable agricultural enterprises. This will uplift the economic situation of the farmer and encourage them or family members to seek formal job opportunities.


Formal recognition of the informal sector opens up many investment opportunities for SMEs. Social enterprises serve a critical role in galvanizing the economic ecosystem of developing nations such as Malawi. They form a symbiotic bond between the people and the enterprise to maximize profits while being applauded for a lasting social impact. Such activity is direly in need for the Malawi people if they are to adequately face the wide array of challenges to come.



Mitchell, James Clyde, et al. “Malawi.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., 20 Jan. 2019. “Malawi – Agricultural Sector.” Export, 11 Apr. 2019,

The Guardian: Chamley, Santorri. “Malawi’s Youth Unemployment Crisis.” The Guardian, Guardian News and Media, 10 June 2013,

“Education in Malawi, Africa – General Information.” RIPPLE Africa,


World Bank: “Overview.” World Bank, 12 Apr. 2019,

“Malawi .” Data, World Bank, 2011,

“GDP per Capita (Current US$).” Data, World Bank, 2018,


My name is Rahul Sista. I am 18 years old and am currently pursuing a degree in Business Administration at the University of Washington in Seattle. I have worked with Indian non-profit organizations to build schools for the underprivileged and provide free eye healthcare. My ambition is to start a social enterprise to uplift rural communities in India.

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