In the face of persistent economic instability, Malawi’s entrepreneurs are stepping up as agents of resilience and change.
Despite many daunting challenges, which include rampant inflation, a private sector starved of credit, foreign-exchange shortages, fuel shortages, and a lack of reliable supply of power, young Malawian entrepreneurs are forging their way forward, often out of necessity. Yet, without targeted support, many of the 300,000 to 500,000 Malawians entering the workforce will continue to remain trapped in informal self-employment, often in “survivalist” occupations, unable to scale and generate meaningful employment.
To overcome this constraint, and for Malawi to break the current downward spiral, it needs to develop entrepreneurs that have the skills, knowledge and capability to build businesses that can provide gainful employment at scale for youth entering Malawi’s job market. By strengthening and working with the incubator and business development services ecosystem to improve the quality of business education, the Zantchito Entrepreneurship and Access to Finance Pillar (part of the Zantchito Skills for Jobs Programme funded by the European Union and the United Nations Development Programme, and implemented by Cadmus UK international) uses a market systems approach to encourage the development of more stable and growth-oriented enterprises within the country.
The following provides an assessment of entrepreneurs entering the first cohort of incubation under the Zantchito Entrepreneurship and Access to Finance Pillar, based on surveys and analysis conducted by Cadmus staff. The data and analysis suggest five key findings that could influence the way in which entrepreneurship development interventions in the country are delivered going forward.
1. Age has a limited impact on entrepreneurs willing to establish a growth orientated business.
The Zantchito programme’s target group is predominantly (51%) aged between 26 and 35 years, slightly above the age for other programmes in the region. The prevalence of idea-stage entrepreneurs in this slightly older age bracket is linked to two factors specific to Malawi. Firstly, many individuals only turn to entrepreneurship after having looked (in many cases unsuccessfully) for employment first, and secondly, the average age of school and university graduates is above that typically seen in more developed economies due to resource constraints and delays in the start and completion of programmes.
Despite the slightly older age of the Zantchito target group, there is little evidence at this stage of the programme that age brings significant advantages in terms of work experience, networks (both professional and informal) or improved access to financial resources. This diverges from other regional and global research, such as from the Global Entrepreneurship Monitor, that suggests entrepreneurs tend to be more successful between the ages of 30 to 40 years.
2. A gender gap remains in terms of entrepreneurs wishing to start a business.
In Malawi, literacy and education levels for women are significantly lower than for men, with women facing a 65% literacy rate compared to 80% for men in 2020. This gender disparity in education affects women’s capacity to engage in entrepreneurship, as evidenced by the low 35% participation rate of female incubates in the first Zantchito cohort. This is particularly the case in sectors requiring technical knowledge and innovation, as evidenced by their limited participation as early-stage entrepreneurs in the programme. Furthermore, despite the introduction of a number of entrepreneurial development programmes over the past five years and the development of the Malawi Women in Business Network, business networks and mentorship opportunities for women are scarce, particularly in rural areas. Women are more likely to be engaged in informal networks, which limits their exposure to growth opportunities and mentorship programmes that can help develop their business skills.
3. Geographic location becomes an increasingly important factor as business ideas evolve.
Whilst the programme has focused on providing equal opportunities for rural entrepreneurs to participate in its activities, the implication from the data suggests that more innovative businesses, or those focused on manufacturing, are more likely to consider relocating their businesses into urban or peri-urban settings once they enter the pre-incubation phase. Being located in or near major cities allows entrepreneurs easier access to customers, which is essential for product validation, sales, and growth. Areas with dense populations or major trade routes also give access to a larger number of potential customers and a wider network of suppliers and collaborators.
Conversely, for the vast majority of entrepreneurs within the programme that engage in more imitative businesses, where margins are tight and costs of moving are challenging, more remote areas may provide some form of “natural price protection” given the rapidly increasing cost of travel and transportation in the country. It could also allow them to potentially benefit from less competition or from addressing underserved populations. However, given their dispersed nature, it has been a challenge for the programme to deliver an effective business incubation curriculum in person, which has meant that several incubates have had to receive an online version of the curriculum. This in turn has hampered quality as these incubates do not always have the right hardware and airtime to attend the sessions.
In other areas, geographic clustering around certain industries can be crucial for business growth and survival. These clusters provide not only a competitive advantage but also a network effect where entrepreneurs benefit from shared knowledge, collaboration, and investor interest in particular sectors.
4. Prototyping products and services bring considerable value and learning to early-stage entrepreneurs.
The evidence suggests that prototyping is an essential aspect of success for early-stage entrepreneurs in business incubation programmes, particularly in Malawi. It helps validate ideas, refine products, gather customer feedback, and ensure that startups are on the right path toward scaling. By emphasising prototyping, incubators create a low-risk environment for experimentation, allowing entrepreneurs to make more informed decisions before fully committing resources to product development. More specifically, for the more innovative products and services being tested by entrepreneurs, prototyping brings the following benefits:
- It enables early feedback, which helps to validate the core assumptions of the business model and product-market fit before significant resources are invested.
- Building a prototype reveals design flaws, technical issues, or unanticipated challenges that can be addressed early on. Within the incubator environment, prototyping helps troubleshoot problems with the support of mentors and peers.
- Prototyping is central to customer discovery and market validation. The development of prototypes and testing them provide opportunities for receiving feedback from early users and adopters. In the current configuration of Zantchito only a limited focus has been on this market feedback aspect. In the next incubation round this may need to be integrated within the incubation process itself.
The current process of prototyping has focused on the physical production of the prototype. However, for more innovative products and services being developed, there is a lack of mentors who can provide market assistance to guide product development on a timely basis. This is partly due to how the programme was developed with a break between pre-incubation and entrepreneurs entering the more detailed incubation cycle.
In addition, for those that develop more imitative business models, prototyping so early in the incubation cycle might not be as effective as they first need to understand the market, its size, dynamics as well as wider marketing and branding aspects to ensure product differentiation and identify opportunities for growth and scale.
5. A sub-set of entrepreneurs is beginning to consider opportunities in emerging sectors that hold promise to diversify the economy.
Malawian economic activity remains heavily reliant on agriculture, which explains why agriculture and agribusiness dominate early-stage entrepreneurship ideas under Zantchito. The programme has not targeted specific sectors but has aimed to be sector agnostic to ensure that a broad cross-section of ideas and businesses emerge that can potentially shape Malawi’s future economic direction. The programme also allowed participating incubators to assess the clusters of businesses within their region and match their internal staff’s sectoral expertise to promote targeted sector specific applications for incubates. This approach has helped unearth business ideas (around 10% of all applicants) in new and emerging sectors including the digital services sector, particularly software / app development, web services, photography / videography, as well as renewable energy, waste / circular economy applications. These newer sectors have been complemented by more traditional sectors, such as fashion and textiles, predominately leather and apparel, and retail.
Conclusions
The need for greater standardisation of the curriculum. The early implementation experience has highlighted that whilst a divergence of training approaches and curricula developed by incubators is a strength of the programme, it has also exposed some weaknesses. Therefore, going forward, Zantchito should undertake an assessment of training curricula of participating incubators and consider developing a more standardised approach to ensure key concepts are adequately addressed across the cohorts.
Improving the quality of mentorship support. Furthermore, the analysis clearly highlights the critical need for entrepreneurs entering the programme to have experienced mentors that are available on an “as needs basis” to help them navigate the early steps of business establishment and early growth. This will give entrepreneurs the confidence to make critical business decisions. The programme will therefore need to place greater emphasis on identifying, training and supporting a cohort of mentors to improve the quality of advice given to incubates.
Building entrepreneurial resilience. Despite the country having faced a challenging and deteriorating macro-economic and enabling environment, Zantchito has seen a large and committed cohort of genuine entrepreneurs wishing to establish and grow their business ideas through the pre-incubation and incubation phases of the programme. These entrepreneurs have already had to overcome several challenges to get to the starting gate of their entrepreneurial journey but have shown significant interest and willingness to further adapt their ideas, plans, and approaches to address these new challenges as they have gone through the incubation process.
As Malawi navigates its economic recovery, these early lessons from the Zantchito Entrepreneurship programme provide a foundation for building a new generation of innovative, inclusive and growth-oriented enterprises.
