BLANTYRE (Malawi NewsNow ) — Economist and Press Corporation Limited group chief executive officer, Professor Mathews Chikaonda, says the Malawi kwacha is losing its value because the country is still not able to generate enough foreign exchange to meet its import needs.
Malawi kwacha has been on a free fall and is trading at K530 to the US dollar .
Chikaonda says lack of diversification of the economy is crippling Malawi’s efforts to generate enough foreign exchange to meet its import demand.
“We need to accept our reality. Just because we are in the tobacco marketing season is not a guarantee that we will have enough foreign exchange. RBM needs to keep some for the rainy day,” he says.
He advises that instead of just being an importing nation, the government needs to seriously implement export diversification drives to help the economy cope during the lean period.
Analysts say some major cause of forex shortage is the long-term fertiliser subsidy programme. With all its good intentions—to end hunger thereby contributing to poverty eradication, the subsidy requires thousands of drums of forex to import. Since the programme started in 2005, Malawi has been spending not less than K20 billion annually on the programme.
The country’s import bill for fuel, cement, metal bars and other construction materials has spiralled, victims of our own growth.
The other cause is the unscrupulous business people who siphon forex out of this country through fraudulent import transfers, hoarding, fake holiday packages and by literally zipping US dollar bills in the trousers while on foreign trips.
The fourth cause which has been controversial before is the state travel bill.