President Joyce Banda has stressed that she will not stop the floatation of the Malawi Kwacha currency as consumer groups plan nationwide protests next month against the sharp rise in the cost of living, the high inflation rate and uncontrolled fuel pricing.
Consumers Association of Malawi (CAMA) chief John Kapito said “what has created some concern and panic is the floatation of the currency, which has created a wrong policy sequence between devaluation of the currency and floatation of the Kwacha It’s like having a free fall of the Kwacha on the local market against foreign currencies.”
He contends that the policy has created a sharp daily rise in prices of goods and services.
But President Banda through a live radio programme on December 31 2012, said she will not stop the devaluation.
“I will not stop the flotation of the kwacha,” the Malawi leader said Zodiak Broadcasting Station (ZBS) during which people were given a chance to ask her questions through telephone calls and short message services (SMSs).
Malawi Kwacha
“That will be suicidal. We just have to be patient,” she added, saying she inherited a bad economy from the Mutharika’s regime and the measures she has implemented will take more time to succeed.
“I am the first one to agree devaluation has brought suffering,” Banda said. “However, this has also helped exporters earn more and for the first time in as many years, tobacco growers benefited a great deal from their crop as a result of devaluation. Our only problem is that we have a very narrow export base and this is why we have been hit hard by this devaluation.”
Meanwhile, former ruling Democratic Progressive Party (DPP) has said the “the hurried devaluation” of the Kwacha by 49 percent, “followed by day to day inflation which is now around 40 percent has caused a lot of misery to Malawians.”
The party also faults the fuel prices automatic pricing mechanism which the government is implementing for the rise of fuel prices from “a mere K160 per litre to around K600 now”.
This, it said in a statement, has heaped more misery on Malawians because businesses have had to increase prices of basic commodities such as sugar, soap and salt, against the meager salaries offered by the government and other employers.
Malawi devalued the kwacha by a third against the dollar on May 7, a month after Banda took office, and agreed to let the exchange rate float to meet conditions set by the International Monetary Fund. Since then, the currency has dropped 26 percent to 326 per dollar, making it the worst-performing unit in Africa.