Devaluation impact felt

As commodity prices soar

John Kapito

Combined effects of the continued rise in inflation and last week’s 25 percent devaluation of the Kwacha has seen Malawians calling for immediate interventions by the government to contain rising commodity prices.

Those that spoke to The Business Times have, among other things, called on the government to consider subsidising basic commodities and promote the use of manure in the next agriculture season to control the pressure Malawians are facing.

Our spot-checks Tuesday found that mega retail grocery shops in the country’s cities were adjusting upwards prices of most basic commodities.


For example, a two-litre bottle of cooking oil, whose price was recently reduced to K5,000 due to a Ministry of Trade directive, is now fetching K6,800.

A one kilogramme (kg) packet of sugar is now at K1,100 from K850 while a 400 gram tin of milk powder is at K4,750 from K4,450.

Further, a 50kg bag of cement is now fetching K12,200 from K9,500, while a packet of 72 baby diapers has moved to K22,000 from K17,000.


Maxwell Kambalame, a Blantyre resident, said people are already forced to cut on their budgets to make ends meet.

“The cost of living is very high right now. I think the government should start to consider subsidising some of the commodities that are needed everyday to ease the pressure on Malawians,” he said.

Madalitso Mlenga, another Blantyre-based consumer, said there was a need for the authorities to raise awareness among Malawians to be economically self-reliant and adopt farming practices that could increase production without use of imported goods such as fertilisers.

But in an interview, Executive Director of the Consumers Association of Malawi John Kapito said subsidies cannot help in the Malawi situation.

“The current developments are happening beyond the control of the government. We are currently looking for support from the International Monetary Fund and it cannot allow subsidies if we are to get their support.

“Subsidies are a thing of the past and will not happen now; our taxes will not support subsidies because we will end up putting all revenue to subsidies and have nothing to run the government with. We cannot borrow money to offer subsidies and no one will be willing to lend us money,” he said.

He urged the government to consider cutting down on some of its expenses such as travel in managing the situation.

In an interview at the weekend, Minister of Finance Sosten Gwengwe said, already, the Treasury has moved to adopt some yet-to-be announced tighter monetary policies and measures.

“We are also moving fast in looking at containment measures, especially on public spending. that means we will have a very tight fiscal regime. We are taking measures that, when the economy stabilises, then we should be able to see stability of prices, interest rates and the rest of the macroeconomic indicators moving in the right direction,” Gwengwe said.

Centre for Social Concern Economic Governance and Programmes Coordinator Bernard Mphepo said the first solution could be the intervention of the government to control food inflation by ensuring that maize is available in all markets.

“Secondly, the government should ensure that Malawians are consuming products produced in Malawi to promote local industry,” Mphepo said.

Reserve Bank of Malawi Governor Wilson Banda said the devaluation of the Kwacha is going to cushion Malawians from scarcity of commodities on the market.

He said between 2010 and 2012, when Malawi adopted a fixed exchange rate regime, goods were scarce across the board.

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