By Benadetta Chiwanda Mia:
As fuel queues continue to lengthen in Malawi, the government remains firm in its decision not to increase fuel prices, citing the need to protect the welfare of citizens.
The development has sparked a debate among economic experts, with Mavin Banda highlighting the complexity of the issue.
“It is a clash between economic pragmatism and social welfare.
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“Price increase alone is not a long term solution if there is no continuous availability of ample forex to be able to import fuel consistently,” Banda said.
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He asserts that the root cause of the problem is not merely the availability of fuel but a broader issue of productivity deficits, which manifest as foreign currency constraints.
Banda added that such constraints were exacerbated by other fiscal responsibilities, notably impending fertiliser imports for the agricultural season.
He, however, warned that prolonged petrol and diesel shortages could impact both consumers and producers, particularly as transport costs directly translate into higher food and public transportation prices.
“The knock-on effect, due to the proximity to the end-of-year purchases, will place further hindrances such as hoarding, further aggravating supply chain bottlenecks,” Banda said.
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On her part, economist Bertha Chikadza presented a perspective that leans towards a necessary fuel price hike to address accumulated pricing issues.
“A hike in fuel is necessary to clear the price buildup which we, as a country, have accumulated since suppliers are bringing the fuel expensively and selling at a loss, which is unsustainable,” Chikadza said.
