Malawi Kwacha appreciation puzzles growers


Tobacco grower’s body, the Tobacco Association of Malawi (Tama) says most farmers of the leaf are now in a fix following the continued appreciation of the kwacha, saying this may dwindle their return on investment.

The local unit has in the past two weeks been gaining momentum against other major trading currencies with some authorised dealer banks now trading it at around K724 against the US dollar.

Speaking in a telephone interview, Tama Chief Executive Officer Graham Kunimba said the kwacha normally gains value during the marketing season and it loses value when farmers are buying farm inputs.


He said this puzzle the tobacco growers who eventually lose a lot in their production.

Kunimba then called on the Reserve Bank of Malawi to adopt deliberate policies that would avert the volatility of the currency to benefit the tobacco grower.

“We are at a loss as farmers as this is an annual problem. We are asking authorities to consider and be sympathetic with the situation of the farmer. The farmer is just toiling and not benefiting.


“The volatility of the kwacha is very bad; cost of production is always high. This is the reason why we see the farmer always complaining about prices,” said Kunimba.

Normally, the kwacha appreciates weeks before tobacco marketing season. This year, the tobacco season is anticipated to open at the beginning of April.

According to Kunimba, this poses a threat of continued losses as the farmer would not be able to reap the most from their labour and toil.

He said the rate of appreciation is faster than anticipated and this means earnings for the farmer would significantly drop.

“During the time of production is when the farmer needs financial assistance and get dollar denominated loans from the financiers. The loans are immediately converted into Malawi kwacha when it depreciates.

“The time the tobacco grower is paying back the loan, it is the time when the kwacha is appreciating and that is the time the tobacco market commences,” lamented Kunimba.

At the beginning of this week, Chancellor College Economics professor Ben Kalua hinted that the local unit may continue to appreciate and significantly gain against other major trading currencies.

He said by next month, the kwacha may trade as low as K620 or thereabout against the dollar.

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