Tobacco has raked in $128.1 million in the first 10 weeks of sales, up from $97.4 million realised during the same time last year, figures from AHL Group show.
According to the figures, the average price the leaf is fetching has slightly improved from $1.51 per kilogramme (kg) to $1.64 per kg.
The earnings translate to less than a month of import cover, a development economists have described as worrisome.
Malawi’s gross foreign exchange reserves —a combination of official and private sector reserves— continues to drop as seen at $383.6 million (an equivalent of 1.8 months worth of imports) in April 2021, latest figures from the Reserve Bank of Malawi (RBM) show.
The position is down from $391.9 million (1.9 months of imports) in the preceding month, according to RBM’s April 2021 Monthly Economic Review.
Economist Laston Manja said he did not expect tobacco revenue to have substantial impact on the forex position.
He said the country should hasten the economic diversification process as the green gold continues to face challenges with both revenue and output dropping each year.
“There is a lot we can do when it comes to diversification even in the agriculture sector. We can venture into legumes farming and other crops but, apart from agriculture, the country should look at alternatives such as tourism,” Manja said.
University of Malawi Professor of economics Ben Kalua said, while import cover may slightly improve, it was high time the country diversified its export base.
He said cannabis had proven to be an effective alternative for tobacco.
“By the end of the year, we should have found advanced avenues of imports such as cannabis which has proved to be helpful in other countries which have started cultivating it,” he said.
Malawi remains a predominantly importing and consuming nation, highly dependent on exporting raw agricultural products.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.