Malawi economy in much worse state than before the devaluation of the kwacha—CAMA

* Everything has come to a standstill and now we have no forex, no fuel and limited goods available on the market

* The devaluation of kwacha was claimed to be unnecessary evil by the President and his Finance Minister

* We were also told that it was meant to realign the kwacha with other major currencies

* Unfortunately, the outcome of that decision has been negative and after four months, we have seen continued depreciation of the kwacha

By Duncan Mlanjira

Consumer Association of Malawi (CAMA) contends that the country’s economy is in much worse state than before the devaluation of the kwacha and has been compounded by the failed International Monetary Fund (IMF) support program.

In a statement, CAMA Executive Director, John Kapito said it seems the Government has “no alternative economic plans to ensure that the economy keeps running”.

“Everything has come to a standstill and now we have no forex, no fuel and limited goods available on the market and no IMF support.

“The devaluation of kwacha was claimed to be unnecessary evil by the President and his Finance Minister. We were also told that it was meant to realign the kwacha with other major currencies.

We were also told that negotiations with the IMF were at an advanced stage and that soon the economy would start receiving the much needed forex.

“Unfortunately, the outcome of that decision has been negative and after four months since the devaluation of the kwacha, we have seen continued depreciation of the currency and the support from the IMF is nowhere.”

Kapito further observes with deep concern that the “economy continues to sink with sharp price increases on all basic commodities and closures of both SME’s and other industries — creating mass retrenchments in an economy that has the highest unemployment rates amid scarcity of forex, petrol and diesel”.

“The President,at the time of devaluation of the kwacha, assured Malawians that the Minister of Finance was in Washington, USA and when he is back the economy would be back to normal.

The questions that Malawians are asking are:

1. Was the devaluation a necessary evil or poor miscalculation of IMF’s support and response?

2. Was the devaluation meant to increase exports knowing fully that Malawi has no export capacity?

3. Was the devaluation of the kwacha meant to hurt consumers with high cost of living?

4. What exactly was the unnecessary evil hidden in the devaluation of the kwacha to necessitate the current economic challenges?

5. Does both the President and his Finance Minister understand the impacts of such a huge devaluation on an economy already experiencing the worst high cost of living?

Kapito expressed dismay that as a country, the economy is dependent on borrowing from the IMF without any other alternative plans, describing it as “shameful” and the leadership as “pathetic”.

“We believe the IMF programme should have been one of the many economic strategies among many other economic initiatives.

“There are no indications that the President and his Finance Minister have any plans to cushion the poor considering their poor decision and judgment on the impacts of the devaluation that could have been avoided.”

He goes further to accuse the President that, while Malawians are going through tough times, Chakwera and his Ministers “are busy wasting public money through his attendances of unnecessary traditional dances and church gatherings, which are a total waste of public money and exerting unnecessary pressure on the already depleted resources”.

“When will the President, Cabinet and his large number of [unnecessary] advisors realize that Malawi is bankrupt and that certain functions and activities should be stopped for the good of Malawians?

“This is the same President who made a ban on lakeshore conferences — to cut on expenditure — yet he cannot tame his own travels. What messages or pain does the President want to see in people for him to start behaving as a real human being or President?

“Mr. President, Malawians are looking up to you to turn around the economy — that’s the job of the President. It is time you took up your responsibilities and begin to carry out your Oath of office and for once,please stay in your office, assemble the right minds to come up with lasting solutions to this current poor state of our economy.”

On September 2, Forum for National Development (FND) also penned the President to stay in office to solve the country’s economic crisis rather that travel  to the US for the UN General Assembly (UNGA).

National coordinator Fryson Chodzi said FND was reliably informed that Chakwera’s entourage was to be not less than 30 people, alleging that close to K1 billion would be spent on allowances and other logistics.

“Apparently, the trip will require forex in form of US dollars,” said Chodzi. “The trip is happening at a time you government announced tough and strict austerity measures which government ministries, agencies and departments have to follow [which] included restriction on foreign trips.

“The event is happening at a time your government devalued the national currency by 25% as a result of sharp shrinking of foreign currency reserves due, according to the Central Bank, to a drop in export revenues.

“The event is happening at a time the country is experiencing erratic supply of fuel due to non-availability of forex, hence affecting economic activities.”

The FND offered a few practical thoughts for the leadership, that saying he should have considered cancelling the trip for the UNGA and that by doing so, the President “will be saving a million of forex, which can alternatively be used to import drugs;  salvaging the Ministry of Agriculture to facilitate importation of much needed fertilizer.

He maintained that money saved could demonstrate Chakwera’s “true will of servant leadership and setting a tone against wastefulness and complying to your own order of strict adherence to austerity measures”.

“Mr. President, staying behind with your people that are experiencing unprecedented load shedding, will demonstrate your zeal to resolve the problem — your country needs economic growth.

“Every policy speech and every piece of legislation should be tested on the grounds of what effect it will have on investors. Investment is the first step up the growth ladder.

“Investments only occur where there is electricity and confidence. You don’t have to wonder if you are doing the right thing — the market will show you immediately if you are on the right path.”

He further asked Chakwera to reflect upon his policy directions, because his current approach “seems to be going the opposite of Canaan direction”.

He concluded by applauding the President on his stance that corruption will be rooted, describing it as a positive approach, “unfortunately, it is perceived that this problem is being handled with kid gloves and there are no concrete moves to take action against those cadres who are in positions of power” in the Malawi Congress Party.

“Everyone is responsible for his own legacy. What legacy do you want to leave behind after your term? You must now combine action with the words spoken.

“Take up the responsibility to govern, and then govern. Rid yourself of the party mentality and please stop trying to save the corrupt individuals instead of saving Malawi.

“History will judge you on your actions. You have the choice either to build or to destroy. Whichever part you choose will stand in the annals of this country.”