‘We should have devalued kwacha in phases’

United Democratic Front (UDF) president Friday Jumbe comments on Malawi’s economy in this interview with our News Analyst Deogratias Mmana.

Recently, you have made statements on the economy in which you have given the impression that you were in support of President Joyce Banda’s economic policies, especially the devaluation of the kwacha.

My principle has remained the same on the devaluation of the kwacha. During the Bingu wa Mutharika regime, I said it was inevitable to devalue the kwacha. I knew the forces were too big for Bingu. I gave credit to President Joyce Banda for devaluing the kwacha, but I do not agree with the modalities with which she devalued the local currency. The process of devaluing the currency was recklessly done. Implementation of the devaluation was recklessly done. If I were part of the President’s economic team, I would say, yes, let us devalue, but in phases to avoid shocks.

 

After the devaluation, we have another headache of automatic pricing mechanism which can see fuel prices increase every month. Do you think this is good policy?

I do not agree with the automatic pricing formula. It is a joke that you go to a fuel pump and find prices up every now and then. Every time there is fuel price on the global market, they push it to the Malawi market.

Fuel vendors look foolish because they will push the price to the users every month. Those in the fuel business should have managed the situation in such a way that it does not affect the end user. For example, Illovo Malawi does not increase sugar prices every time prices of raw materials increase. I would not mind being told that fuel is at K600 per litre today, but it remains there for the next one year.

So, I do not agree with government’s monetary policy because the exchange rate must be totally flexible. I also do not agree with the liberalised formula of pricing fuel. When you have floated your currency, you have what we call a managed float where you do not leave the currency to go anyway, anyhow. The work of the Reserve Bank is to monitor the movement of the currency exchange rate.

When I was talking about these things during Mutharika’s time, I was speaking while angry, but today with my sister, I am soft and people misconceive me as supporting some of her policies.

 

But the President has advisers on the economy?

The guys that should help on these things are not helping her. They should assist her to come up with policies that make sense.

 

If you were an adviser to the President on economic affairs, what would have been your advice?

There are a lot of issues that are at stake. I do not want to be misunderstood by the President’s economic team. I do not want to undermine them but I can subtly say that there is need for government to refocus its monetary and fiscal policies.

There is a lot to be desired on the monetary policy front that ought to have been done yesterday. If you look at the banking sector, you see that the liquidity situation cannot be allowed to sustain for some time. If you look at some of the financial statements coming from the banks, there are problems there. Credit is not available. If you say you are on austerity stand, I am yet to see what you mean. I am yet to see any government that is in austerity and at the same time creates jobs. In Malawi, unemployment levels are high. So, this talk of austerity measures does not add up and yet every finance minister who comes in talks of the same thing.

If you look at the fiscal issues again, there are problems because the national budget has a lot of cockroaches that feed on it. There is a lot of corruption and thieving. People are stealing government money in broad daylight. Those in the economic team should manage these cockroaches. Even the President has said that she will be forced one day to shame those involved in corruption.

 

Your recent comments on the economy may be construed to mean you want favours from government.

 

I do not look for favours from PP [People’s Party], neither do I look for rough treatment from them. I just want to live peacefully in this country as a citizen. I don’t think PP can give me any favours. I remain what I am. I just want to do my business peacefully.