Devaluation hits hard on Malawians

Mary Kwananda is a mother of four children and divorced. She is caught in dilemma between settling utility bills first or buying groceries. Since the over 49 percent kwacha devaluation, Kwananda is struggling to feed her family.

Kwananda gets a K25 500 salary from her secretarial job at an Internet and printing shop in Blantyre.

“My salary is not enough to cater for the needs of my family. Prices of goods and services have gone up. I have to buy maize flour, sugar, soap and salt besides paying utility bills,” she says.

Kwananda, who resides in Chilomoni Township, says before the devaluation, she used to have a budget of K14 000 (about $56) per month on food items and utility bills.

“Although it was not enough, we were still surviving. But now life is unbearable. Imagine a packet of sugar costs K300 [about $1.20] up from K160, electricity and water tariffs have gone up. How do I adjust my budget?” she says.

She worries that despite all these financial challenges, there does not seem to be a solution anytime soon since her employer has not increased her salary, citing poor business that has also resulted from the devaluation.

“In those days, my utility bills used to be K3 400 [about $13.6] in total, but now the amount has almost doubled,” Kwananda says.

Market surveys show prices of basic items such as maize flour, sugar, soap and salt have gone up by as much as 50 percent and fuel prices have risen by 30 percent, pushing up the cost of public transport by about 40 percent.

If you ask Maureen Chimtengo who sells tomato and other vegetables in Blantyre Market, she will tell you that the tough economic times are biting her hard.

Chimtengo plies her business in the congested market. She says her earnings have dwindled by half since the devaluation.

“For example, previously a K15 plastic bag would be filled with K500-worth of Irish potatoes, but now the same bag carried K1 000-worth of potatoes. Customers always complain that this is expensive, but the thing is: We also buy the goods at high prices,” says Chimtengo.

What this means for consumers such as Kwananda is that economic survival has become more uncertain than ever.

The Reserve Bank of Malawi floated the kwacha upon recommendation by the International Monetray Fund (IMF). The devaluation, aimed at reinvigorating the economy and wooing back international donors, triggered steep increases in prices of goods and pushed people deeper into poverty.

For example, Kwananda’s K25 500 salary was worth about $154, at the K166 rate the dollar was trading at before the devaluation. This meant she was above the poverty line, as roughly she would live on about $5 per day.

However, with the devaluation, the same salary puts Kwananda just slightly above the poverty line. Pegged at K285 per $1, Kwananda now survives on $2.8 a day with her $89 dollar salary.

The human suffering and failure by the authorities to enforce salary increments has forced the Consumers Association of Malawi (Cama) to issue a stern warning that if nothing is done, the public will act.

Cama executive director John Kapito expressed disappointment that government has not come up with measures to cushion poor Malawians from the short-term effects of the devaluation. He claimed that the situation means that Capital Hill does not know how to deal with Malawians’ misery.

“We had expected cautionary measures to be put in place by now, but nothing is happening. Consumers feel let down by their companies or the small businesses they are doing. Imagine, people cannot even find jobs at the moment,” said Kapito.

Although, President Joyce Banda is yet to declare measures of dealing with skyrocketing prices, donors have responded with renewed financial support. World Bank country representative Sandra Bloemenkamp recently said the bank is working on a package to help the poor cope with devaluation effects.

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