Malawi government has threatened to ‘unleash proper penalties’ on companies that will not effect price reductions on their products following the appreciation of the kwacha.
But the Consumers Association of Malawi (Cama) has queried the regulatory mechanism government is employing to punish the so-called defiant companies, adding that the appreciation of the kwacha is not a recipe for price reduction.
Cama has also said while it was good that government is yearning for price reductions of goods, it was also important to understand that there are several fundamentals considered when pricing commodities. These include lending rates and fuel prices.
In a statement issued on Wednesday and signed by Malawi’s Minister of Information and Civic Education Moses Kunkuyu, who is also the official government spokesperson, government has ‘strongly’ condemned and warned “any continued deliberate defiance to a call for the price reduction of goods and services following the recent positive economic strides the nation has witnessed.”
He said it is disheartening to observe that some companies continue robbing unsuspecting consumers of their hard-earned money through charging exorbitant prices.
Said Kunkuyu: “Government will unleash proper penalties on companies that deliberately choose to ignore and disrespect the call. In the same vein, government through the Ministry of Industry and Trade and in collaboration with the Competition and Fair Trade Commission will immediately start inspecting shops and companies to appreciate the prices and take decisive action where necessary.”
The local unit, the kwacha, has in recent weeks gained in value from a peak of K420 per dollar to sell at around K320 against the dollar in most authorised dealer banks (ADBs) as of on Wednesday.
According to Kunkuyu, the unpopular economic reforms adopted by the President Joyce Banda administration in May 2012 have, however, proved critics wrong as evident in the appreciation of the kwacha and easing of inflation, among other economic gains registered so far.
He added that the recent economic gains have resulted in a reduction of fuel pump prices, which he said should have translated into an immediate decrease in the price of goods and services that largely depend on fuel.
But in an interview on Wednesday, Cama executive director John Kapito laughed off government’s call and recalled that at a time when the kwacha was depreciating fast, government snubbed calls by Cama to contain soaring prices as it argued the market is liberalised.
In a separate interview, Economics Association of Malawi (Ecama) executive director Nelson Mkandawire welcomed the move by government and also hailed companies that are voluntarily slashing down their prices in tandem with market dynamics.
Competition and Fair Trade Commission (CFTC) chief executive officer Charlotte Malonda on Wednesday said consumers suffered and endured price increases from enterprises because the kwacha was weakening.
She argued that in return, consumers should enjoy some relief now that the kwacha has strengthened against major currencies.