No quick fixes to forex scarcity
Government says Malawians will have to wait longer before the foreign currency scarcity is sorted as there are no quick fixes.
Secretary for Economic Planning and Development Winford Masanjala said this in an interview on Thursday after meeting the Budget and Finance Committee of Parliament over progress on the Public Sector Investment Programme.
He said the current foreign exchange shortages hinge on supply side issues, which means Malawi needs to produce goods and services that it can export to generate forex.
“At the moment, what it means is that if you do not have forex you cannot import certain things,” said Masanjala, citing cooking oil manufacturing companies which require forex to import raw materials.
He said as long as there are acute forex shortages, cooking oil shortages are inevitable.
“The issue for us is to ask, can these raw materials be found within Malawi, so that they will not require foreign exchange.”
Malawi has been reeling under foreign exchange shortages since the termination of a foreign exchange swap deal in 2020. Inflows from tobacco, the country’s main export crop, have also dwindled in recent years while international trade was hampered by the Covid-19 pandemic.
However, Masanjala admitted that Malawi’s desire and appetite for imports exceed its capacity to export; hence, the country perpetually runs out of forex.
He said government is looking at structural transformation where the country produces and export different goods and services.
Masanjala said: “That is why government is saying in the next year to three years, we need to have mines restarted in Malawi so that we can have alternative sources of forex.
“Whether you are an agricultural or mining country, is a choice you have to make. God did not make us an agricultural country, our ancestors decided to be an agricultural country, but what we are saying is that you can be an agricultural country, but diversify with mining, that is what we are going to do.”
On agriculture, he said government wants to diversify to have anchor and mega farms that will come on board in the next two to three years.
In a separate interview, acting chairperson of the parliamentary committee Paul Nkhoma, who is also Kasungu North North East legislator, asked government to seriously champion commercial agricultural investments to deliberately target exports.
H e c h a l l e n g e d government to learn from the current forex scarcity and plan ahead to avert future problems.
Figures from RBM show that Malawi requires $3 billion annually to meet imports requirements, but the country generates $1 billion in forex per year.
Each month, Malawi spends an average of $250 million for imports. Tobacco—the long time top foreign currency earner for Malawi—raised just $197.1 million last year.
