Tobacco earnings Failing to impress
Despite registering improved revenue in the 2023 Tobacco Marketing Season, earnings from the main foreign exchange earner crop dubbed “green gold” remain below the country’s imports needs, data shows.
AHL Group data shows that earnings from the leaf has generated $273.62 million (about K291 billion) in the 17 weeks of the sales. This is a rise from $141.6 million (about K150 billion) realised during the same period last year.
Reserve Bank of Malawi (RBM) figures put the country’s monthly import cover at $250 million (about K266 billion) to satisfy the country’s needs of critical imports.
Experts say low earnings from tobacco confirm the need for a serious diversification drive to find a basket of crops that could supplement foreign exchange from tobacco.
Speaking in an interview yesterday, Malawi Agricultural Policy Advancement and Transformation Agenda (Mwapata) Institute executive director William Chadza said while tobacco is still playing an important role in the country’s total export proceeds mix, its contribution has been steadily declining over the years.
He said tobacco remains crucial to Malawi’s economic growth, but urged transformation, focusing on diversification, productivity and commercialisation.
Said Chadza: “We need to diversify the export base through creation and supporting additional export clusters such as legumes to supplement tobacco.
“It is a fact that many agricultural value chains have great unmet potential to address the challenges the country is facing.”
Agriculture expert Felix Lombe said reduced earnings from tobacco against what the country requires in terms of foreign exchange needs continue to confirm that tobacco needs to be complemented as a source of foreign exchange.
“Tobacco does not have to be completely phased out, but the introduction of alternatives needs to be done fast and in full scale and swing. Of late, soy, sesame, and groundnuts have proven to be good alternatives,” he said.
Lombe, who is a fellow at the African Research and Impact Network, maintained that the agro sector remains key to forex generation, adding that beyond production, agro processing needs equal attention.
Economic statistician Alick Nyasulu admitted that tobacco brings in a lot of foreign exchange, but said the earnings are not good enough.
Over the past years, Malawi’s annual tobacco earnings have been dropping from a peak of $410 million (K436 billion) in 2010.
