Economics Association of Malawi (Ecama) has observed the need for the country to work together in promoting exports, in order to move away from over-reliance on just one export product, tobacco.
Ecama president, Edward Chilima said this on Wednesday when his organisation received a K500 000 donation from FMB to assist in the day to day running of Ecama activities.
Malawi relies on tobacco as its main foreign exchange earner, accounting for more than half of the earnings. The kwacha has been gaining in value for the past two months due to proceeds from tobacco, boosting foreign exchange reserves.
This year, the country is expected to realise about $300 million from the leaf which accounts for 13 percent of gross domestic product (GDP), up from last year’s $177 million when the country realised the worst output in 18 years at 79 million kilogrammes.
“We need to work towards promotion of exports, that is key; and therefore even the budget must start to show that we are trying to promote exports. Without export products the country will continue sailing in difficult times,” he observed.
The Ecama president agreed that the appreciation of the kwacha can largely be attributed to the tobacco proceeds.
“The appreciation of the kwacha is indeed largely from the tobacco proceeds, and as we are all aware, tobacco is seasonal. Somewhere in July/August, the tobacco auction floors will close, so naturally we would expect that the supply of forex will start to come down at that point. The question will then be, what happens after that? As long as there is no replacement for tobacco dollars then we should expect that there will be some movement in the dollar again, possibly going up again but that will largely depend on supply and demand,” he said.
He argued that if demand is not as significant then, the level of depreciation could also be managed, and that is where the monetary and fiscal policies come in.
Chilima therefore stressed the need for the country to start promoting other export crops because then as a country we would break the cycle on dependence on tobacco.
In an earlier interview, Ministry of Agriculture and Food Security (MoAFS) spokesperson Sara Tione indicated that the Government of Malawi is currently diversifying its agro-based economy to other agricultural enterprises such as groundnuts, soybeans, maize, sugar cane, rice, sweet beans, pigeon peas, cotton and dairy.