The President of Malawi, Joyce Banda announced that she will not reverse the devaluation process of the major currency of the country, Kwacha. Her decision makes it clear that she has not been influenced much by the consumer groups’ planned rallies to be started from mid-January, to protest the soaring costs. She added that if the floatation process is stopped now, that will be suicidal for the economic prospects of the country. She urged her countrymen to stay patient in the meantime.
On 7th May, 2012, Malawi Government devalued the major currency by one-third against the greenback. Incidentally, Banda took the office in April and she agreed to let the exchange rate float to meet certain conditions which are set by the International Monetary Fund. Since that time, Kwacha has experienced a total decline of 26% and is at 326 per USD currently. Kwacha is actually the worst performing unit in the entire African region. The inflation rate in this Southern African country has also increased to 33% in November. It was actually at 30.6% in October.
Banda also commented that she understands that devaluation of the currency has brought suffering for the people of her country. She added that the decline, on the other hand, has helped the exporters big time as they are now able to earn more. She gave an example of the tobacco growers as well. Incidentally, tobacco growers, for the 1st time in a long period, have been able to benefit a great deal from the crop and this is a direct result of the devaluation process. Banda added that her country’s export base is very small and hence, the country has been hit so hard by the currency devaluation process.
The food shortages in Malawi in 2012 are a big concern for the Government, as described by Banda. She said that food shortages have added to the woes of the consumers. Incidentally, statistics suggest that around 2 million Malawians don’t get food and as a result, the Government has decided to increase the aid for the vulnerable families.
The Consumer Association of Malawi has decided to conduct mass demonstrations on 17th January to show their protest against the rising prices. The group has also demanded Banda to cut her budget on travel and vehicles, thereby, reducing the overall Government spending to help the country’s sagging economy.