Devalue kwacha to raise tobacco prices, experts urge Reserve Bank of Malawi

Economics and agricultural experts are urging the Reserve Bank of Malawi (RBM) devalue the kwacha during this tobacco selling season to raise up the dwindling leaf prices that has put farmers in anxiety.

Kalua for devaluation during tobbaco season, Gondwe (right) says nope

Kalua for devaluation during tobbaco season, Gondwe (right) says nope

Poor start on tobacco sale at Lilongwe Auction

Poor start on tobacco sale at Lilongwe Auction

Professor of economics at Chancellor College Ben Kalua said the government, through the Reserve Bank of Malawi should consider devaluing the kwacha to help tobacco farmers realise better tobacco prices.

He said the tobacco industry is the back bone of the agriculture industry therefore hurting it through unfavourable tobacco prices would further cripple the already sick economy.

Chairman of the Agriculture committee of parliament Felix Jumbe said his committee has since been granted a meeting with the Reserve Bank governor Charles Tchuka and his officials on the same issue.

“We have been seeking a meeting with the governor and finally we have been granted, probably we will meet him next week. We want them to consider a devaluation to raise the tobacco prices which are now pathetic. I hope they will understand our point,” said Jumbe who had been waging a lone battle against the appreciation of the kwacha just before the auction floors opened on Wednesday.

As of Thursday, two days into the selling season, the highest leaf fetched US$1.54 per kilogramme and the lowest was at 80 cents per kilogramme.

President of Farmers Union of Malawi says the farmers did the farming nd took huge bank loans when the kwacha was trading K1000 against the dollar but now it has appreciated to US$600 which means the farmer is making huge losses.

Central bank officials were not available for comment but in earlier interviews Finance minister Goodall Gondwe ruled out devaluation of the kwacha.

He said the devaluation of the kwacha cannot be the only solution to the low tobacco prices as it will as well affect other sector of the economy and would make all efforts to fix the economy worthless.

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21 thoughts on “Devalue kwacha to raise tobacco prices, experts urge Reserve Bank of Malawi”

  1. Funzo says:

    Hasn’t it fallen enough? This is economic nonsense. Experts?

  2. Mphatsoh says:

    U r not serious. Where r u from? Do realy know what you are talking about or you have gone astray from your proffession? Shame on you.

  3. therere says:

    are you a true professor?

  4. therere says:

    economically that is not right, the best is for the buyers to offer better prices

  5. munyane says:

    That’s chicken thinking, chicken brains !!!!!

  6. johnbwanyama says:

    What difference does it make to request buyers to offer good prices such as 3dollars and above that translates to more kwacha if one goes to bank. Currently the dollar is 1 to 690, so if u farmers get 3 dollar upwards i hope they will get same kwachas. Hot debate, what do u think those who advocates for devaluation other than thinking otherwise.

  7. Trendex says:

    THE MEANING OF DEVALUATION IS TO MAKE WHAT YOU WANT TO VALUE USELESS. THE QUESTION TO BATTLE WITH IS ‘WHY IS OUR KWACHA STRENGTHENED ONLY DURING TOBACCO SALES AND FLOPS AFTER THE SALES?’ IF THIS QUESTION IS ANSWERED, THEN BE THINKING OF DEVALUATION [IF IT CAN WORK IN THOSE LINES OF THOUGHT]. I AM NOT AN ECONOMIST BUT TO DEVALUE WILL MEAN EVERYTHING WILL GO UP. WHAT ABOUT THOSE WHO HAVE NO TOBACCO? THINK TWICE, ACT ONCE AMALAWI.

  8. Invisible Hand says:

    I though you have been saying our Kwacha is under a floating regime? Why then some people are suggesting text book type of managing the Kwacha? Why should you devalue? This is real short sightedness among the proponents of the devaluation. Mungopasana u profferssor eti? Madyabu apezi.

  9. Lovey says:

    Do you mean devalueing Kwacha for the sake of tobacco farmers only id meaningful?What about the welfare of poor Malawian tax payers.kugwa kwa kwacha result yake moyo kulimba pa Malawi.Mwatani kodi?

  10. Ze Roberto says:

    Devaluation of the Kwacha is just one of the curative if not rehabilitative measures. They are desperate solutions in desperate times. The only viable or long term term solution to an economy is the establishment or expansion of a country’s manufacturing base. Any country that is a net importerror will remain in the third world bracket. That is plain truth. Since 1993 which coincided with multiparty dispensation Malawi has witnessed more closure than opening of companies because of selfish politicians who did everything to suffocate companies for their personal gain. I hate it.

  11. Nchanga wa Nchenga says:

    Alimiwo adzigulira2 zipangizo za ulimi ndalama ikapanga starbilise, but why should they make the whole country to continue suffering?

  12. The Analyst says:

    O………………………………………………………………………………………………………………………………………………………………………………………………………………..O
    These people are just called experts for being so long in the system; otherwise what they say lacks sense most of the times . . .

    First . . .
    . . . The reasons being advanced for the devaluation; are too shallow and narrow for the expert-accolade they are accorded.
    . . . Exchange rate is the single most important variable for inflation in Malawi. The immediate effect of a devaluation thus, is butt-biting inflation which shall affect the whole population including those farmers.
    . . . The inflation (from devaluation) will wipe out the gains which the farmers reap from increased revenue.
    . . . Sadly, this would have a negative real benefit for the farmer coz the negative impact of inflation is far greater than positive impact of increased revenue as per empirical research; hence a net loss for the farmer if devaluation is effected?

    In short, your narrowness of mind is quite strange for the experts you are mistaken for.
    …………………………………………………………………………………………………………………………………………………………………………………………………………………
    Second . . .
    . . . Malawi is a net importer of goods and services (we import more than we export). This means that it’s not just the farmer that will lose out but also the whole country.
    . . . And even if we broaden the focus and aim at increasing the country’s level of foreign exchange reserves from tobacco proceeds, we don’t need to devalue the Kwacha but appreciate it so that we get more dollars for each unit of the Kwacha.
    . . . On a lighter note, what will these farmers do when their income increases, if not marry 10 wives and kulawa tiatsikana tonse ta mmudzi? So you need to increase income for such few people at the expense of the rest?

    It’s a wonder how you guys came to be known as experts COZ your minds seem muddled.
    O………………………………………………………………………………………………………………………………………………………………………………………………………………O

  13. Kalowa says:

    Koma is this professor really serious? School yake adachita kuti? Chicken type of thinking!

  14. vavlov says:

    I cant believe even with poor tobacco performance in the marke, Malawians still grow tobacco. Its time farmers diversified and considered other crops.

    So many agencies charge levies on tobacco (e.g., TAMA, ARET, Tobacco Control Commission, etc), so besides appreciation of the Kwacha, farmers are swindled big time. This is thangata at its worst.

  15. Konko Konko says:

    Professor Kaluwa and Jumbe u r very stipid, what about the ordinary poor people who are struggling to buy basic needs while the kwacha is @ K670, what about if the Malawi kwacha is devalued? If the kwacha is devalued, prices of goods on the market will be very expensive. You r tobacco farmers that’s why u r talking all these nonsense, go to hell.

  16. Gunnery says:

    No! How can we devalue the Kwacha for short term reasons such as putting more money in farmers use, ignoring other sectors of the economy like industrial production that has suffered long due to devaluation of Kwacha in the past months.

  17. Mbereka says:

    So economists would rather have the rest of the population suffer because of tobacco farmers. Are they sure that this call for devaluation is for the Malawians in general or for the chosen few? We have already suffered enough with this animal called devaluation. Please do not torture us further than what this economics baby has already done. Please Mr. Charles Tchuka, do not listen to these economists. Raising the prices of tobacco can not be a good reason for devaluing the Kwacha. Reserve Bank of Malawi does not serve only economists and tobacco growers. Consider the plight of the local poor. Consider also those who purchase items from outside Malawi. You are hurting us hard with this devaluation. Also consider those who pay school fees outside country and even within Malawi in some institutions which although to charge in foreign currency do so. Please do not talk devaluation.

    1. chikopa says:

      Kkkkkkkkkkkkk! This is what we call our professors in Malawi. I was baffled to see inauguration of Professor Khomba who uttered nothing but grade 2 expertise which is not worth any salt. Malawian professors just interested in dressing up in robes with no contribution whatsoever. Let the Kwacha find its own value against major currencies after all farmers do buy farm inputs soon after selling their produce.

  18. Yohane luweya says:

    You greedy experts, what are going to do with employees? You have never supported civil servants pay hike! You always give negative effects on economy. Why this? You need also to think of what happens to lowly paid servants. Not all of us are tobacco growers and that we will benefit from your proposal. Get away with your childish economic advice. The government is going in the right direction. Do not mislead it.
    Thank you.

  19. Tengu says:

    Whose interests are the captains of the currency called Malawi Kwacha serving???

  20. golo says:

    What is the rationale behind devaluation? Is it going to help the economy rather than just trigger demand-pull inflation? What sort of Economics is this?

Comments are closed.