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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Funzo
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Funzo
5 months 3 days ago

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

Mphatsoh
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Mphatsoh
5 months 6 days ago

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.

therere
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therere
5 months 7 days ago

are you a true professor?

therere
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therere
5 months 7 days ago

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

munyane
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munyane
5 months 7 days ago

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

johnbwanyama
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johnbwanyama
5 months 7 days ago

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.

Trendex
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Trendex
5 months 9 days ago

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.

Invisible Hand
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Invisible Hand
5 months 10 days ago

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.

Lovey
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Lovey
5 months 10 days ago

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?

Ze Roberto
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Ze Roberto
5 months 10 days ago
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.
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