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As the country continues facing a forex shortage, CDH Investment Bank (CDHIB) has implored key players in the economy to give urgent attention to export development, which can lead to generation of foreign exchange.
In a press release on Monday, November 21, the leading investment bank’s Chief Executive Officer (CEO), Kwame Ahadzi said Malawi has a lot of exporting opportunities that are currently underutilized.
“We have been producing soya, sugar, cotton and other top agricultural crops for export but these are mostly produced in small quantities,” said the CEO.
“We believe an investment in the agribusiness and other sectors could largely contribute towards the foreign exchange generation in the country.”
He added that the country’s foreign exchange reserves continue to be under pressure due to the dwindling of gross domestic product (GDP) and therefore requested official and private sector reserves, Malawi’s economic players, public and the private to implement forex generation activities in order to improve the forex situation in the country and support economic activities.
He also urged the country to implement deliberate efforts for imports substitution while developing exports which can be realized through industrialization and tailored and efficient technological development to accelerate production and value addition.
“Malawi has suffered severe forex shortages, especially this year, in addition to the devaluation of its national currency,” he said. “To fix the forex exchange shortages, measures looking to address both the demand and supply side of foreign exchange need to be adopted.”
According to the bank, the country has over the years been depending on its main cash crop, burley tobacco to generate forex. However, in recent years Malawi has invested in tea, sugar, and soya beans in a bid to diversify its exports.
Meanwhile, the forex shortages have resulted in shortages of essential products including fuel and rising costs of consumables.
Last week, former Reserve Bank Governor, Dalitso Kabambe wrote on his Facebook page that “Malawi economy is crumbling, the Gross Domestic Product (GDP) is sluggish and falling with each year — tanking to a paltry 0.9% as of this year”.
“In 2019 it was at 5.5%. In 2021, it dipped to 1.2%. This year, it is such an uninspiring figure. This is against annual population growth rates of 3.0%.
“What does this mean? Our economy is failing to sustain the livelihoods of Malawians let alone providing for new entrants. Simply put, each passing year since 2020, more and more Malawians are being relegated into the abyss of abject poverty.”
Also last week, Consumer Association of Malawi (CAMA) maintained that Government should come up with sustainable multiple sources of generating funds other than over reliance on borrowing or grants in order to have a sustainable smooth and effective economic recovery plan.
In a statement on Wednesday, November 16, CAMA Executive Director, John Kapito trashed President Chakwera’s announcement of a new funding program under the Global Climate Change campaign — the Carbon Tax Credits — saying this source of funding “is disturbing, humiliating and worrisome for the State President to start promising people about such type of funding towards economic recovery and poverty reduction”.
He said: “It is shocking that Government has failed to identify other sources of funding apart from its pursuit for an International Monetary Fund (IMF) facility. We cannot commit the whole nation to one expensive source of borrowing which will not even recover the economy.”
Kabambe also echoes Kapito on domestic borrowing, who expressed dismay on this trend, saying “Government has resorted to over borrow domestically and from any other source it can find money without any consideration or plans on how such loans will be repaid”.
He went further to say the effects of “such negligent borrowing on poor people such as high inflation is resulting in high prices of goods and services and it’s unfortunate that most of the high debt is as result of Government appetite for non-productive activities that can’t grow or recover the economy”.
Kapito reminded the President that CAMA has on several times appealed to Government “to invite and engage key local stakeholders from all sectors of economy to a national economic recovery conference to discuss and find solutions over the current economic challenges”.
He said that suggestion “has been rejected and the economy continues facing serious challenges with no sign of recovery”.—Additional reporting by Duncan Mlanjira, Nyasa TimesFollow and Subscribe Nyasa TV :