Forex shortage hits Malawi cement companies: Minister Gwengwe warns against price hike
A lack of foreign currency is causing the recent shortage of cement in import-heavy Malawi, according to Minister of Trade Sosten Gwengwe.
Gwendwe said on Wednesday that cement companies lack the necessary foreign reserves to maintain production.
Addressing the media in Lilongwe, Gwengwe warned cement traders against increasing prices beyond K7 500 which is recommended in the current prevailing economic situation.
The Minister’s remarks follow a meeting with cement manufacturing companies and importers that aimed to find solutions.
Gwengwe has warned that unscrupulous traders who are taking advantage of cement scarcity to raise prices will have their licenses revoked.
The Minister said cement producers such as Shayona Cement Limited, Cement Products Limited and Lafarge have not raised prices but traders are taking advantage of the situation.
Gwengwe said discussions with the Reserve Bank of Malawi have taken place to prioritise issuing forex to cement importers to deal with the challenge.
Recent weeks the local market has experienced rising prices of cement reaching up to about K10 000 per bag.
Malawi’s systematic decline in foreign exchange reserves has been a prevailing theme for years now, despite efforts from various parties to maintain the balance between supply and demand.
The nation could be in for intense hardships and desperately needs to build reserves back up for obvious reasons, but perhaps most significant is proving to foreign investors and donors alike that the corruption seen in the past will remain in the past.
For the time being, international aid is not a sustainable solution to foreign exchange woes, and the nation must prove that it has more to offer the world than just tobacco.
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May be the producers funded MCP-UTM into government then it’s Pay back Time .who knows.
Hon Minister some advise from a CEO of a cement company in USA. To minimise price, to maintain a standard price and to ensure continuity of supply. First only allow Lafarge to import cement. Second immediately introduce price control for cement.
No lame excuses.Peter Managed the economy without doners support,amid two disasters,.Fuel was everywhere, managed two elections built so many roads using our own money.Mwano mukumuchitira Peter.Mulungu atilanga nao.
Muziwona a tonse alliance simunati .Malawi mumamufuna mutalamula uja ndi ameneyi
This can’t be true, there are a lot of technocrats in the alliance who should be able to turn around the economy. Is the vice president not an economist who singlehandedly played his economic tricks to keep the telecom company alive? As always said, he is a practical man not a theorist. So within 2 months you guys have cleaned the coffers and brought the economy on its knees? Koma kumenekooo!!
Chitsime chimadziwika kuya/kuzama kwake chikaphweraaaaaaaaaa!@%*&””
Should we say it’s only DPP who know how to play the forex and Kwacha stability well? Is it through magic kapena school yawo ya economics ndi yosiyana ndi ya achina Gwengwe and Mlusus?I’m now getting worried. Be careful Tonse. We may soon start comparing the evil thieving government of DPP to the innocent Tonse government that is bringing misery to the populace.
Having Cement prices rise with K2500 within a month is a of point of concern and is showing that you guys have lost control of affairs already. You better tread carefully or we will have a president older than we can imagine. He will be 95 or so, being carried in a wheelbarrow when he bounces back in 2025
Honorable Minister,
You need to know that cement traders have fixed costs as well, which is distributed against the number of bags they sell.
If a trader sells 10,000 bags a month and has fixed costs of K3 million a month he averages K300 per bag as his fixed costs now this same trader can’t access 10,000 bags a month due to the shortages and only accesses 3,000 bags so automatically he has no option but to up the price of cement as his fixed costs has gone up to K1,000 per bag from K300 a bag plus he needs to add a margin for himself.
As Ujeni commented it’s all basic principles of economics which we feel you are aware of.
It’s not that traders are profiteering but they also need to cover costs.
I feel pegging prices in a free market is uncalled for.
You may consider lifting the import licenses on cement temporarily and allow all to import cement till the local manufacturers can supply the demand.
You will note 2 out of the 3 local manufacturers have increased prices on cement not only due to the forex shortage but also due to the fact that imported cement is in short supply, once the imported cement resumes in the market the local manufacturers will be forced to reduce their prices which they have increased exorbitantly.
Please consider suspending the import permit for a short period and see the drastic changes in cement prices.
tonse govt open borders to cement from zambia and tanzania. this will force companies to be competitive and reduce prices. how can malawi cement cost$10 a bag when sadc average is $5. profiterring wil only stop when markets are open to free and fair competition.
kwacha iphofomoke tsono. zachisoni
A Gwengwe traders are not taking advantage. Though the cement producers have not changed the price, production has gone down so prices have to go up because the demand is the same. Basic principles of Economics 101. The funny thing is you are very aware of the principles.
What you’re saying, Ujeni, is exactly what Gwengwe is saying. “Traders are taking advantage of the situation (low supply and same demand implies that demand has increased, therefore prices have risen as well)” Same difference, boss. Don’t teach Gwengwe economics.
so why is Gwengwe saying that they should peg the prices at 7500. Are we manipulating markets now. it can’t work. if the demand is high it’s high. if the retailer sells at 7500 a third party will still come and bulk buy to sell at the 10,000 because the demand is there.
it’s a free market. how can you peg the price at 7500. The forex problem is limiting production and the low supply is pushing up the market price.
Cement wa Chisale ndi mutharika uja watha muma warehouse amwenye ndichifukwa chake akusowa koma yaaa, paja DPP imati ili ndi forex reserve ya 6months ,
Yes, DPP left six months of forex reserve, but the Tonse Alliance guys have cleaned it in just two months. This government is a disaster.