Malawi central bank economist upbeat of ‘long term gains’

Malawi’s recent policy changes by President Joyce Banda’s administration may in the interim appear pricey to ordinary citizens but the long term gains will compensate the losses, an economic expert has said.

Citing the 49 percent devaluation of the official Malawi kwacha exchange rate against the US dollar and the subsequent floatation of the exchange rate as some of the changes, the expert, Mary Nkosi, feels the policies have been put in place to create a better Malawi.

Nkosi, who is the Deputy Governor of the Reserve Bank of Malawi, was speaking at a business breakfast organised by Sunbird Malawi at Mount Soche Hotel in Blantyre last week.

Nkosi: Renewed optimism

“There will be short term costs but the long term gains more than compensate for the losses,” she told the morning gathering.

Nkosi said over the years, Malawi has lagged behind its neighbours in the sub-Saharan Africa with its share of regional exports to the world declining sharply in terms of the business environment indicators such as transaction costs and infrastructure.

As such, she said, adjusting the exchange rate regime was one of the measures to enhance the country’s international competitiveness.

“The bank recognises that further steps still remain to be undertaken, such as removal of structural bottlenecks that are retarding growth and diversification of the economy,” she said.

Renewed optimism

The economic executive said RBM believes that the private sector is an engine of growth in any economy “but for them to make any impact the bank would encourage that they improve on their efficiency in both resource mobilisation and allocation.”

While agreeing with the country’s administration that the biggest current challenge was revitalising the economy which has been on its death bed for the last few years, Nkosi remained upbeat that Malawi has a bright future.

“The good thing is that we know where things went wrong and if that were corrected, it is not too late to get back on a positive trajectory,” she said while applauding management of Sunbird for their
foresight in fostering discussions and debate on issues that affect our economy through such interactions.

She added: “It is through such fora that the intellectuals and business community in this country make enormous contribution to the policy making process. “

Meeting under the theme “Think Global, Act Local”, Nkosi observed that there was renewed optimism amongst Malawians, especially the business community to see that the economy is doing well and that most people have sufficient income for essentials and perhaps a little extra.

“We would want to see that businesses are hiring and jobs are relatively easy to get. We may, not have a job for everyone but we would like to see that everyone is well off,” she stated.

Nkosi observed that Malawi has come late in responding to problems being faced but there is a lot to learn from the neighbouring countries that went through similar situations and had responded.

“We are far behind some of the countries such as Zambia, Uganda, Tanzania and to some extent Mozambique who liberalised their financial sectors some time ago. It was also painful for each one of them but the pain did not last.”

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