Malawi in meltdown: PAC presented with factbox of distressed economy

Malawi Confederation of Chambers of Commerce and Industry’s (MCCCI) chief executive officer  Chancellor Kaferapanjira has highlighted that Malawi is plunging into an economic meltdown and that the private sector is  in distress with the weakening of Kwacha currency, rising inflation and interest rate.

Kaferapanjira was speaking at major conference organised by quasi-religious grouping the Public Affairs Committee (PAC) is in Blantyre where a cross-section of Malawians is discussing the future of the country with is facing economic crisis.

Making a presentation on the Economic impact on the Business Community, the MCCCI boss accused the Peter Mutharika government’s borrowing, saying it has led to high interests rates; as a result, businesses are not growing.

He said inflation continued to rise and has now reached 25 percent, a calculation of unusual precision for an economy in chaos.

“Inflation rate is at 25%, somebody is stealing from your pocket. From your K1000, government gets K250,” Kaferapanjira said in his factbox showing how the economy has declined and the difficulties suffered by ordinary Malawians.

He also pointed out that Malawi Kwacha currency which has weakened to dollar almost $1 to K900 is virtually worthless.

Kaferapanjira criticised the country’s financial plan.

“We have a national budget that is not able to provide needs to the population, government seems not concerned,” he pointed out.

Kaferapanjira also dealt a big blow to government’s strategy to beckon foreign investors, when he noted that “Malawi has no conducive environment for business.”

He cited Escom increasing tariffs for electricity “yet load shedding everyday.”

Kaferapanjira also told the conference that government owes the sector “huge sums of money” but expect the same private sector to create jobs for citizens.

“Government has stolen a lot private sector. It is in distress, it doesn’t know which button to press,” said Kaferapanjira.

In his presentation, Finance Minister Goodall Gondwe admitted that the problems are high interest rates, volatile exchange rate and inflation.

“Kwacha was left to float,” he noted, adding: “We let market forces to control the kwacha, we do not have enough reserves to control inflation now.”

Said the Finance Minister: “Nobody, not even the President can control inflation and increase in interest rates.”

On accusations of borrowing, Gondwe said government has reduced from borrowing K25 billion a month to K4 billion a month.

“We are trying hard,” he said.

Making a presentation titled Economic Situation in Malawi, Economists Association of Malawi president; Henry Kachaje observed that there is growing inequality in Malawi due to policy choices, huge gap between the poor and the rich.

“Every President leaves office after depleting state resources; predecessors always say they have found nothing,” said Kachaje.

He said Malawi has “a single misfortune of elevating thieves to higher positions.”

Kachaje said another issue of concern is the way resources are used, so little spent on development, yet so much spent on consumption.