Malawi economy is on the right path-MCCCI

Applauds Chakwera for “decisive economic policies”

By Senior Business Editor 

The Malawi Confederation Chambers of Commerce and Industry (MCCCI) has hailed President Lazarus Chakwera for his recent tough but “decisive” economic policies which it says are now yielding the domestic economy massive dividends.

Speaking Friday night at Sanjika Palace during a Presidential dinner for business captains, MCCCI President Lekani Katandula said the recent decision by government to devalue the local currency, the Kwacha, against major international currencies-notably the United States Dollar-is now unleashing so many positive economic multiplier effects into the economy.

Said Katandula:” I applaud you His Excellency for taking such a bold decision.As a result, we immediately qualified for a new ECF (Extended Credit Facility) and also we have seen resumption of direct budget support.”

Malawi government devalued the Kwacha on November 8,2024 by a magnitude of 44 percent.

The policy stance drew alot of mixed reactions in the public domain but was widely commended by the donor community including one of Malawi’s major multilateral creditor, the International Monetary Fund (IMF) which immediately granted Malawi a new four-year ECF worth 174 million US dollars.

As if that was not enough, many other donors including the World Bank announced several other foreign exchange injections including direct budget support, first of its kind since 2017.

Katandula said although foreign exchange situation has not yet fully stabilised on the market, the chamber is aware that the country is now “on right trajectory.”

He said the private sector still has a huge backlog of foreign exchange on the back of huge demand for the commodity.

Katandula said at it stands, the private sector is taking a conscious stance following the devaluation, explaining that they cannot fully increase renumeration bills as it would increase inflationary pressures in the economy.

He also bemoaned lagged effects of external shocks in the economy citing devastating impacts of Cyclone Freddy, war in Ukraine and other previous tropical storms which he said hit the economy at a time when the economy was beginning to recover.

Speaking separately, NBS Bank Chief Executive Officer Kwenele Ngwenya, whose bank sponsored the dinner, said the role of the business community including banks cannot be overemphasized.

Providing statistics, Ngwenya said last year, the economy saw a massive improvement in the trade gap from minus 1.7 billion Us dollars to minus 350 million Us dollars, representing an 80 percent slump.

But he clarified that the reduction was mainly due to a decline in imports and not necessarily due to increase in exports, “hence the need for a focused strategy to boost exports.”

He applauded the central bank, Reserve Bank of Malawi (RBM) for creating a conducive environment, emphasizing that their role as the private sector is to create innovative business models to generate more foreign exchange.

Addressing the business captains in a brief speech, President Chakwera urged the business community to think outside the box and start proving tangible solutions to economic problems gripping Malawi.

“Break those boxes, I hear answers almost every where I go but little solutions to our problems, let us change,going forward” said Chakwera.

During the dinner, Partha Dutta presented a gift of locally grown products processed by ETG.

Malawi is consuming 250 million Us dollars worth of foreign currency every month which translates into a annual import bill of 3 billion Us dollars.