Reserve Bank of Malawi devalues Kwacha with 25 percent

Reserve Bank of Malawi RBM has devalued Malawi Kwacha with 25 percent

RBM governor Dr Wilson Banda says the devaluation of the Kwacha has been made due to shortage of foreign exchange

Banda said in the short term the kwacha exchange rate adjustment may add pressure on inflation

However he said the adjustment should make it easier for companies to manage their businesses and strengthen economy

“In the medium and long term it is expected that production and consumption will change towards increased exports and reduced imports hence increased foreign exchange reserves,” Dr Banda

10 years ago Malawi also devalued its currency with 49 percent which saw up to 50% increase in prices of goods and services.

Commenting, one of the economic experts in the country Dr Ben Kalua says the decision will only help to sort scarcity of forex in the country through pricing

“It is high time the country reconsidered its prioritized export products,” Dr Kalua

Meanwhile cross boarder business operators have expressed sadness with continued economic challenges affecting Malawi’s economy.

One of the cross boarder business operators Joy Mamu said she has been realizing meager profits due to shortage of forex which is now being bought at a higher price.

She expressed further fear with the devaluation towards promotion of her business.

Malawi Union for Informal Sector MUFIS president Hajj William concurs with Mamu saying “shortage of forex has affected cash flow of the cross boarder business operators.”

William however requested government to conduct capacity building trainings on the impact of the devaluation on business operators.

Meanwhile, Malawi revue Authority MRA has admitted that shortage of forex will put pressure on revenue collection.

MRA commissioner general john Biziwick said 30% of tax payers are business operators who require forex to make their businesses transactions.

Biziwick however was quick to say the authority has put in place various measures to boost revue collection and meet its target.