By Kingsley Jassi:
With commodity prices getting out of control partly due to loss of value to the Kwacha, some experts have called for sophistication in how the economy is managed.
Seasoned businessperson and industry leader, Fredrick Changaya, said there is low sophistication at the high level of economic management, leading to policy deficiencies.
“As a country we’ have not been sophisticated enough to manage the sequence of economic growth. We need that at policy level,” Changaya said.
He cited how the country missed an opportunity to avoid the current inflation by failing to import cheap maize from Zambia last year to cushion the country’s eventual supply shortfalls.
Changaya said the country should begin to be serious on the issue of industrialisation by targeting interventions to strategic players in the economy to produce at optimum levels, welcoming the forex interventions that have been pledged to some businesses.
“ Policy instruments should speak to each other and must all support the industrialisation agenda to ensure forex generation and demand management,” he said.
In an earlier interview, economist Lesley Mkandawire pointed to a possible worsening of the situation.
He banked hope in a fiscal policy that would aim at reversing the import demand and lowering the deficit to calm prices that he described as worrisome.
The government has since pledged to inject some forex into businesses that are importing crucial items in a bid to sustain their operations and curb rapid increase of prices.
This manifests a growing crisis at the time reserves are apparently low, further limiting access to forex on the formal market and pushing more businesses to access it at the parallel market at a high cost.
With the black market rate continuing to soar above K4, 000 per US dollar, this has increased the price surges and vendors in Lilongwe went on the streets to force the authorities to calm the situation.
Minister of Industry and Trade Sosten Gwengwe said there would be some strategic injection of forex into some businesses that import essential items as a measure of reducing their cost of imports.
“There are some measures that will be employed to address the challenge interms of access to forex and that include making some provisions to some businesses. That will reduce the cost of importation and will have to impact on retail prices because importers will have no exchange,” Gwengwe said when he met the vendors.
On Monday, a high level meeting, including officials from Reserve Bank of Malawi (RBM), Ministry of Trade, Ministry of Justice, National Intelligence Authority, Financial Intelligence Authority, among others, discussed ways of addressing the forex situation, tackling the issues about parallel market, exchange rate measures, among others.
RBM Governor, Macdonald Mafuta Mwale, cited social media speculation as one of the key driver behind the market distortion.
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