Economic experts and industry captains have predicted another shortage of foreign exchange which would threaten the economic growth.
In its half year financial statement for the period ending June 30 2020, Standard Bank plc indicates that the economy will face a shortage in foreign currency supply among others.
“The exchange supply is expected to remain weak which will continue to exert pressure on the Kwacha. The impact of the Covid-19 on supply chains and the exchange rate dynamics will have a strong influence on the direction of the inflation and interest rates,” reads the statement in part.
However, the bank says it has registered an increase in profit after tax by 56 percent to K12.75 billion and grew its assets by eight percent compared to the same period last year.
Economists Association of Malawi (Ecama) holds that reduced production of Malawi’s main export crop tobacco will aggravate the situation.
In an interview, Ecama President, Lauryn Nyasulu, said she believes that the development will lead to a depressed economic growth.
“We need to work towards making sure that we stimulate the economy, a lot needs to be done in the coming budget to empower Agricultural Development and Market Corporation (Admarc) and National Food Reserve Agency (NRFA) to make sure that economic activities around agriculture are sustained,” Nyasulu said.
Dean of Commerce at the Polytechnic, Betchani Tcheleni, added that the trend will result in the widening of the country’s trade balance.
”We have to think about our own internal arrangement because depending on what other economies are doing, will only collapse us further. Let us think about things that we can produce within the country which will increase forex and employment,” Tchereni said.
This is devastating news as the country has a history of foreign exchange shortages in 2011 when donor partners cut off aid to the country resulting in fuel shortages and weakening of the local currency.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.
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