Malawi’s foreign currency struggles have sparked a fresh political battle, with questions emerging over who is benefiting and who is losing from the current system.
UTM president Dalitso Kabambe has accused the government of implementing a flawed exchange rate policy that he says is hurting exporters and benefiting importers, describing the system as “state-sponsored criminality”.
Kabambe made the remarks during an exclusive interview on Times Television on Saturday, where he criticised the decision to maintain the official exchange rate at K1,751 to the US dollar.
The former Budget Director in the Ministry of Finance argued that fixing the exchange rate has created distortions in the forex market, as importers access foreign currency through banks at the official rate while selling imported goods based on higher parallel market rates.
“You are encouraging imports and discouraging exports,” Kabambe said.
He said businesses that export goods are disadvantaged because they receive payments converted at the official bank rate despite facing production costs influenced by the parallel market exchange rate.
Kabambe cited tobacco farmers as an example, saying they buy inputs such as fertiliser at prices reflecting a higher exchange rate but later sell their produce using the official exchange rate.
“Actually, I always say this is state-sponsored criminality. You are penalising your own people who are producing goods in this country and exporting them because they have no choice but to use the exchange rate from the banks,” he said.
Kabambe further accused the government of mismanaging foreign exchange, arguing that proper coordination of fiscal, monetary, and exchange rate policies is needed to address inflation and reduce pressure on the parallel market.
He also alleged that government spending has contributed to increased demand for foreign currency, describing the administration as “the biggest culprit” in forex challenges.
Beyond forex issues, Kabambe criticised what he described as excessive public spending, including the K88 billion allocation to the Office of the President in the latest budget.
He also raised concerns over higher education financing, saying many students in public universities come from poor households and struggle to meet tuition costs.
