Talk of another Kwacha devaluation is sending a chill through an economy already struggling with high prices, with fears that another currency shock could make basic goods even more expensive.
Consumers Association of Malawi (CAMA) executive director John Kapito has warned that another Kwacha devaluation could pile fresh pressure on consumers, farmers and small businesses already struggling with rising costs.
Kapito said the country should carefully reconsider any proposal requiring another currency devaluation as part of the ongoing International Monetary Fund (IMF) Extended Credit Facility (ECF) negotiations.
He said Malawi had already experienced significant currency adjustments, including a 25 percent devaluation in May 2022 and a 44 percent devaluation in November 2023.
According to Kapito, the previous measures contributed to increased prices of food, fuel, fertiliser and other essential commodities, placing additional pressure on households and businesses.
“Another devaluation in less than three years risks imposing further economic pressure and hardship on Malawians,” Kapito said.
He argued that Malawi’s dependence on imported fuel, fertiliser, medicines and machinery means a weaker Kwacha would increase the cost of essential goods, with consumers and productive sectors ultimately bearing the burden.
Kapito said devaluation alone would not resolve the country’s foreign-exchange shortages, arguing that Malawi instead needs to increase production, diversify exports, promote value addition and ensure export earnings enter the formal financial system.
He also questioned whether the economic and social costs of another major devaluation would be proportionate to the resources available under the IMF programme, which he said is approximately US$175 million over 48 months.
Kapito said the authorities should therefore focus on reforms that address the structural causes of Malawi’s economic problems while protecting households, farmers, workers and small businesses from additional pressure.
