University of Malawi’s economic expert Jacob Mazalale has described Wednesday’s 44 percent devaluation of the kwacha as being long overdue.
Mazalale, a former Head of the Economics Department at the University of Malawi was speaking in an interview on the side-lines of the Economics Association of Malawi (Ecama) Annual Conference, currently underway in Mangochi.
According to Mazalale, Malawi has been living in an illusion for some time and it was very clear that the local currency was misaligned and needed to be devalued.
He said going to the bank, it was very rare to find the dollar at the official rate of K1180.
Mazalale says while prices of goods and services are likely to go up, they should stabilize in the near future.
Malawi has approved devaluation of 44% on Thursday, bringing the total devaluation during President Chakwera’s 3 years’ period in power to 78%.
During the Kamuzu Banda reign, the Kwacha sustained its power trading one-to-one with the United States Dollar.
Soon after attaining democracy under former President Bakili Muluzi, the Malawi Kwacha faced a series of devaluations throughout a 10 years’ period which accumulated to 5000% when Muluzi was leaving power. Muluzi left the Kwacha trading at K50 to US$1.
During Bingu wa Mutharika who took over leadership from Muluzi, the Kwacha depreciated further, trading at K350 for US$1 representing 600% devaluation across 8 years’ period.
Bingu’s successor, Dr. Joyce Banda devalued the Kwacha with 43%, making it to trade at K450 to US$1 in a space of 2 years when she was in power.
Former President Professor Peter Mutharika stayed in power for 5 years during which he devalued the Kwacha further to trade at K950 to US$1. This represents 110% devaluation under Mutharika in 5 years.
The incumbent President, Dr. Lazarus Chakwera, has devalued the Kwacha to trade at K1700 to US$1 representing 78% devaluation.