By Chisomo Phiri
United Democratic Front (UDF) president Atupele Muluzi has warned that Malawi cannot overcome its economic challenges without urgently addressing the country’s foreign exchange crisis, saying the shortage of forex is fuelling problems ranging from fuel shortages and rising prices to unreliable electricity and youth unemployment.
Muluzi made the remarks in a message to Malawians on Monday in which he acknowledged President Arthur Peter Mutharika’s recent address and some of the progress highlighted by the government, but said Malawians must also confront the economic difficulties they continue to face.
Atupele Muluzi
He cited fuel shortages, rising prices, unreliable electricity, shortages of medicines, struggling businesses and a lack of employment opportunities for young people as some of the major challenges facing the country.
“At the heart of many of these problems is the forex crisis,” said Muluzi.
He said Malawi requires about US$3.3 billion annually to meet its needs for fuel, fertiliser, medicines and other essential imports, but generates only about US$1 billion from exports.
Muluzi said this leaves the country with an estimated foreign exchange gap of about US$2.3 billion.
He further pointed to the wide gap between the official and parallel market exchange rates, saying the official rate is around K1,800 to the US dollar while the parallel market rate is about K4,000.
The UDF leader argued that the disparity contributes to forex shortages, discourages investment and increases the cost of essential goods.
Muluzi welcomed reports that government is negotiating with the International Monetary Fund (IMF) and World Bank, but said Malawi must go beyond securing external financial support by addressing the exchange rate and increasing its foreign exchange earnings.
He said his proposed ‘Business First’ plan calls for the careful liberalisation of the exchange rate, supported by measures aimed at attracting investment into key sectors of the economy.
These sectors, he said, include mining, energy, tourism, agriculture and manufacturing.
“We cannot continue borrowing our way out of the crisis. We must produce more, attract investment and create opportunities for our young people,” said Muluzi.
He said Malawi’s young people need jobs, reliable electricity, fuel, affordable medicines, investment and hope, arguing that the country has the potential to reverse its economic difficulties if difficult decisions and reforms are implemented urgently.
Muluzi also sought to frame the issue beyond partisan politics, saying the economic crisis affects the country as a whole.
“This is not about politics. It is about the future of Malawi,our future and the future of our young people,” he said.
Malawi has in recent years faced persistent foreign exchange shortages, which have affected the importation of fuel, fertiliser, medicines and other essential commodities.
The shortage of foreign currency has also contributed to pressure on businesses and consumers, while the gap between official and parallel exchange rates has remained a major concern in discussions about the country’s economy.
Malawi’s economy is heavily dependent on imports for many essential goods, while its export base remains relatively narrow.
Key foreign exchange earners include agricultural commodities such as tobacco, tea and sugar, alongside other emerging sectors.
