HomeBusiness and FinanceUndule weighs in on kwacha devaluation, outlines hopes and opportunities

Undule weighs in on kwacha devaluation, outlines hopes and opportunities

Governance and Human Rights Expert Undule Mwakasungula has weighed in on the trending reactions to the decision by the Reserve Bank of Malawi (RBM) to devalue the local currency – Malawi Kwacha – by 44 percent against the United States dollar (USD).

Mwakasungula, just like other social and economic commentators such as Betchani Tchereni and Ken Msonda of the Democratic Progressive Party (DPP), has backed the fall of the currency, stressing that it heralds the beginning of the journey of hope and opportunities.

He condemned the remarks by former Vice President Dr. Cassium Chilumpha, who advocated for the current government’s removal, arguing such sentiments are ill-advised and could potentially lead to unrest. 

“Such calls are unwarranted and could disrupt the nation’s stability, which is crucial during these challenging times. It is essential that all political discourse and actions remain constructive and focused on the collective well-being of the country.

“As Malawi is going through this economic phase, it is more than just managing a currency’s valuation; it is about steering the nation towards self-reliance, economic growth, and stability. By focusing on local industry strength, agricultural investment, and maintaining a unified stance, Malawi could turn these challenges into stepping stones towards a prosperous future.  Important to understand that while the immediate effects of the Kwacha’s devaluation pose serious challenges, they also serve as a way for essential economic reforms and progress.  This phase in Malawi’s economic journey, therefore, is not just a challenge to be overcome but an opportunity to build a more self-reliant and prosperous future,” he said.

The revered and fearless human rights fighter and defender further argued that the devaluation of the kwacha must not be looked merely as a financial statistic, but as an important time in Malawi’s economic journey.

He says the change, though has brought immediate challenges such as an increase of basic commodities and other essentials, also holds within it the seeds of long-term potential benefits.

“Malawi, as a nation is currently navigating through a challenging but critical economic chapter following the devaluation of the currency, the kwacha, against the USD. This is a trying moment in Malawi’s history, but while initially appearing challenging, is in fact a moment with potential opportunities, a testament to the nation’s enduring spirit and capacity for growth,” he wrote in his statement shared with us.

Mwakasungula: The devaluation is a genesis of hope

But Mwakasungula was quick to recommended that radical measures should be put in place to cushion the poor by, among others, strengthening local industries, thereby reducing reliance on imports.

He said this could be achieved through targeted incentives and support for small and medium enterprises, which he said are also the bedrock of Malawi’s economy.

“Simultaneously, it is crucial to focus on diversifying the agricultural sector, which forms the backbone of the nation’s economy. While continuing to support tobacco production, a major export earner, expanding into other crops and agricultural products will reduce economic vulnerability and create more stable income sources for farmers. This diversification not only helps in balancing the nation’s exports but also ensures more sustainable agricultural practices and a more resilient economy.

“To cushion the impact of currency devaluation on the poor, a government must implement immediate support measures.  Implementing these measures promptly could help mitigate the immediate hardships faced by the poor due to the devaluation, while also laying the groundwork for long-term economic stability and growth. Furthermore, educating the public about the long-term gains of supporting local products and understanding the benefits of devaluation is vital in fostering a supportive and resilient national environment,” said Mwakasungula.

Mwakasungula stated that while the shocks the devaluation has brought are huge, Malawians needed to exercise patience and perseverance, saying the path to economic stability and growth is usually be gradual though attainable with collective resilience and understanding.

He said it is high time Malawians came together, acknowledging the potential within these challenges and working collaboratively towards a brighter future.

“In such times, the role of unity and constructive engagement cannot be overstated. Inciting negativity and unrest, particularly against the government due to the economic situation, could lead to instability, which would only serve to deter potential investors and harm the economy further. Constructive engagement, including input from the opposition and all sectors of society, is crucial in navigating these challenges effectively. Respecting the democratic process is another cornerstone in this journey. While criticism and accountability towards the government are necessary, it is essential to respect the institutions and processes that uphold democracy. Calls for undemocratic regime changes, particularly before the 2025 elections, are not only unproductive but potentially harmful, risking the progress made so far,” he said.

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