Malawians, already bruised by escalating commodity prices, should brace for even harder times as the Minibus Owners Association of Malawi (Moam) are preparing a 100 percent fare hike due to a similar hike in insurance premiums.
Moam secretary Coxley Kamange confirmed the development in an interview on Monday.
A 100 percent increase in bus fares means that commuters will now have to cough K3 000 ($18) between Blantyre and Lilongwe, up from K1 500 ($9).
Kamange said the significant jump in insurance premiums, effective January 1 2012, has left them with no option but to raise the fares.
“Before the increase, we were paying K59 000 ($352) to insure a minibus at the now liquidated Citizen Insurance Company and K82 000 ($491) and K130 000 ($778) at Prime Insurance for Moam members and non- members, respectively.
“With the increase, we now have to pay K221 000 [$1 323] to ensure the minibus. This is not sustainable,†said Kamange.
The insurers, according to Kamange, are citing the devaluation of the kwacha, an increase in road carnages involving minibuses, new Reserve Bank of Malawi (RBM) regulations, underage drivers and unreasonable insurance claims as being behind the increment.
“We are not convinced with the reasons given by the insurers and we consulted the Ministry of Transport to intervene.
“We were supposed to have a meeting with the insurers, Ministry of Finance, RBM and the Passengers Welfare Association of Malawi to map up the way forward last week, but the gathering coincided with the launch of this year’s National Tree Planting Season.
“We are now waiting for another meeting to be scheduled anytime this week. If the meeting does not yield any results, we will go ahead to hike the fares,†said Kamange.
A 100 percent jump in minibus fares could trigger a corresponding rise in commodity prices as transport constitutes a large proportion in the price build-up of goods.
The country’s minibus fares last jumped by over 20 percent in November 2011 after the Malawi Energy Regulatory Authority (Mera) hiked the price of fuel by an average 26.4 percent.
Malawians are also anticipating another significant fuel hike in the near future as the country weakens the value of its currency, the kwacha, in a desperate attempt to get back on track the derailed Extended Credit Facility (ECF) programme with the International Monetary Fund (IMF).
President Bingu wa Mutharika has been a strong critic of a further devaluation of the currency, arguing it will hurt the poor.
But economic analysts believe there is a limit to which Mutharika can resist the move as continued suppression of the kwacha’s value will further the fragile economy.
Currently, the bulk of the country’s donors are withholding over $500 million (around K83 billion) in budgetary support in the absence of a programme with the IMF.
