Businesses in the country are feeling the pinch of the recent steep fall of the local currency as they never expected it, Indigenous Business Association of Malawi (Ibam) president Mike Mlombwa has said.
Mlombwa, in an interview on Wednesday, said the kwacha’s depreciation has had a big impact on businesses because it took them by surprise.
Between July 1 and 29, the kwacha has fallen by around 12 percent against the dollar from being sold at K453 at the beginning of the month to K521, according to Reserve Bank of Malawi (RBM) figures, while some authorised dealer banks are selling the dollar at K560.
Said Mlombwa: “For example a Toyota Hilux 4×4 vehicle, which was selling at K22 million two weeks ago, is now being offered at K30 million,” he said.
Concurring with Mlombwa, Small and Medium Enterprise Association (Smea) president James Chiutsi said SMEs are feeling the pinch because they do not have enough capital to maintain large stocks of merchandise.
“Unfortunately, our customers in Malawi are reluctant to accept any price increases as they themselves face decreasing disposable income,” Chiutsi said.
He said the development has created panic and uncertainty.
Meanwhile, RBM has moved in to stop the kwacha’s free fall by introducing measures that restrict banks from determining the day’s foreign exchange market price.