Zomba-based economist Chinyamata Chipeta has faulted the floatation of the kwacha in 2012, saying the policy was adopted without proper research on the ground.
Chipeta, who is also executive director for Zomba-based Southern African Institute for Economic Research (Saier), has also cautioned the Peter Mutharika government against borrowing economic policies from the West ‘wholesome,’ arguing that not all external economic advice is in tandem with characteristics of the domestic economy.
“The devaluation was okay, but the floatation was wrong. You do not float a currency when you don’t have enough foreign exchange reserves and when donor aid is uncertain,” said Chipeta at the Malawi Institute of Management (MIM) in Lilongwe yesterday.
Chipeta, who conceived indigenous economics at Chancellor College, a constituent college of the University of Malawi, was speaking at a two-day national policy workshop designed to explore how Malawi can use indigenous knowledge in formulating appropriate policies for its economic development.
The meeting has drawn economic scholars and practitioners from across the country.
“Not all foreign advice is consistent with characteristics of the local economy,” said Chipeta, a professor in economics.
Former president Joyce Banda’s government, through the Reserve Bank of Malawi (RBM), devalued the local unit by a magnitude of 49 percent on May 7 in 2012 and also announced the subsequent liberalisation of the exchange rate regime as part of a package of its economic reform programme.
Since then, there has been pressure on the central bank to abandon floatation by economic commentators on account of ever-rising cost of living.
But RBM has remained adamant with its Governor Charles Chuka repeatedly saying the market-determined exchange rate is the best for Malawi.
Currently, the kwacha has sharply nose-dived, losing ground to the dollar from a value of K393 a few weeks ago to sell at K490 in some banks, raising fears of further rise in average prices of goods and services as importers pass on high costs of importing their goods to consumers.
But in his argument, Chipeta said floatation has left Malawi vulnerable to speculation; hence ,fuelling high inflation rates.
He said such a situation has made the Malawi economy uncompetitive on the international market and the situation would require further devaluations of the currency if it is to be corrected.
Chipeta said it was high time Malawi researched on indigenous economic knowledge and culture to design economic policies that will be well suited to respond to local factors.
“We need to develop a good understanding of our own history, culture and heritage to challenge Western stereotypes that portray Africa as inferior and the mzungu [white man] as the one who knows it all. Good knowledge of indigenous culture will give us pride and confidence and promote our African identity,” said Chipeta.
He said the workshop is in line with ideologies of the Pan African movement, which encourages African countries to design their policies based on customs, knowledge and culture.
Organised with funding from the Nairobi-based African Economic Research Consortium (Aerc), the workshop has drawn presenters such as RBM deputy Governor (Economic Services) Naomi Ngwira, University of Malawi deans Edge Kanyongolo, Patrick Kambewa, Sosten Chiotcha, Chiwoza Bandawe and also Malawi Economic Justice Network (Mejn) executive director Dalitso Kubalasa.