Forex shortage forces manufacturers to scale down

Some manufacturing companies have scaled down their production as they cannot import raw materials due to the shortage of foreign exchange in the country’s commercial banks.

The development comes at a time commercial banks are running short of foreign exchange and being forced to ration, affecting operations of manufacturing companies.

In an interview yesterday, Mohammed Tutla, operations manager of Zamm Investments, a Lilongwe-based manufacturer of carbonated soft drinks, said production has almost ground to a halt as they are struggling to import raw materials from South Africa and China.

He said the company already ordered materials, but have not been able to pay the suppliers on time.

On his part, Raiply Malawi Limited chief executive officer Khrishna Das admitted that the shortage of forex is counterproductive as raw materials cannot be imported, including spare parts for maintaining the production machines.

Mzuzu Dairy Limited managing director Denis Chitowe admitted that large amounts of milk are going bad because they cannot import additives and packaging materials for production of yoghurt, among other milk products.

On Wednesday, Malawi Confederation of Chambers of Commerce and Industry head of membership development and communication Tione Kafumbu called for urgent action to address the forex situation.

In the second quarter ending June 2020, Reserve Bank of Malawi indicated that official foreign exchange reserves dropped to $646.4 million from $699.9 million recorded in the previous quarter.