The stability of the South African rand recorded in the past three months presents an opportunity for the country’s businesses to thrive, analysts have said.
South African rand, which has been fluctuating since end last year, has seemingly stabilised from July to date.
Reserve Bank of Malawi (RBM) figures show between August last year to July, the rand has been trading between K50 and K58 to the kwacha before it stabilised to trade at K48 from July to date.
Since Malawi trades more with South Africa compared with other countries in the region, value and movement of the rand influences Malawi’s economy.
Available figures indicate that Malawi generates roughly 9.04 percent of its gross domestic product (GDP) from trade with South Africa with imports accounting for 7.7 percent of Malawi’s GDP while exports accounts for 1.3 percent of the country’s GDP.
In an interview with Business News on Monday, Cross Border Traders Association president Esther Tchukambiri said the present value and state of the rand has had an impact on their profitability and business in general.
“Things have turned for the better now because we are trading and travelling with assurance of a stable value. This has also made planning easy for us,” she said.
University of Malawi’s Chancellor College economics associate lecturer Lucius Cassim noted that South Africa is one of Malawi’s major trading partners, the present scenario has a positive bearing on the trade and economy at large.
He said: “Any currency instability is bad especially when the rand appreciates since Malawi’s trading with South Africa is predominantly import related and may lead to exchange losses. But now that the rand seems stable, businesses are likely to thrive however key for businesses is to manage their currency shocks by diversifying their portfolio.”
Speaking separately, Catholic University economics lecturer Gilbert Kachamba said considering South Africa is the country’s major trading partner, the present stance of the rand is good for the economy. He said the kwacha and rand have a direct bearing on exports and imports which in turn have an impact on the country’s balance of payments.