Tobacco sales in Malawi this year have raked in $176.87 million (about K44 billion) which represents a drop of 40 percent over last yearâ€™s total sales, a latest Nico Asset Managers report has said.
Last year, Malawi earned $293 million from tobacco, which is Malawiâ€™s major foreign exchange earner and has over the past year been wiring in over 60 percent of the country’s total foreign exchange.
The drop in tobacco revenue is a heavy blow to the economy as it may deepen the scarcity of foreign currency which key in the importation of essential goods such as fuel, fertiliser and pharmaceuticals.
Already, recent projections by the International Monetary Fund (IMF), in its Regional Economic Outlook (Reo) spell out doom as the fund foresees a 1.2 months and 1.1 months of import cover in 2012 and 2013, respectively.
The plunge in tobacco revenue should make policy makers and a country as a whole realise the need to lessen the over-reliance on the green gold which is facing severe pressure from the World Health Organisationâ€™s Framework Convention on Tobacco Control (FCTC) guidelines and measures, among other external and internal shocks to the leaf.
The FCTC measure and guidelines seek to abolish tobacco farming by 2025, according to information by the countryâ€™s biggest tobacco grower body, the Tobacco Association of Malawi (Tama).
â€œThe realisation for this season which is at $176.87 million is 40 percent below last yearâ€™s realisation at $293.12 million. The 2010 season was a good year which fetched $410.60 million at an average price of about $1.92/kg,â€ says the investment firm in its July economic report, quoting the Tobacco Control Commission (TCC) statistics.
TCC chief executive officer Dr. Bruce Munthali was not available for comment on Wednesday, but he told Business News on Monday that although the 2012 tobacco market has wound up, contract sales at the Lilongwe Auction Floors are in still progress but were expected to end this week.