Tobacco farmers urge RBM to hold kwacha

Farmers for tobacco, the country’s principal forex earner, have urged the Reserve Bank of Malawi (RBM) to stop the steep appreciation of the kwacha because it would lead to loses when the marketing season opens.

Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba in a telephone interview on Wednesday said since the kwacha gains value during tobacco marketing season and loses value when farmers are buying farm inputs.

Kunimba urged the government and RBM to implement deliberate policies that would control the volatility of the local unit.

“The policies favour consumption and not production. The current seasonal volatility of the kwacha discourages farmers from producing more tobacco, the country’s main forex earner,” he said.

However, he could not quantify the losses that the farmers would experience due to the appreciation of the kwacha saying they would assess the losses soon.

But last year, a renowned tobacco farmer Felix Jumbe was quoted in The Nation having said that tobacco farmers were going to lose about K30 billion due to the appreciation of the kwacha in exchange rate losses.

The kwacha lost about 20 percent, in about two months from selling at K412 to the dollar, just before the closure of the tobacco marketing season, in September last year, to about K488, according to figures provided by RBM.

Due to prudent monetary policies since December last year the kwacha has been appreciating  against the dollar which was officially selling at K448.48 on Tuesday compared to K514.19 in December last year when the local currency turned the corner.

But RBM spokesperson MbaneNgwira, in a telephone interview on Wednesday said a stable currency is in everyone’s interest and not just tobacco farmers.

“Whenever the kwacha gains or loses value there is a sector that is affected. As a central bank we are concerned with the appreciation of the kwacha because it means there is a discord in the system.

“The appreciation of the kwacha is being influenced by too much forex in the market or speculation. We are taking out the supply that is why our forex reserves are increasing,” said Ngwira.

He noted that the appreciation of the kwacha may have an impact on the country’s exports depending on whether the commodities are processed or not.