Tobacco Association of Malawi (Tama), the country’s oldest and biggest tobacco growers’ body, has regretted the timing of the massive depreciation of the kwacha against the dollar, saying such a situation should have happened when the tobacco market was in progress.
“If the depreciation happens when we are selling tobacco, we will not complain. But why do they [monetary authorities] always wait until the selling season ends?
“I know they will always say it’s because of market forces and what have you. But we are not happy as tobacco farmers,” complained Tama chief executive officer Graham Kunimba in an exclusive interview with Business News in Lilongwe last week.
He was reacting to the current sharp fall in the value of the local currency against other major foreign reference currencies, notably the dollar in recent weeks. As of Friday last week, the local unit had plummeted to trade above K450 in most authorised dealer banks (ADBs), probably the worst highest rate since last year during the same period.
The situation is even worse on the parallel foreign exchange market, as some dealers are selling the kwacha to a dollar at K475, prompting economic analysts to predict that the kwacha is likely to hit an all-time record of K500 to the dollar by December as the lean season drifts.
“When we were selling our tobacco, the kwacha was selling at K390 to K400 against the dollar. But now, the kwacha has actually depreciated to a level where we did not anticipate and basically you can see that tobacco is the main driving force behind the sustainability of our currency in Malawi,” said Kunimba.
Tobacco Control Commission (TCC) chief executive officer Bruce Munthali yesterday said the commission also shares the concerns raised by tobacco growers, saying the regulatory body had already channelled the concerns to the Ministry of Agriculture, Irrigation and Water Development as well as the Reserve Bank of Malawi (RBM).
He said TCC could have loved if authorities were controlling the movement of the kwacha, especially during the tobacco marketing season.
Recently, RBM Governor Charles Chuka downplayed the general outcry on the weakening of the local currency, arguing there is no need to worry and panic.