Malawi was a different country just months ago.
Although he was once liked, President Bingu Wa Mutharika’s true colours began to shine in his last term. He passed repressive legislations, such as Section 46 and the Injunctions Law, limiting freedom in the country by the day.
He also did a fine job ticking-off the very countries investing in Malawi’s economy. Under Bingu’s leadership, foreign partners such as Britain withdrew not only their foreign aid and investment, but their representatives stationed on the ground.
There was a gas shortage, sugar shortage, and foreign currency shortage, for instance. Malawians parked their cars at gas stations for as long as a week to get gas, a co-worker of mine said Tuesday.
But on April 5, 2012 Malawians took a sigh of relief.
Bingu died, and Mrs. Joyce Banda was named the new Malawian President. She is Malawi’s first ever female leader of the nation.
I have been in the country nearly two weeks now. And “You have come at a good time,” is something I am told on the daily. Especially as a reporter.
People are allowed to talk openly about politics again. Gas lines have shortened, there is sugar in the country, and most importantly, foreign support is once again flowing into Malawi. In fact, after Bingu’s death the Zambian government gave the country about $US 150, 000,000 worth of fuel in celebration of its new presidency and re-establishment of the friendship between two nations.
But there has been one very drastic change since Banda’s leadership. And it has to do with the kwacha.
The kwacha was devalued by 49 per cent on Monday. And this has caused quite a sudden change of events.
Firstly, the black market has nearly vanished. Before the devaluation, the bank’s exchange rate was about 180 kwacha per 1 US dollar. This created a black market where foreigners would trade their currencies for a much better rate. On this market, the US dollar traded at 265-300 kwacha per 1 US dollar.
Now Malawian banks trade at 250 kwacha per 1 US dollar. People can use banks at ease now as a result.
The purpose of the devaluation is to attract foreign investment and foreign interest in Malawi. As mentioned, this suffered under Bingu’s leadership after he ruined almost all of the country’s friendships with other nations. In fact, Bingu had no intention of devaluing the kwacha to attract foreign investors until at least 2014 from what I am told by Malawians.
But as an observer in this country, I fear this might have some backlash amongst all the good President Banda has done.
Prices are on the rise!
The Walmart-owned store located in area three named “Game” was close one day this week so its prices could be adjusted. Other companies have followed suit. Bus fares have increased and so have fuel costs.
Of course, prices have to rise with such a drastic decrease in the kwacha’s value. But I worry this is all happening prematurely. There needs to be a window of time in which foreign investment can come into the country and balance the economy.
Experts in Malawi predict it will take at least a year for the economy to stabilize.
That all said I have yet to hear much criticism here on Banda’s decision to devalue the kwacha. In fact, it seems rather accepted.
Her many changes and decision are still welcomed and the country remains hopeful.
For instance, an opposition party has even dissolved to join Banda’s forces.
Dressed in white, black and orange, heaps of people gathered at the People’s Party Unity Equity Development Centre in theKawaleTownship in Lilongwe Monday to celebrate the dissolving of Malavi People’s Party. They danced, they cheered, and they chanted Banda’s name.
Maybe I have just come at a “good time” then.