At first glance, nothing has changed in the Limbe market. The stalls, run mostly by women, continue to sell vegetables, fruit, cereals and various types of food at one of the main markets in Blanytre, Malawi's economic capital. Life goes on in the same way as it did before the country's Central Bank announced on November 8 the devaluation of the national currency (kwacha) by 44% against the US dollar. However, a closer look reveals the concern that the measure has caused among the inhabitants, of whom 85% live mainly from agriculture and whose lack of employment alternatives has led their government to recently sign an agreement with Israel to send 5000,<> young people to work on farms, despite the current conflict.
Fanny Musa, a food vendor at the market, has been hit hard by the move. Since opening his business five years ago, he says this is the most difficult period he has faced: "My sales have plummeted. The cost of products has gone up and now I literally earn half, even though I've raised prices. Before the devaluation (the second in 18 months) I had a profit of about 10,000 kwacha a day (about five euros) while today I am lucky enough to get 5,000." Now, she tells this newspaper, adding up what she pays her two assistants, she will not be able to cover the additional 70,000 kwacha (41 euros) of the increase in school fees for her four children. "The timing is critical," he says. When a country devalues its currency against the dollar, exports become cheaper in the global market and in theory become more competitive, but at the same time, imports become more expensive, mainly of products such as gas, oil or fertilizers.
Margaret Banda has been selling malambe (baobab fruit) at the Limbe market since 2010. She is also a farmer, but this year she has not been able to buy fertilizer, which has risen by 25%. It now takes much longer to sell a 90-kilogram bag and has had no choice but to raise prices to make his work profitable, which has lowered demand even further. DIEGO MENJIBAR
Market in the town of Limbe, located near the country's economic capital, Blantyre. The prices of goods and services after the devaluation have increased markedly and people are currently unable to cope with these increases. DIEGO MENJIBAR
Gaston, a domestic worker, in front of the hut where he works in the neighbourhood of Nyambadwe, Blantyre. Gaston has not received any salary increase after the devaluation.
People walk down the main street of the Limbe market, where trading has not stopped despite the announcement of the 44% devaluation of the kwacha (Malawian currency) against the US dollar on November 8, 2023.DIEGO MENJIBAR
A young man from the town of Blantyre shops at the stall of Ntanyula Loveness, a vegetable vendor who has been in the market since 1993. She buys more expensive than before, but she can't raise her prices much because if she doesn't she loses customers, which has impoverished her even more, she explains. DIEGO MENJIBAR
Traders in the Limbe market are regulating prices themselves to accommodate the devaluation, something that is aggravating inflation in the country. DIEGO MENJIBAR
The main concern of Malawians after the implementation of the measures was the increase in the price of goods and services and its impact on the cost of living, and indeed that has happened. The Malawi Energy Regulatory Authority (MERA) raised petrol and diesel prices by 45% and 42% respectively on the same day, and the Electricity Supply Limited Corporation (ESCOM) increased the price of electricity by 40%. The devaluation, designed to resume international budget support and increase export profits by reducing their price on the global market, has lowered overall demand and directly affected people's lives in a country mired in a fuel crisis and shortages of medicines and fertilizers.
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Making financing for development work in Africa
Like other developing countries, Malawi has been suffocated by foreign debt and in default since 2022, according to a report published by the International Monetary Fund (IMF). The country needs nearly $2027 billion of debt relief by <> to pay its main creditors, India and China. However, its small and fragile economy and its climate vulnerability due to the increase in the frequency and intensity of cyclones, floods and droughts, make it impossible to restore macroeconomic stability and deal with debt in a country focused on agriculture and imports. The impact of this has led the IMF to coordinate a devaluation that today has a direct impact on inflation and the increase in the cost of living in one of the countries most affected by the climate crisis.
Following the devaluation, the IMF approved a loan of €163 million (with an immediate disbursement of €32 million) to the African country to increase its foreign exchange reserves. Despite this, Malawi is currently experiencing a period in which the uncertainty caused by food shortages has become a priority. Since the announcement of the measure, the word "hunger" has begun to resonate louder in the streets, despite the fact that organizations such as UNICEF have been denouncing for months that more than half a million children are at risk of malnutrition. "The price of fertiliser has increased by 25%, from 70,000 kwacha to 107,000 kwacha (about 62 euros) and a poor Malawian cannot afford such an increase in production. The amount of corn expected to be harvested will not be the same with the increase in the price of fertilizer. This will lead to food insecurity in households that rely heavily on agriculture," said Alex Chidzandi, an investment company that grows and manufactures agricultural products.
Prices go up, wages don't
"It's unsustainable," says Samson Mfimuko, a 35-year-old motorcycle taxi driver from Lilongwe, the country's capital. Samson talks about how the devaluation has affected every area of his life: "The first thing is that I have less work, people don't want to pay more for the same route they did yesterday even though the price of gasoline has gone up a lot, so now they walk more and I have fewer customers. Also, I'm having trouble buying food. I've started to get into debt, especially with basic products like flour, soap and oil." He adds: "We are afraid of what could happen to us. Personally, I don't see any other way out to save myself than to plant to eat."
Despite the rising cost of living, Wilson Banda, the governor of the Reserve Bank of Malawi (RBM), urged citizens not to raise the prices of their products, as this could have "adverse effects on inflation, lead to job losses and increase pressure on the national budget." according to a local media outlet. In a press release last Friday in Lilongwe, Banda criticized traders for increasing the prices of goods and services unjustifiably. The response from the Malawi Congress of Trade Unions (MCTU) was straightforward: "RBM should propose appropriate measures to stabilise our economy, not punish workers. Our demand is that the revision of wages be adjusted to a 44% devaluation or a reduction in the cost of living."
Their complaint comes in the wake of the government's failure to increase the salary of public workers, a measure that the Malawi Congress of Trade Unions has been demanding since the implementation of the measure. Mike Phambo (not his real name to protect his identity), a prison officer in the Midwest, recounts how he lost almost half of his money overnight: "I've been growing corn for the last two years and selling the crops. The other part of the money was used to buy fertilizers, seeds and pesticides for the next growing season, and the remaining balance was paid into the bank. In 17 months I managed to save $4,500 (€4,100). Now I've lost almost 2,000 and I've had to cancel all my plans."
Other health officials have received a 10 per cent pay rise, although the Malawi National Nurses and Midwives Organisation called the increase "insufficient" and a "mockery". If their demands are not met, they contemplate taking additional measures, as happened in 2020 during the coronavirus pandemic, when they went on strike due to a lack of protective measures and subsidies.
A young man holds a banner in opposition to President Lazarus Chakwera during a protest in Blantyre against the recent 44% devaluation of the local currency against the US dollar. DIEGO MENJIBAR
Humanitarian and non-governmental organizations, which are very numerous in the country, have also not raised the salaries of their local workers, and the security guards or nannies consulted for this report have also denied any increase in their salary. "Our bosses haven't raised our salaries even though they are paid in dollars and we are paid in kwachas," explains Annes Moyo, a domestic worker in Blantyre.
Days after the announcement of the measure, protests were called in different cities of the country. In Blantyre, hundreds of citizens joined the march to demand policies from the government to support the population. "Everything has gone up, we can't cope with the current prices. We must protest against the government to put an end to this," said one attendee.
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