Malawi's Currency has lost almost half its value
44% devaluation means that if a Malawian mother of three earns an equivalent of 100 dollars [in the local currency of Kwacha], that 100 dollars will be worth less by almost a half
Malawi is in big trouble and IMF is not helping matters. Eleven years ago in 2012, IMF compelled Malawi to devalue its currency by 33 percent, so that donor funding could be restored. Clearly, this step eventually shoved Malawi into a deeper economic hole. Eleven years later, Malawi is again seeking donor funding and has yet again devalued its currency by 44%. In exchange, the IMF has approved a four-year credit facility worth $174m.
For comparison’s sake, former boxer Floyd Mayweather earned roughly $250 million from his fight with Manny Pacquiao in 2015. Much more than the $174m IMF loan that has necessitated a 44% devaluation of Malawi’s currency. The current chronically capitalistic system simply isn’t working for African countries. It isn’t.
44% devaluation means that if a Malawian mother of three earns an equivalent of 100 dollars [in the local currency of Kwacha], that 100 dollars will be worth less by almost a half. She would have to earn almost 200 dollars to retain the same value. But of course she will keep earning the same salary.
Although nurses in Malawi earn double what this mother-of-three earns (roughly $198), they also have to join her in budgetary acrobatics if this salary is to meet their most basic needs. They are also wondering how on earth they will survive now that this salary has lost almost half of its value.
Meanwhile, the cost of living will go up.
Where does that leave and twenty million Malawians? If this currency devaluation didn’t work eleven years ago, what magic will make it work today?
Facts About Malawi:
- Located in Southern Africa, Malawi is landlocked, sharing its borders with Mozambique, Zambia, and Tanzania.
- Its estimated population is 20.41 million (2022).
- Its annual economic growth rate is 2.6%.
- Agriculture employs over 80% of Malawi’s population
- Malawi’s President is Lazarus Chakwera of the Malawi Congress Party
- In March 2023, Tropical Cyclone Freddy killed approximately 1,200 Malawians
- Cyclone Freddy ripped away $500 million from Malawi’s economy
- Lake Malawi is the fifth largest fresh water lake in the world by volume, the ninth largest lake in the world by area and the third largest and second deepest lake in Africa.
- Lake Malawi is home to more species of fish than any other lake in the world