Business community calls for more action on forex hoarders BY CAROLINE KANDIERO
Business experts have commended government for its action on forex hoarders which led to the arrest of a Chinese national last week after President Bingu wa Mutharika openly said that some businessmen were responsible for the shortage of forex in the country.
Shen Chong who has no business in the country was arrested last week Wednesday by Fiscal police as he was trying to leave the country through Chileka International Airport for Hong Kong with US$39,151 (about K5.4million) loaded in seven Benson and Hedges cigarette packets.
Economist Association of Malawi President (Ecama) Thomas Munthali said the move by government is good as most culprits are financing black market business which is not benefiting the country.
“This Chinese is not even a business person in the country which means our forex is being used elsewhere which is unfortunate. We should lack forex due to other reasons and not that because some people are hording it and externalising it illegally.
“While we appreciate government’s effort, we also feel that this exercise could have started way back but still this could be a lesson to others who are in practice,” said Munthali.
Mulli Group Company Managing Director Leston Mulli said a lot of traders are taking advantage of the trade loop holes in the country.
“The traders are misusing the trade agreements and taking advantage of the loop holes that are there. It is good that the President Bingu wa Mutharika has warned these business people and the police have immediately acted by arresting the Chinese national,” said Mulli.
Mulli further said the act of hoarding forex is a disadvantage to the business community as it might lead to the devaluation of the Kwacha.
“The President vowed that he will not devalue the Kwacha, but this trend might result in the Kwacha being devalued and our businesses will suffer and not only us but the consumer as well will suffer,” he said.
He then cautioned the police to be on the look out and arrest more of the culprits if the shortage of forex through illegal acts has to be dealt with.
The kwacha is said to be overvalued against scarce foreign exchange a situation that has pushed importers of goods and services into a fix.
Official exchange rate for the Kwacha against the US dollar is firm K140 and according to Malawi Savings Bank Financial and Economic report for May, the country’s import cover was at 1.78 months up from 1.4 months in March.
President Bingu wa Mutharika said during the official opening of this year’s international trade fair he would not hesitate to deport any trader siphoning forex out of the country.
“Last year we produced and exported a lot of tobacco but where is the money? I repeat, I’m angry with you and you are enemies of the state,” said Mutharika as quoted in our sister paper Malawi News.
Forex vendors have taken advantage of the foreign currency shortage to sell the US dollar at around K200 to the dollar over the official rate of K140.
Big manufacturing companies such as Packaging Industries Malawi Limited have also cried foul saying they were having difficulties sourcing the now illusive forex to import.
Trade data indicates that Malawi’s import bill for 2008 hit the US$1 billion mark since the country is highly dependent on imported goods.
The Reserve Bank of Malawi has for close to two years been operating a directive that all forex earnings should be routed through its system.
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