Following last week's Business Thumbs in which I expressed my reservations on the Consumers Association of Malawi – Cama's planned demonstrations in January, the association's Executive Director John Kapito took time to respond to the article:

'Kwacha fall more than we were told'

Dear Thom,

Your article in The Daily Times raises a number of factual misrepresentations of what I have said over time. Your article seems to suggest that our call for mass protests is against devaluation, which is a total misrepresentation of facts.

While I do agree with some of your observations based on public statements that I have made, it is important to understand and appreciate that I have never questioned the merits of the devaluation of the kwacha which was indeed a welcome expectation at that particular time as the market indeed needed such a reform as it was in bad shape.

The 49 percent devaluation did not raise any challenges or objections from any quarter of the economy as the process was meant to realign the kwacha to the then parallel market exchange rates.

And at that time, debate and language among many Malawians was centred on the need to devalue but with strong fiscal and monitory oversight and that the reforms would be monitored and reviewed for the good of the consumer and the economy. That is what we supported and our message to consumers was to accept and embrace the devaluation and its implications on their livelihoods as the 49 percent devaluation would have an impact on their disposable incomes.

Similarly, most workers went on strike demanding increments to match with the 49 percent devaluation in order to cushion the impact of that devaluation. And I repeat, at that time the economic debate was on the 49 percent devaluation and nothing else.

What came as a surprise to some of us as consumers, including those that were fighting for salary adjustments at that time, was the floatation of the kwacha which was to run together with the huge devaluation, which meant the real devaluation was not the one we were informed. We noted within a short period that indeed the actual drop in the strength of the kwacha was much higher than we were told.

The merits for deciding to float the kwacha alongside the huge devaluation were never communicated and therefore the only strategy that consumers and most of the traders had was how best they could insulate themselves from the 49 percent devaluation and nothing more.

Currently the kwacha has been weakened by over 115 percent from the time it was devalued by 49 percent.

You may also wish to know that devaluation and flotation of a currency are not the only tools for economic reforms. You are suggesting that because Malawi devalued and floated its currency, then it is on the path to recovery. I would encourage you not to write your articles like a born again student of the IMF and the World Bank.

While I do agree with you that economic reforms can be punitive and responsible for economic stability, you have failed to articulate and convince me how the current reforms will improve the lives of Malawians. The fact that you believe in the recovery plans being perused by the government should not be the basis for you to challenge others. I am one person, and I am sure there could be many more like me, that believe that what we have is not near a recovery plan.

What is important in any economic or any other reform is the ownership of such a process and what is missing from the reforms in Malawi is who is dictating, driving and owning these reforms. Are you suggesting that by merely devaluing and floating your currency, the two add up to economic recovery? Which economic reform policy document do you have that I do not have which indicates that after we go through the current challenges; they will come to pass now and in future?

By the way, is the executive extravagance and corruption also part of the economic reform? Is begging from donors an economic reform? Is bloating the cabinet at a time you have economic challenges an economic reform? And would you stand up to your people and say life will change for the better after such abuses? I would encourage you to understand our plans and reasons for the mass protests better before raising issues that are irrelevant.

The planned protests are for those that are going through the pains of the current economic reform experiments. And indeed within the many suffering Malawians, not all will participate. The fact that people like you will not participate does dilute our message. Remember, we are not protesting against devaluation as you state it in down-playing our cause.

John Kapito

Executive Director

Consumers Association of Malawi

Feedback: 'This was one of  your best articles'

Dear Thom

Your article, Faulting John Kapito, JB's flipped cabinet; is one of your best written slots I have ever read. This is a very captivating and well thought write up. Please keep it up dear Thom. I commit to read this column again.

Regards

Ken Chiuza

Via e-mail