In recent years, Malawi has repeatedly devalued its currency — most recently under pressure to unlock support from international lenders such as the International Monetary Fund (IMF). These devaluations are presented as necessary steps to fix foreign exchange imbalances, improve competitiveness, and stimulate export growth. But the real-world outcomes raise deeper questions about who benefits most from such decisions — and who bears the costs.
Malawi’s Vulnerability to Imported Inflation
Malawi is a small, import-dependent economy. Fuel, medicines, agricultural inputs, and even many food items come from abroad. When the kwacha is devalued, these goods become more expensive almost immediately. Yet wages remain stagnant, and most households lack any buffer against rising prices.
This phenomenon — imported inflation — hits Malawi harder than many other countries. It erodes purchasing power and pushes more families into poverty. Any potential gains from export competitiveness are quickly overshadowed by the immediate social and economic hardship.
The Export Illusion
One of the primary justifications for devaluation is to boost exports. But Malawi’s export base is narrow — tobacco, tea, sugar, and a handful of agricultural commodities. These are mostly sold as raw or semi-processed goods into markets where prices are determined by global demand, not by our exchange rate.
Devaluation might make these exports slightly cheaper, but it does not change their position in the global value chain. The value continues to be captured elsewhere — in processing factories abroad, in logistics companies, and in retail shelves far from Malawi. Meanwhile, smallholder farmers and exporters in Malawi remain price-takers.
Western Interests and Unequal Outcomes
Whether intentionally or not, currency devaluation often plays into the hands of richer economies and global corporations:
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Raw materials become cheaper to acquire from Malawi.
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Foreign investors gain purchasing power in a devalued market — buying assets, land, or influence at a discount.
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External lenders are repaid in hard currency, meaning devaluation increases the burden of debt repayment in local currency terms.
In effect, devaluation can reinforce structural economic inequality — keeping countries like Malawi in a low-value, export-dependent position while wealth continues to flow outward.
What Malawi Needs Instead
Currency adjustment may have its place in specific macroeconomic contexts, but it should not be treated as a primary tool of development. For Malawi, the priority should be to:
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Build local production capacity to reduce dependence on imports, particularly in energy, food, and inputs.
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Invest in value addition, ensuring that more of the wealth from our exports is retained within the country.
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Diversify the economy beyond traditional commodities — into services, manufacturing, ICT, and regional trade.
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Negotiate aid and debt terms that align with national development goals, not just macroeconomic compliance.
Conclusion
Devaluation is not a neutral policy. It produces winners and losers. In the case of Malawi, it often deepens the very vulnerabilities it claims to address — while serving the interests of external creditors and buyers.
If we are to chart a path to real economic sovereignty, we must move beyond currency adjustments and confront the structural issues that limit our capacity to produce, retain value, and grow on our own terms.