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CFSC predicts tough economic condition for Malawi ahead of post harvest

food items like these their prices will continue to go up
food items like these their prices will continue to go up

LILONGWE-(MaraviPost). The country’s social and economic monitoring body, Center For Social Concern (CFSC) has predicted that Malawians will continue to feel the pitch of economic turmoil a head of the post harvest despite inflation’s down turn.

This is a tough reality the nation is unlikely to bear based on the National Statistics Office (NSO)’s economic focus report for February and March 2016 which headlined the easing off of the country’s inflation by 0.1% and 1.3% (February and March respectively) from 23.5 % in January whose real impacts could not be felt by an average urban consumer as most commodity prices kept going up on local markets.

Through its monthly Basic Needs Basket (BNB) report for April 2016 released on Wednesday, May 4 and made available to The Maravi Post reveals that harsh economic climate will persistently push many poor families into a tight corner as they have to continually confront twin economic evils of the day.

The CFSC snap survey further notes that the ailing economy will hardly create new jobs and even those already in jobs are not assured of job security as most companies are locked into a restructuring drive to sustain efficiency and profitability during these hard times and so ensure survival.

“The unsecure jobs are also coupled with low and stagnating incomes, which hardly afford the population a reasonable income to attain daily basic needs for healthier and productive lives. Evermore, the relentless spike in cost of commodities on markets has made the situation worse. The currently unstable Kwacha and food shortages, especially maize, due to poor weather conditions have left Malawians poorer each passing day as cost of living keeps on pushing through the
roof.

“ Although national headline inflation was reported by NSO to have eased off during recent successive months of February and March by 0.1 and 1.3 % respectively from 23.5 % in January, real impacts could not be felt by an average urban consumer as most commodity prices kept going up on local markets. According to the monthly data compiled by the CFSC through its Basic Needs Basket Programme in the major cities and towns of the country, it was revealed that the month on month cost of basic items has maintained an increasing trend since January, 2016”, reads CFSC BNB the report in part.

The report added that the cost of basic food basket for an urban low to medium income family of six people shot up by 6.7 %, from MK 98, 889 in January to MK 105, 086 in March. During the same period last year, the food basket went down by 3.1% from MK 78, 263 to MK 75, 817.83. The largest share of the food expenditure is maize and accounted for almost 27 % of the total food basket during the last three months. From an average of MK 12,331 per 50 Kg bag in January, the cost of maize rose by 8.1 % in February to MK 13, 333 before retreating by 6.4 % to MK12, 478 per 50kg bag in March.

The decline in maize prices was due to onset of the harvest season and largely resulted into a drop in overall food basket by 0.9 % from MK 106, 036 in February to MK 105, 086 in March. The drop in maize prices alongside total food basket is expected to continue for the next few months as farmers will have harvested their maize and make it available to the markets. However, this will be temporary due to severe maize output shortages in some parts of Central and Southern regions due to El Nino weather.

The strategic influence, which maize has on the national food basket and ultimately on total cost of living is very huge and therefore as a nation we cannot afford to fold hands and wait for food sufficiency to be realized automatically in the face of current unpredictable weather patterns.

The Maravi Post later caught up with Chikondi Mendulo, CFSC’s Social Condition Programs office who attributed the trend in continue
shortage of food to poor weather conditions resulting into a low ground water table this year have also led to skyrocketing prices of other important food items such as beans, tomatoes, onions and vegetables.

“For instance, from January to March, the prices of tomatoes, onions and vegetables have gone up by 12, 64.3 and 16.3 % respectively. In March, a kilogram of tomato, onions and vegetables cost MK 720, MK1, 808 and MK 426 respectively. During the same month last year, tomatoes and vegetables cost around MK 510 and MK 316 per kilogram respectively.

“Additionally other essential food items such as bread and sugar have
had their prices going up as well. The price for a loaf of bread had increased by 16 per cent, from MK 279 in January to MK 325 in March. The increase in the Sugar price has been rather insignificant as a
kilogram of sugar rose by 0.1% from MK 651 in January to MK 652 in March.

“Similarly, the cost of other crucial non – food basic items such as charcoal, soap and dressing oil has also squeezed hard budgets of consumers. A 50 Kg bag of charcoal went up by 31.2% from MK 5, 914 in January to MK 8, 772 in March. Further, a 100 grams protex soap tablet has seen its price going up 4.5 % and a medium packet of boom washing soap went up by 14.3% in March from January. Overall, total basic needs basket (Food and Non – food items) has increased by 7 % in March, from MK 155, 301 in January to MK 166, 262 in March. This is in sharp contrast to last year during the same period when the total”,
says Mendulo.

Mendulo therefore advised government to spearhead the process by
creating the right mix of institutions and policies that will make medium to large scale irrigation farming a reality arguing that failure to do this will see many poor Malawians suffering and dying of avoidable malnutrition and hunger in few years to come.

“In the meantime, government should invest into winter cropping so that farmers who failed to realize enough maize can replant some crops and fall back on them when maize becomes scarce on the markets in a few months to come. Furthermore, government needs to move quickly into the rural markets to purchase the grain from farmers at more competitive prices before vendors sweep the markets off the grain and
hoard it to sell at exorbitant prices when the grain becomes scarce.

“In addition to achieving food sufficiency, government and all stakeholders should work towards creating and implementing the right policies that encourage entrepreneurship and innovation as these are key to jobs and income creation. With the current harsh business climate characterized by scarcity of capital and high interest rates, Small and Medium Enterprises (SMEs), which currently account for almost half of the nation’s Gross Domestic Product (GDP) are failing to grow and create the much needed jobs. Government needs to realize that it is not enough to take a step and acknowledge the importance of financial independence from donors but to design and thoroughly implement policies that can stimulate economic growth and development from within such as these are the most crucial steps”, says Mendulo.

 

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