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Malawi faces double whammy: Fuel and Electricity prices soar

Written by Chinsinsi Cheketa:

The Malawi Energy Regulatory Authority (MERA) has inflicted a double whammy on Malawians by raising prices for electricity and fuel in the wake of a 44 percent devaluation of the Malawi kwacha on Wednesday.

MERA had already introduced an 18 percent first-year tranche of the 50.8 percent base tariff increase for the period 2023 to 2027 on September 1st, 2023. However, it has now implemented a 40.92 percent tariff increase.

Simultaneously, fuel prices have also surged, with petrol and diesel jumping by 44.90 percent and 42.40 percent per liter, respectively. Petrol, previously priced at K1, 746, will now cost K2, 530, while diesel is going up to K2, 734 from K1, 920 per liter.

This double blow is expected to result in increased transport fares and necessitate traders to raise prices on their goods. Malawians are left with no choice but to dig deeper into their already stretched pockets to purchase basic necessities.

Has been devalued-Malawi kwacha.

To make matters worse, this comes right after the devaluation of the Malawi kwacha by 44 percent. Electricity tariffs have also seen a 40.92 percent increase, pushing average electricity tariffs from K123.26 to K173.70 per kilowatt.

In light of the recent adjustments, the Malawi Congress of Trade Union (MCTU) has requested the government to consider increasing the proposed National Minimum Wage of K100, 000 by an additional 44 percent providing substantial support to workers affected by the devaluation.

Its President Charles Kumchenga, laments that despite an ever-changing cost of living, the incomes of the average Malawian worker, especially their salaries, have remained stagnant for an extended period.

His union has proposed an increase in the national minimum wage-Kumchenga.

Kumchenga says “We are worried about the potential repercussions of the recent devaluation of the Malawi kwacha, including potential layoffs and the closure of numerous businesses, which could have far-reaching impacts, exacerbating an already unstable economic climate, if the government fails to take prompt action”.

He adds that a significant portion of Malawi’s businesses rely on importing materials for production, making the 44 percent devaluation a matter of grave concern that extends beyond the cost of living.

Currently, minibus owners have already hiked transport fairs, with some even doubling the price. There are also fears that fertilizer prices may increase while only 1.5 million smallholder farmers are set to benefit under this year’s Affordable Input Programme (AIP), raising concerns of food insecurity.

Commuters are feeling the pinch as transport costs soar.

Malawi’s Human Rights Defenders Coalition (HRDC) has since demanded the immediate return of President Dr Lazarus Chakwera, who is in Saudi Arabia attending the first Saudi-Africa Summit, to address Malawians following the devaluation of the kwacha.

MERA explains that the adjustments in prices of both fuel and electricity are a response to the devaluation of the Malawi kwacha, driven by positive prospects of unlocking around 174 million US Dollars from the International Monetary Fund (IMF) through a three-year Extended Credit Facility (ECF) Programme.

While the aim is to boost the foreign exchange supply in the market, Malawians are now facing the challenging consequences of the economic shifts.

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