Malawi is losing at least US$1.9 billion annually on the commodity exchange market due to high lending rates by commercial banks and government policies, Director of AHL Commodity exchange, Stone Chadzunda has said.
Chadzunda said “farmers in the country have been unable to meet the international demand for agriculture produces due to lack of finance and high interest rates offered by the nations commercial banks”.
“The current interest rates in the country are very high and when you have high interest rates it implies that when farmers borrow money and they are going to have to repay back more.
“Its easy to say that when the interest rates are low or reduced then the farmers will be able to save money which inturn will enable farmers to go back to the field, to grow more products or traders would be able to go into the fields to buy more products and sell more products to generate more commodity” he said.
He further exclaimed that the implementing of government policies to ban exports is hindering commodity trade between Malawi and other countries. This makes it harder for the country to meet the demand from outside and it has now cost the country almost 1.9 billion dollars.
Chadzunda also said, “if the nation is coming up with these bans it shuns people from exporting their commodities thereby preventing potential buyers who bring in forex and in so doing slowing down the growth of the commodity on the market”.
He however applauded government for implementing and enforcing the national export strategy which he said would help in developing the commodity Market.
Chadzunda further called on the government to encourage farmers grow more commodities and participate on the market which is essential for the growth of the country. But when asked about the high lending rates in the country people in the banking sector have pointed out that the trend is brought about by different economic problems being faced in the country.
And President of the Bankers Association of Malawi William Chatsala says commercial banks should not be blamed for high interest rates.
“first of all there are several commercial banks on the market we are talking of 12 now, each commercial bank has got its own strategies, but at the end of the day you looking at the state of the economy.
“The interest rates are a reflection of the inflation rate, the exchange rate and it’s a reflection of where the policy rate is so you factor all those things into place and come up with the interest rates” Said Chatsala.