Africa-Press – Malawi. Malawi does not have foreign exchange in the country and this has created challenges for businesses as the nation imports most of the goods from outside. The major foreign exchange currency is the United’ States dollar.
A dollar shortage occurs when a country spends more U.S. dollars on imports than it receives on exports. Since the USD is used to price many goods globally, and is used in many international trade transactions, a dollar shortage can limit a country’s ability to grow or trade effectively.
Foreign exchange has great impact on the economy of a country. When exchange rates change, the prices of imported goods will change in value, including domestic products that rely on imported parts and raw materials. Exchange rates also impact investment performance, interest rates, and inflation—and can even extend to influence the job market and real estate sector.
Sometimes foreign exchange decreases. If the dollar depreciates (the exchange rate falls), the relative price of domestic goods and services falls while the relative price of foreign goods and services increases. The change in relative prices will increase U.S. exports and decrease its imports.
Imagine what would happen if there was no exchange rate. This is the “exchange rate.” Without a reliable supply of foreign exchange in each country, and without relatively stable exchange rates, world trade would drop drastically. You wouldn’t be wearing tennis shoes made in Asia, or eating an apple grown in South Africa.
There is a meaning when a store closes. The closure of a place such as a business or factory is the permanent ending of the work or activity there. It also means people’s jobs are going to end and their income will come to a halt.
Retail stores start closing for many different reasons, such as over-expansion, cash crunch, brand related issues, mall related issues, economic and demographic reasons. In many cases you will find the same retailer that is closing a location is actually opening a new one in another place.
The role of chain stores or any of two or more retail stores is having the same ownership and selling the same lines of goods. Chain stores account for an important segment of retailing operations in Malawi and Africa at large.
The fastest growing small businesses in Malawi in 2022 include: residential remodeling. Home health care. Animal care and services. Digital events. Wedding businesses. Neighborhood or online nursery businesses. Tutoring and online learning. Food delivery.
The kwacha is the currency of Malawi as of 1971, replacing the Malawian pound. The kwacha replaced other types of currency, namely the British pound sterling, the South African rand, and the Rhodesian dollar.
The Malawian kwacha has depreciated against the USD by 40.45% since January 2020. The kwacha is yet another central bank junk currency. Malawi Government recently devalued the Kwacha by 25 percent reportedly on advice from the International Monetary Fund. What happens when currency devalued?
Understanding Devaluation Devaluation reduces the cost of a country’s exports, rendering them more competitive in the global market, which, in turn, increases the cost of imports. If imports are more expensive, domestic consumers are less likely to purchase them, further strengthening domestic businesses.
Unconfirmed reports indicate that ShopRite will close all its shops countrywide this year. According to inside sources, the decision has been arrived at because of forex shortage in the country.
Zomba and Limbe shops will close this month of August. Lilongwe and Mzuzu shops will close in October this year while the last one to close will be Chichiri Shoprite in November this year.
The development has attracted mixed opinions from Malawians on social media as some support the idea saying it will give room to local investors to sell their farm produce.
Others have argued that Shoprite chain stores are an unnecessary drainer of foreign exchange as we can produce commodities in Malawi instead of importing.
Some are worried that the closure of these shops will affect the country’s economy. However, other reports indicate that Shoprite will close its shops throughout Africa.
My opinion is that the idea of closing down Shoprite shops in Malawi will give room to local investors to sell their farm produce but hundreds if not thousands of employees will painfully lose their jobs before they get another job because of this scenario.
People need jobs now more than ever before as the economy keeps biting hard due to the rising cost of living and the gap can not be easily filled. Many people are struggling to survive while they have jobs and are still working. It is worse to be left jobless and the hunting for jobs is even more stressful this time around when the economy is struggling.
Although local investors will have the opportunity to sell their farm produce, Shoprite is not all about farm produce only. They are able to sell other products from factories which Malawi doesn’t have
I also want to argue that Shoprite chain stores are a necessary value for money as they have been able to provide locally produced goods at a cheaper price than many locally owned shops.
It is not a drainer of foreign exchange as such, but we just cannot produce enough commodities in Malawi, that is why we have been importing for the past 58 years.
We keep talking that we need industries and companies of our own in order to move forward but we are not moving even an inch. The closure of these shops will indeed affect the country’s economy.
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