Malawi has got a couple of problems, mostly due to having no foreign exchange. This is because the world doesn’t want much of anything from Malawi. If foreigners with foreign currency do not buy things from Malawi, then there is no foreign currency with which to buy foreign products that Malawi needs but does not produce itself (fuel, medicines, etc.).
A huge portion of Malawi’s annual export earnings are from the sale of tobacco, and this year the market was not good. In fact, I heard last week that tobacco profits fell by 51% compared to last year at the same time. My field site is situated right in the heart of tobacco country, and last year I was surprised at the wealth that some individuals living in very rural villages were able to amass from the growing the so called “green-gold”. This year, things are different. People keep telling me that normally at this time of the year, the local economies are flush with cash, and the markets are weekly excuses to party. But not now, people are worried about the future, and holding on to whatever meager profit they managed to squeak out this year.
The market for tobacco was not good for Malawi this year for a few different reasons. First, when you export primary products, there is always volatility in pricing – some years are good, some years are bad, and this one was about as bad as they come. Some people say that this year’s crash was precipitated by a lack of regulation, with Malawian farmers producing too much this year, driving the prices down. Second, the World Health Organization was threatening to ban blended cigarettes worldwide at it’s 2010 meeting, which would drastically reduce demand for burley tobacco. Guess which country is the largest producer of burley tobacco? In their meeting last year, they stopped short of banning it, but perhaps the buyers now think it’s just a matter of time before the tobacco they buy from Malawi won’t be legally allowed. Third, in early September, the president of Malawi, Bingu wa Mutharika, deported four top executives (which he called “imperialists”) from the three largest tobacco-buying companies in the country, two of which are US-owned. While this was in reaction to the low cost of tobacco being offered this year, it no doubt had a negative effect on the rest of this year’s season, and mostly likely on next year’s as well.
In the area in which I work, farmers tell me that there is a rumor that said the expelled “imperialists” have decided to set up large tobacco estates in neighboring Mozambique. All in all, tobacco was bad this year, and is not likely to get better anytime soon. As a result, you hear politicians suggesting that Malawi shift away from tobacco, to other items for export, such as cotton or mushrooms. But when 70% of your export earnings have depending on one crop, it is very hard to convince people to abandon the only thing they have ever grown.
As a result of this crash of the tobacco economy, in combination with the withdrawal of lots of donor funds (most notably, the complete withdrawal of budget support by the British a few months ago), the Malawian government has been unable to buy foreign goods. The most visible consequence of this has been the massive fuel shortages. The title of this post Diesel, Petrol, Palibe is a commonly heard phrase these days. Palibe means “without” – there is even a hand signal that one can do to signal the desire for petrol/diesel, and a response to signal there is none. This is very useful when you are driving around town frantically looking for fuel, and don’t want to bother stopping at every likely-empty station.
Scarcity of fuel has meant the people try to stockpile, either for themselves in the future, or to sell on the black market at 2-3x the price once the stations dry up. Either way, it has produced a proliferation of “jerrycans” – former cooking oil containers, typically 20-25 liters, now used to store fuel. These were outlawed for a while, but seem to be back in full swing.
In addition to crippling the nation, I must also (selfishly) mention that the fuel shortage has put a major dent in my research budget. There is no way to avoid buying on the black market, and as the shortages get worse, the price goes up. Plus, it is a headache trying to figure out how to get petrol, when it does come in on the regular market. The guys working on my project are based an hour north of Kasungu and the closest filling stations, so by the time they hear there is petrol in town and drive down, it is often gone. So, we have our own 100 liters of fuel in jerrycans, just trying to keep that Rav4 runnin’.
This post was prompted by the latest wave of shortages. After several weeks of fairly decent petrol supply, there is again a shortage. Did I mention that Joachim and I are a 10 hour drive from home?