A few weeks ago, the chronic fuel crisis in Malawi reached new heights. Shortages of foreign exchange continue to make imports of any kind difficult, and fuel is the hardest hit. I emerged from the campus at Mzuzu University to be confronted by line of vehicles – probably nearly 2km long – queuing for fuel at the petrol station down the road.
The effect is felt throughout the country. Businesses – particularly anyone reliant on diesel – are hamstrung. Bus and taxi fares climb continuously. Getting fuel for my motorcycle becomes a game of tapping social networks – scrolling through my address book looking for anyone who can hook up 20L of petrol. Anything below $5/L on the black market is a good day.
Since I have lived in Malawi, fuel shortages have existed periodically, but the current state is a new high in my memory. I’m told that while some petrol reserves still exist in the country, diesel has been tapped out, and the country is reliant solely on new imports that are distributed in an ad hoc manner throughout filling stations across the country. Again, it becomes a game of who you know, and even then it sometimes isn’t enough. Earlier this month, the German Embassy closed for half a day due to lack of fuel. Contractors on fixed price contracts are scrambling for alternatives now that they have to source diesel on the black market at triple the regular rate.
I currently write this from Zambia, a country without fuel queues that just successfully held peaceful elections that saw a new leader ushered into power. Not so long ago, the difference that I felt between these two countries was not so stark. Here’s to hoping for a return to shorter fuel queues when I return.
How is fuel managed in Malawi? Is it managed by the national government, or private entities? What are the main difficulties in importing sufficient amounts? Please excuse my ignorance.
By: Tom Curran on November 10, 2011
at 8:47 am
Hey Tom,
Great questions. Fuel is managed by the national government, who regulates who is allowed (legally) to import fuel into the country. Currently, in border regions, quite a bit is making its way over illegally.
The biggest challenge with fuel is insufficient foreign exchange reserves. Since Malawi doesn’t produce petroleum itself, everything has to be imported, and that requires foreign currency. Without sufficient exports of its own, Malawi is struggling to secure enough foreign exchange to make those purchases possible.
The currency is also fixed, which helps to control inflation, but makes it difficult to trade for anything internationally at real market value. If the currency were allowed to float, fuel would be easier to obtain, but the prices of everything would skyrocket.
By: Duncan on November 10, 2011
at 9:04 am
good economics lesson there Duncan. cheers
By: rozzy on November 14, 2011
at 6:01 pm
Hey Duncan!
I am imagining you leaving the university, seeing the 2km line up, and sighing in relief as you hop on a bicycle taxi to get home.
How long are you staying in Zambia for? Are you in Lusaka? Are you coming to conference?
Karina
By: Karina Redick on November 16, 2011
at 2:19 am