Mutharika blames businesses for Malawi forex crunch

Malawian President Bingu wa Mutharika on Friday accused businesses of causing foreign exchange shortages and vowed action against "enemies of the state."

"Forex shortages are being caused by the business community itself. We have out there a large number of dishonest and greedy business people," Mutharika said at an international trade fair here.

"These are enemies of the state. I will take action against you. This is dishonesty, I want you to know I am angry," he said.

Mutharika, an economist who once headed a regional trade bloc, said "investors" collect local currency and turn it into US dollars and other currencies and "ship it back outside Malawi."

"I know these things and the people who are doing this. These are enemies of the state," he said.

He said last year the poor southern African nation received its highest foreign exchange earnings from tobacco, but "in less than three months all that forex disappeared."

"Where did it go? It was not taken by you Malawians, it was the same business community. Now they are coming to cry for forex shortage."

Tobacco, popularly know as "green gold" here, contributes up to 70 percent of forex earnings to the agriculture-powered economy. The leaf also contributes 35 percent to the state's annual income.

Last year, the crop earned the country a record 162 million dollars.

"Malawi cannot be sweating with tobacco and other produce to benefit a few business people," he said. "All their accounts are in London, in Dubai and other places."

"From now on, you will hear from me. I will take action against you. Some of you better start packing up and go." he said.

Financial experts say Malawi's import cover has been hovering at 1.7 months for the past few years, saying this was too low by international standards.

The experts say Malawi, a landlocked country which imports most of its products and raw materials, needs an import cover of over four months.