Assessment of impact of currency devaluation on selling prices of small businesses

This study assessed the impact of currency devaluation on the selling prices, sales volume,
and revenue performance of small-scale Kaunjika (second-hand clothes) traders at Tsoka
Market in Lilongwe, Malawi. Using a quantitative research design, data were collected from
60 traders through structured questionnaires and analyzed using SPSS. Descriptive statistics
summarized the demographic characteristics of respondents, while a paired sample t-test was
conducted to compare pre- and post-devaluation business performance. The results revealed
that the majority of traders were young (25–35 years, 38.3%), moderately educated (46.7%
with secondary education), and experienced (73.3% had 4–10 years in business). The paired
t-test results showed a significant decline in monthly sales volume (Mean = –16,554.50; t = –
2.61; p = .012), and a highly significant reduction in monthly revenue (Mean = –1,095,583.33;
t = –9.29; p < .001), indicating that devaluation negatively affected both sales and income
levels. Conversely, the average selling prices increased significantly (Mean = 7,066.67; t =
10.31; p < .001), reflecting traders’ price adjustments in response to increased import costs.
Furthermore, 77% of traders reported raising prices as their main coping strategy, while
smaller proportions reduced stock variety (15%) or operational costs (8%). The main reasons
cited for price adjustments were decreased customer purchasing power (60 respondents) and
increased cost of procurement (59 respondents). These findings suggest that currency
devaluation led to higher prices but lower sales and revenues, highlighting the inflationary
burden on small traders and consumers alike. The study concludes that while Kaunjika traders
demonstrate resilience, they remain financially vulnerable to macroeconomic shocks. It
recommends enhancing SME financial resilience through credit support, business training, and
local sourcing strategies, coupled with exchange rate stabilization policies to mitigate future
devaluation effects.
Keywords: Currency devaluation, Kaunjika traders, selling prices, sales volume, revenue.