Malawi receives K7bn in remittances

Malawi received about $16 million (K7 billion) in remittances from migrants in 2012, a slight drop from about $17.4 million (K7.7 billion) received in the previous year, available data has shown.

The United Nations Conference on Trade and Development (Unctad) report accessed by Business News on Wednesday also indicates that in 2011 migrants in Malawi paid about $17.6 million (K7.8 billion) in remittances, slightly above receipts in that same year.

Top economies in sub-Sahara Africa, according to Unctad, include Senegal which received $1.4 billion, Uganda $977 million, and Lesotho $601 million in 2012. Neighbouring Mozambique received $99 million while Zambia received $45 million last year.

Since 2008, Malawi’s receipts from migrants have been generally constant at around $16 million, however, payments increased from $10.5 million in 2008 to $17.6 million in 2011.

Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira, in an interview on Wednesday, argued that the Unctad data on receipts was not reliable as it did not include some remittances.

“The data that is available does not include remittances in goods. Due to the fixed exchange rate that we were using, Malawian diaspora could not send money through the official channels because of differences in exchange rates while others opted to send goods,” said Ngwira.

He added that although the current liberalised exchange rate system will encourage remittances into Malawi the central bank is working on a number of initiatives to encourage the receipts.

On how Malawi Government ensures that the payment system does not involve money laundering, Ngwira argued that those that receive and pay remittances are not the same individuals.

Commenting on the margins between receipts and payments which are against Malawi Ngwira said payments are well captured because official channels are used.

Early this year a World Bank report on financial infrastructure and remittance services faulted Malawi as the most expensive country to send money to from another African country, confirming the hassles that Malawians in diaspora meet in sending money back home.

The World Bank report further said remittances play a critical role in financial inclusion since they are the first financial service to be used by recipients who are more likely to use other financial services including bank accounts.

According to data provided by the National Statistics Office (NSO) remittances only contribute a small fraction to the country’s gross domestic product (GDP).

However, in a bid to increase remittance payments to Malawi and create employment for the youth, President Joyce Banda recently announced that the country had sent about 59 young people to the United Arab Emirates of Dubai in a labour export deal while others would go to Kuwait.