Small Scale Business Importers and Exporters Association has appealed to the new administration to prioritise addressing foreign exchange scarcity, describing it as the backbone of the country’s economic challenges.
The association’s secretary general Frank Mhango said this in Lilongwe on Friday at a time foreign exchange reserves continue to decline and are now recorded at below one month of import cover, thereby straining business operations.
Briefing journalists, he warned that if businesses continue to access foreign exchange from the black market, prices of goods and services will continue to rise.
Mhango said apart from medium to long-term solutions such as increasing production and securing forex inflows from development partners, the Reserve Bank of Malawi should follow up with commercial banks on how they are rationing the available forex.
He claimed that some banks allocate forex to a few companies at the expense of small and medium enterprises operations.
“Our message to the new administration is that they should put foreign exchange issues seriously because if we continue getting the dollar at K4 000 on black market, then things will continue to worse,” said Mhango.
The group’s executive member Alfred Manda also raised outstanding taxation issues that Malawi Revenue Authority (MRA) should address, including duty on tax-compliant traders.
He said: “We also wanted express our commitment to ensure that our sector is formalised and that all our members should comply with Taxation Act.
“We also need MRA to set standard and reasonable duty to importers because some members complain that they are being overtaxed.”
In an interview on Sunday, Reserve Bank of Malawi spokesperson Boston Maliketi Banda acknowledged that short-term solutions such as demand management and currency devaluations have proven ineffective to address the foreign exchange challenges.
He said the central bank is collaborating with the government, the financial industry and the private sector to prioritise and invest in productive sectors with high export potential.
“The country’s persistent foreign exchange shortages are a symptom of a deep-rooted, structural imbalance. For decades, our imports have significantly exceeded our exports,” said Maliketi Banda.
In a separate interview on Sunday, Financial Market Dealers Association president Leslie Fatch said reduced supply of foreign exchange has affected commercial banks’ ability to service the market, adding that rationing forex is just a reaction to the drop in supply.
“Considering that structural challenges are yet to be fully addressed in the market, for now banks have to actively prioritise on which bills to be serviced with the limited resources,” he said.
In August this year, RBM announced a reduction in the mandatory conversion rate for export revenues from 30 percent to 25 percent, with further reductions for qualifying companies anticipated.
