President Lazarus Chakwera has reportedly fired Reserve Bank of Malawi (RBM) Governor Wilson Banda, apparently after running out of patience with the man he appointed in July 2020, two top government officials confirmed on Saturday.
A top Capital Hill official who requested anonymity told Nation on Sunday last evening: “It is true that he has been relieved of his duties. What I am not sure of is how the Office of the President and Cabinet [OPC] has handled the matter.
“It could be that he will be paid salary until the end of his contract or he is being paid a lump sum of his benefits for the remaining months,” said the Capital Hill official who was consulted on the matter.
A well-placed State House source corroborated the President’s decision to sack Banda, but said OPC was preparing a public statement on the issue.
OPC spokesperson Robert Kalindiza said he was still consulting to provide a concrete position, while Minister of Information Moses Kunkuyu did not respond to our questionnaire.
Presidential press secretary Anthony Kasunda referred enquiries to Finance Minister Simplex Chithyola Banda, who did not respond to our calls.
On his part, Banda, when contacted on Saturday evening, declined to comment, stating: “I am not taking any questions or interviews from the newspapers. I know what you want to ask. Tikambirane sabata ya mawa zimenezo [let’s discuss that next week].”
Meanwhile, economist Wisdom Mgomezulu, who is Malawi University of Business and Applied Sciences lecturer, on Suturday linked the governor’s removal to failures to effectively execute policies.
He pointed to the prevailing high inflation rates, exchange rate instability and missteps in currency revaluation as some of Banda’s major performance issues.
“His administration’s failure to address these issues worsened the economic crisis,” he said.
Banda—the monetarist with a PhD in Economics from the University of Manchester, Master of Public Administration from Harvard University and Master of Philosophy in monetary economics from University of Glasgow—has presided over the highest rise in prices in more than a decade.
Inflation is estimated to have averaged 32.5 percent in the just-ended year 2024 from an 8.6 percent average in 2020.
Banda, who still has roughly six months before the expiry of his five-year term, will best be remembered for his twin devaluations of 25 percent in May 2022 and 44 percent last November—causing sharp price hikes in the import-dependent country that spends three times more foreign currency on imports than it makes on exports.
Banda’s devaluations also sparked salary increase demands that have nearly doubled the minimum wage, putting a heavy fiscal burden on government and suffocating the private sector already struggling to meet payrolls in the rough macroeconomic environment.
His reign was also characterised by crippling foreign exchange scarcity, which have led to prolonged shortages of crucial imported commodities, particularly fuel and fertiliser that remain some of the biggest sources of frustrations among Malawians.
Banda has also led one of the tightest monetary policy stances in decades, which have pushed interest rates to double the levels he found on his appointment in 2020.
He found the policy rate—the RBM’s official benchmark interest rate for commercial banks—at a record 12 percent, but on his exit more than four years later, it is flying at 26 percent, making borrowing a punishing undertaking for investors and consumers.
To be fair, during his time, Banda was dealt a harsh blow by natural disasters—starting with the lingering effects of Covid-19, then Cyclone Idai in 2019, Tropical Storm Anna and Cyclone Gombe in 2022 as well as Cyclone Freddy in 2023.
These climate-induced disasters devastated agricultural production, including of the staple grain maize with its dominant influence in the country’s consumer price index—the basket of selected goods and services that compute the inflation rate.
The disasters also damaged critical infrastructure, especially in the sectors of energy (electricity generation capacity was decapitated) and transport (massive parts of roads and railways were destroyed), hamstringing the economy.
Sectors that lost significant infrastructure included education and health whose reconstruction costs, apart from disaster response expenses, strained and stretched the national budget, thereby contributing to inflationary pressures and macroeconomic imbalances as the government was forced to borrow heavily.
These crises—coupled with the Russia-Ukraine war and historic structural problems in the domestic economy—suppressed economic growth.
Gross domestic product averaged just around 1.6 percent between 2020 and 2024, which falls short of the six percent mark the World Bank says is needed to meaningfully reduce poverty and is also well below the country’s annual population growth rate of 2.5 percent thereby; suppressing individual incomes.
In the waning months of his reign at the central bank, Banda appeared to have lost the confidence of the financial sector—particularly the banking industry—with controversial exchange control regulations that forced bank executives to openly criticise the policies—a rare rebuke from a banking sector that treats the nation’s top monetary policy chief with deference, even reverence.
Before returning to RBM—where he was general manager for economic services from 2003 to 2010—Banda worked for the World Bank as a senior adviser.
He had also served as a director of Malawi Stock Exchange, member of Economics Association of Malawi, chairperson of Malawi Knowledge Network and Malawi Payments Systems.
