Forex controls scare local firms
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said the introduction of new foreign exchange controls make it harder for businesses to access the forex they need to import raw materials and engage in other international transactions.
The chamber’s reaction is contained in its assessment of the business environment in 2024 jointly signed by MCCCI president Wisely Phiri and chief executive officer Daisy Kambalame.
The forex controls are contained in the Malawi Government Gazette dated December 13 2024 addressed to public institutions.

Among others, the institutions shall be required to open foreign currency-denominated accounts at the Reserve Bank of Malawi (RBM) and that they will be required to convert 80 percent of their foreign currency receipts into kwacha while non-governmental organisations are expected to convert 70 percent of their forex receipts into the local currency.
But MCCCI argues that while the intention of the regulations remains to curb illegal forex trading, the regulations will reduce the volume of forex circulating in commercial banks.
The chamber said while it is crucial for the private sector to focus on creating forex and fostering robust domestic supply chains to reduce the import bill, it is equally important to prioritise forex-generating industries.
Reads the assessment in part: “The ongoing forex shortage will likely remain an impediment in 2025, especially with the new gazetted supplementary exchange control regulations.
“There is a critical need to establish a structured mechanism for prioritising the allocation of limited foreign exchange to forex-generating sectors to maximise their production capacity and export potential.”
The private sector lobby group said the targeted approach could involve identifying high-potential industries and businesses that demonstrate capacity to generate forex and providing them with prioritised access.
National Advocacy Platform (NAP), a coalition of over 250 civil society organisations in Malawi, also expressed concern that the new restrictions on foreign exchange management would compromise non-governmental organisations’ operations in the country.
In an earlier statement signed by NAP executive chairperson Benedicto Kondowe, the coalition expressed concern that the new law will present significant challenges to the financial sustainability, operational efficiency, and independence of NGOs.
It reads in part: “Such forced conversions expose NGOs to exchange rate losses, reducing funding for critical programmes and disproportionately affecting international NGOs managing multi-currency projects.
“This disproportionately affects international NGOs and those managing multi-currency projects, as it limits their ability to hedge against market volatility.”
Bankers Association of Malawi has since commenced court proceedings challenging the regulations.
But in an interview yesterday, RBM spokesperson Mark Lungu said authorities always monitor and analyse how the market is operating and if there is need to adjust while ensuring integrity and order in the market.
“The regulations are issued to correct or address malpractices,” he said.
In recent months, government has been implementing some policies aimed at curbing forex shortages, however, the supply-demand imbalance has remained, with the spread between the official and parallel market widening further.
Presently, the kwacha is selling at K1 751 on the official market, while on the parallel market; it is fetching as high as K3 100.
As of October this year, total forex reserves stood at $560.3 million (about K981 billion) or an equivalent of 2.2 months of import cover, according to RBM data.
The recommended minimum cover is three months.
In its assessment, the chamber has also pointed out the implementation of tax stamps, the new government-to-government arrangement for importing fuel, the 10 percent corporate tax on businesses declaring profits of above K10 billion and the Insurance Bill of 2024 as some of the government measures that could negatively affect businesses.