National Working Group on Trade and Policy has conceded that Malawi’s exchange rate regime is fuelling trade distortions as some exporters opt for informal channels to maximise gains instead of officially declaring export proceeds.
The group’s chairperson Frederick Changaya said in an interview on Saturday that forex distortions are encouraging illicit trade and weakening incentives for exporters to use formal markets.
He said this is depriving the country of official export revenues while distorting trade statistics and undermining efforts to tap into an estimated $328 million (about K574 billion) export opportunity in legumes and other high-value crops.
Changaya, who is also National Planning Commission director general, said: “Some of the official export figures may not reflect the actual volumes leaving the country because the current system rewards informal trade.
rewards informal trade. | Nation
“The exchange rate regime is incentivising export arbitrage. People prefer illicit exports and sell dollar proceeds from such arbitrage in black market to make super normal profits. This deprives the country of the real export volumes and revenues.”
His reaction follows published International Trade Centre data showing that Malawi has an estimated $328 million (about K574 billion) in unrealised export potential, at a time World Bank data shows that trade barriers are contributing to potential revenue losses of about $235.1 million (about K411.8 billion).
Ironically, National Statistical Office data show that Malawi’s trade deficit has continued to widen, increasing by 15 percent in 2025 to $2.67 billion (about K4.6 trillion) driven by rising imports and declining exports.
Meanwhile, the African Development Bank has warned that Malawi’s current account deficit is expected to remain elevated due to persistent foreign exchange shortages, weak export performance and exchange rate misalignments.
According to the bank’s Southern Africa Regional Overview, the deficit is projected at 16.9 percent of gross domestic product (GDP) in 2026, improving slightly from 17.9 percent in 2025 and 18.5 percent in 2024.
Economics Association of Malawi president Bertha Bangara-Chikadza observed that while this shows the deep-rooted export challenges the country has been facing, the implication is that it leads to continued pressure on foreign reserves, raising the costs of imports and fuellin inflation pressures.
“For the private sector, this disrupts supply chains, especially due to foreign exchange shortages. It also raises the cost of production, making the environment unfavourable for investment,” she said.
Bangara-Chikadza, who teaches economics at the University of Malawi, said at a macro level, this limits foreign direct investment as investor confidence is undermined.
Earlier, Malawi Confederation of Chambers of Commerce and Industry said the private sector continues to face challenges to access foreign exchange despite government reducing the mandatory surrender requirement to 25 percent from 30 percent for applicable exporters.
Minister of Industrialisation, Business, Trade and Tourism Simon Itaye is quoted as having said his ministry is targeting to curb foreign exchange leakages as part of immediate measures to ease shortages on the market, observing that some forex earnings are not being repatriated to Malawi.
