Ministry, RBM in move to boost remittances

The Ministry of Foreign Affairs and International Cooperation has set up a diaspora web portal to enable Malawians living abroad remit money in a broader strategy to shore up foreign exchange reserves.

Currently, most Malawians use informal channels to send remittances—funds a person earning a living abroad sends to his or her country of origin via wire, mail or online transfer—making it difficult for the Reserve Bank of Malawi (RBM) to account for it.

The setting up of a portal is part of the wider strategy to increase remittances from the current $38 million (K28 billion) to $200 million (K147 billion) or roughly four percent of gross domestic product (GDP) annually.

The $200 million target is close to $212 million (K155 billion) the country last year earned from tobacco, touted as the country’s main foreign exchange earner.

The ministry’s Principal Secretary Isaac Munlo, in an interview on Wednesday, indicated the portal aims at providing more information to Malawians in the diaspora on how they can invest back home without challenges.

He said all commercial banks have been advised to provide information about their services on the portal.

The new measures have come following consultations ministry officials held with people living in the diaspora over the past few months to make it easy for them to invest back home.

“This project is important to the country and it is being championed by other stakeholders, including government ministries, the Reserve Bank of Malawi and other banks. This portal will have a lot of information on how Malawians can remit money or even secure land for development,” he said.

Munlo indicated that some Malawians in the diaspora have started opening foreign currency denominated accounts (FCDAs) since the RBM softened some of the conditions needed for one to access hard cash.

“Some Malawians were complaining that they were opening accounts in dollars and were being forced to withdraw in kwacha but that has now been changed.  If one wants to withdraw in dollars to use the money abroad, they are free to do so.

“As we are speaking, there are some Malawians who are based in Texas, United States of America and have already mobilised money for the construction of a school in Balaka District,” he said.

As part of the measures to attract money from the diaspora, the ministry has also started diaspora mapping to have a picture of how many Malawians are living abroad as the real figure is not yet known.

RBM director of communications and protocol Mbane Ngwira, in an interview on Wednesday, said they are working with the ministry to ensure that the initiative succeeds.

“It is true that as a central bank, we believe that with good strategies we can increase remittances. A lot of people in diaspora always send money using informal channels; hence, the need to put in place measures to help them send money using formal channels,” he said.

On the continent, remittances make up a significant source of financing, supporting families and driving investment, according to the Trade and Law Centre. n