Members of Parliament (MPs) have dared Reserve Bank of Malawi (RBM) to decisively deal with foreign exchange leakages, arguing that weak enforcement and illicit financial flows continue to undermine efforts to stabilise the economy.
The legislators under the Parliamentary Committee on Industry, Trade and Tourism expressed their frustrations in Lilongwe yesterday during a meeting with officials from the RBM and its subsidiary, the Export Development Fund (EDF).
During the meeting, the central bank said it is preparing to prosecute 25 exporters who failed to reconcile export proceeds.
RBM officials led by director of foreign inflows Onellie Nkuna said investigations are underway in collaboration with the Malawi Police Service and that the exporters could face stiff administrative and criminal penalties under the Foreign Exchange Act 2025.
The central bank said export reconciliation among formal exporters currently stands at 95 percent, but argued that informal exports and smuggling remain major sources of forex leakages.
According to RBM, some Malawians obtain export permits using their own credentials before transferring them to foreign traders, allowing export earnings to remain outside the formal banking system while exports are recorded as legitimate transactions.
Nsanje Central member of Parliament Francis Kasaila (Democratic Progressive Party-DPP) questioned why authorities were still consulting on new regulations while foreign exchange shortages continued to affect businesses and households.
Describing the economy as “a house on fire”, the lawmaker argued that the country could not afford prolonged stakeholder consultations when illicit financial flows and externalisation of funds remained a significant challenge.
In response, RBM officials said the country has the capacity to generate adequate foreign exchange, but much of it remains outside formal channels due to informal trade and smuggling.
The bank said it is developing an import verification system that will require importers to prove that foreign currency used for imports was sourced through formal channels.
EDF managing director Fredrick Chanza said Malawi had already purchased more than 350 kilogrammes of gold this year and could acquire between one and 1.2 metric tonnes by year-end if current trends continue.
However, the lawmakers wondered if EDF’s resources were being spread evenly across multiple sectors, including agriculture, mining, industrial parks and gold purchases.
The fund also reported a turnaround in its financial performance, with non-performing loans falling from above 60 percent in 2022 to about five percent currently. Total assets have risen to K122 billion while capitalisation has reached K87.4 billion.
During the launch of the National Economic Recovery Plan in Lilongwe last week, RBM Governor George Patridge stated that Malawi’s foreign exchange crisis may be more complex than a simple shortage of United States dollars.
He linked the forex pressures to years of rapid money supply growth, excessive borrowing and fiscal imbalances that increased demand for foreign currency.
