Foreign exchange (forex) measures Minister of Finance and Economic Affairs Simplex Chithyola-Banda announced on Friday have come under scrutiny with some analysts questioning their practicality.
Presenting the 2025/26 National Budget before Parliament, the minister announced that government will establish a National Anti-Forex Crime Unit to combat illegal foreign exchange trading and the smuggling of minerals and agricultural produce.
He said the unit, which will work alongside the police and intelligence agencies, is expected to clamp down on forex dealers operating in the parallel market where rates often soar above official benchmarks.
Another pillar of the forex strategy is the push for value-added exports, with incentives for manufacturers who process raw materials locally before exporting. This could significantly boost forex earnings while creating jobs and industrial growth.
A major policy shift seeks to encourage commercial banks to play a greater role in generating foreign exchange by financing businesses with export potential, echoing sentiments made by Reserve Bank of Malawi Governor MacDonald Mafuta-Mwale.
Finance and economic analysts, however, question whether the measures, particulary the formation of the unit will be effective in addressing the root causes of forex shortages.
In an interview, anti-money laundering expert Jai Banda observed that enforcing the parallel forex market will be a challenge, considering the clandestine nature of illegal forex operations.
“Regulating parallel markets is not easy because people adapt,” he said. “When the government figures out one way, people adapt and implement other countermeasures to avoid detection.”
On his part, Scotland-based Malawian economist Velli Nyirongo said the demand for forex far exceeds supply, and as long as businesses struggle to access dollars through formal channels, the black market will thrive.
“There’s a fine line between enforcing compliance and overburdening businesses with red tape.
“The key is to simplify processes while ensuring forex is properly managed.”
In an earlier interview, Mzuzu University economics lecturer Christopher Mbukwa said: “If we can move beyond raw exports and focus on value-added products, Malawi can increase forex earnings while reducing its import bill.”
RBM figures show that Malawi closed the year 2024 with a merchandise trade deficit of $2.3 billion (about K4.2 trillion), with imports ($3.2 billion or K5.6 trillion) far exceeding exports ($905 million or K1.5 trillion).
This means in the last year, Malawi imports were 330 percent higher than its exports.
