By Burnett Munthali
In a significant move, the Reserve Bank of Malawi (RBM) has reportedly issued a verbal directive to all commercial banks in the country, instructing them to transfer foreign currency-denominated accounts under their management to RBM’s direct control. The directive, which has raised concerns among financial institutions and the business community, marks a new chapter in Malawi’s ongoing efforts to stabilize its foreign exchange reserves amid persistent economic pressures.
Sources within the banking sector suggest that this shift could allow the central bank to exercise greater oversight over foreign currency transactions, potentially helping to address Malawi’s foreign exchange shortages. RBM has been under pressure to manage declining foreign reserves, with currency shortages affecting importers, fuel suppliers, and local businesses dependent on foreign goods.
The central bank’s move comes against a backdrop of economic challenges, with Malawi grappling with a depreciating kwacha and rising inflation rates. With a limited supply of foreign exchange, RBM may be attempting to consolidate these resources, channeling them toward national priorities, such as essential imports and external debt servicing. However, the lack of formal written communication on the matter has left some banks seeking clarity on the implementation and legal framework for the directive.
Local businesses, particularly those with substantial foreign currency needs, have expressed concern about the potential impact on operations. Many worry that limited access to foreign currency could hinder their ability to import goods, meet contractual obligations, and plan future investments.
The directive has also raised questions about the autonomy of commercial banks and their role in managing foreign currency for customers. In recent years, RBM has introduced various measures to control foreign exchange flows, including tighter regulations on currency trading and monitoring of foreign currency accounts. However, this new directive represents one of the more assertive steps in centralizing control.
As the situation develops, financial experts are calling for transparent guidelines and engagement with the private sector to minimize disruptions. The RBM is yet to release an official statement clarifying the scope of the directive, its duration, and whether exemptions will be made for certain account holders, such as exporters or non-governmental organizations.
This move by RBM underscores the government’s strategy to manage foreign currency more stringently. However, the challenge lies in balancing control over foreign exchange resources with supporting a resilient, competitive business environment—key to fostering long-term economic growth in Malawi.
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