Reserve Bank of Malawi Must Serve Malawians Interests

 Reserve Bank of Malawi (RBM)’s decision to put a cap on how much foreign exchange one is permitted to possess without seeking approval to $1,000 (or about K1.75 million) is a stitch in time.

This is so because requiring people to source documentation pertaining to origins of $1,000 or its equivalent was somewhat inconveniencing. This is so because people, and even firms, were using time they would, otherwise, utilise for productive purposes idling in forex bureaux or authorised dealer banks while waiting for document processing.

In addition, the requirement was causing unnecessary delays at airports and other busy places.

Furthermore, the requirement to produce documentation backing the possession of $1,000 was fuelling corruption, as some of those who did not have documents were being forced to offer kickbacks to those tasked to ensure that individuals and firms do the needful.

To make matters worse, the regulations were not clearcut, such that chances of people creating loopholes just to get money in return were high.

Now, according to the Foreign Exchange (Limit on Physical Possession of Foreign Currency) Notice for 2026, the central bank is giving people room to possess not more than $1,000, or its equivalent in another foreign currency, without requiring documentation or an explanation within the country or when traveling out.

However, for any amount above the threshold, according to the control measures, one would be required to explain its source, accompanied by supporting documents.

The provision also means that when traveling in or out of the country, people will be allowed to keep up to $1,000 (or about K1.75 million), or its equivalent in another foreign currency, without being asked for documentation at the airport.

However, anything above the amount would, according to the RBM, require supporting documentation.

RBM indicates that the move has been necessitated by the need to ensure sanity in the management and use of forex in the country.

Financial Market Dealers Association of Malawi has, on its part, said the controls are meant to supplement provisions of the Foreign Exchange Act of 2025. The Act was incomplete as it required RBM to define thresholds.

This is, indeed, good news.

That said, we would like to urge the authorities to take heed of what the Consumers Association of Malawi is saying, to the effect that there is a need to ensure that currency syndicates are not thriving.

This can be done by ensuring that only those who are licensed operate forex bureaux.

There is also a need to ensure that everyone is aware of the new measures, lest other people continue to force those with $1,000 to produce supporting documents.

In the end, Malawians need a central bank that responds to their needs—and the new measure is definitely a move in that direction.