Reserve Bank of Malawi challenges private sector on forex earning

The Reserve Bank of Malawi (RBM) has challenged the private sector to intensify production for the export market as it has a key role to play in forex generation.

Speaking on the side-lines of a Monetary Policy Technical Forum in Mzuzu, the central bank’s Director of Financial Marke t Chakudza Linje said the private sector is the biggest contributor of forex in any country considering that they can produce for the export market. Malawi’s foreign exchange reserves have been consistently below the recommended three months of import cover, averaging less than two months.

This situation has been exacerbated by trade imbalances, with higher import bills and low export earnings according to RBM.

“For a country to have foreign currency you need to export. As a bank we have limited scope when it comes to exports. So, the private sector is the biggest contributor to economic development of any country.

“That is why we were saying that if the private sector could look into enhancing their activity and productivity towards sectors that export, we have solutions to our forex problem,” she said.

Linje then bemoaned the tendency of speculation on forex and other products like fuel saying they drive prices of commodities up.

But in its recently released position paper released, Malawi Confederation of Chambers of Commerce and Industry said scarcity of foreign currency has been a significant impingement to the industry’s operations and effectiveness.

It said by driving export diversification, promoting industrialisation, and attracting foreign direct investment, the private sector will significantly contribute to the economy.

“The private sector is facing a constrained business environment characterized by inadequate infrastructure, weather shocks, limited access to finance, macroeconomic imbalances, and persistent foreign exchange shortages, all of which contribute to rising production costs,” reads the paper.

As a result, according to the MCCCI, only 34.8 percent of businesses reported positive performance in 2024, compared to 42 percent in the 2023 survey.