Reserve Bank of Malawi says export promotion key

The Reserve Bank of Malawi (RBM) has reiterated the need to boost exports as a way of enhancing the country’s foreign exchange reserves.

This follows revelations that gross official reserves declined to 0.6 months of imports in December 2024, representing a 0.3 percentage points fall from the 0.9 months import cover recorded in December 2023.

However, total reserves, including commercial bank foreign exchange reserves, averaged 2.2 months of import cover in 2024.

In an interview, RBM spokesperson Boston Maliketi Banda said the country had managed on these levels of foreign reserves for decades.

He said to achieve Malawi’s foreign exchange aspirations sustainably, there was a need to strengthen the capacity of export generation productive sectors.

“We are encouraged with the cooperation we are getting from [authorised dealer] banks in the country in supporting measures aimed at boosting foreign exchange reserves.

“Looking ahead, this cooperation should result in a thriving private sector that exports its products and generates foreign exchange, which is vital for stabilising the foreign exchange market and maintaining price stability,” Banda said.

In a recent interview, economic expert Marvin Banda said the country could not earn substantial forex when nearly all it exported were raw materials.

He said it was baffling to see that even though the authorities had been trying to divert national productivity away from tobacco, a staggering proportion of total exports were owed to it.

A Malawi Financial Market Update for the week ending February 28 2025, published by Bridgepath Capital Limited, shows that in January 2024, total reserves stood at $576.70 million (2.3 months of imports).

In February, the forex reserves took a slight dip to $540.32 million (2.2 months of imports), signalling early signs of economic pressure.

The reserves saw intermittent recovery and decline, with a peak in April reaching $603.07 million (2.4 months of imports)—representing the strongest import cover of the year.

As the year progressed, reserves gradually diminished.

By October, reserves had fallen to $519.0 million (2.1 months of imports) before a slight peak to $530.9 million (2.1 months of imports).