Foreign Exchange Rise Provides Breathing Room as Malawi Businesses Await Support

Key Business Points

• Monitor forex availability closely; improved reserves may ease import payments but still fall short of the three‑month import‑cover benchmark.
• Diversify export earnings beyond tobacco by exploring mining, tourism and foreign direct investment to build stronger reserve buffers.
• Engage with policymakers on supply‑side programmes that increase market liquidity and narrow the gap between official and parallel exchange rates.

Malawi’s foreign exchange reserves reached $616.3 million in June 2026, enough to cover 2.5 months of imports, according to the Reserve Bank of Malawi’s Monthly Economic Review. This marks a rise from $596.5 million in May and $555.9 million a year earlier, a year‑on‑year gain of $60.4 million or 10.9 percent. The increase came from both gross official and private‑sector holdings.

Economists caution that the improvement, while encouraging, remains below the three‑month import‑cover threshold that policymakers consider adequate. Christopher Mbukwa of Mzuzu University noted that at 2.5 months the country is still short of the target and that businesses continue to report delays in loading foreign currency onto cards and in paying for overseas supplies.

Edward Lemani warned that it is premature to view the gain as structural, pointing to Malawi’s narrow export base and heavy reliance on imports. He argued that sustainable reserve growth depends on export diversification and directing scarce forex toward productive sectors that can expand the country’s earnings abroad.

Velli Nyirongo, a Scotland‑based Malawian economist, stressed that the quality of the accumulation matters more than the headline figure. He advised examining export receipts, donor flows, borrowing, import demand, seasonal farm earnings and central bank actions before concluding that the external position has strengthened. Nyirongo added that higher reserves will only help businesses if they translate into greater market liquidity (chikalakale cha biashara) in the forex market, allowing firms to obtain currency quickly and at rates closer to the official level.

Mbukwa echoed this, saying the real test is whether the gap between the official and parallel market exchange rates narrows and whether companies can access forex without long waits. He recommended implementing robust supply‑side programmes, boosting export revenues from mining, tourism and foreign direct investment, and moving away from reliance on tobacco as the main forex earner.

Overall, while the reserve uptick offers a brief respite, Malawi’s business community should focus on diversifying income streams, advocating for policies that improve market liquidity, and preparing for a more resilient external position.

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