Revitalizing Malawi’s Economy: Small Firms Push for Forex Solutions to Fuel Growth
Key Business Points
- The Small Scale Business Importers and Exporters Association is urging the new administration to prioritize addressing foreign exchange scarcity, which is exacerbating the country’s economic challenges.
- The association is calling for the Reserve Bank of Malawi to monitor how commercial banks allocate foreign exchange, ensuring that small and medium enterprises have access to the necessary funds.
- The Malawi Revenue Authority (MRA) needs to address outstanding taxation issues, including setting standard and reasonable duty for importers, to support the formalization of the sector and encourage tax compliance.
The Small Scale Business Importers and Exporters Association has appealed to the new administration to tackle the pressing issue of foreign exchange scarcity, which is straining business operations and contributing to the country’s economic challenges. According to the association’s secretary general, Frank Mhango, the decline in foreign exchange reserves has led to a situation where businesses are forced to access foreign exchange from the black market, resulting in higher prices for goods and services. Mhango emphasized that the Reserve Bank of Malawi should work with commercial banks to ensure that foreign exchange is allocated fairly, rather than being rationed to a select few companies.
The association’s executive member, Alfred Manda, also highlighted the need for the Malawi Revenue Authority (MRA) to address outstanding taxation issues, including duty on tax-compliant traders. Manda stressed that the sector is committed to formalization and tax compliance, but needs the MRA to set standard and reasonable duty for importers. The MRA’s response to these issues will be crucial in supporting the growth of small and medium enterprises, which are the "mpango wa kukwela" (engine of growth) of the economy.
In response to the association’s concerns, the Reserve Bank of Malawi spokesperson, Boston Maliketi Banda, acknowledged that short-term solutions have proven ineffective in addressing the foreign exchange challenges. Instead, the central bank is collaborating with the government, financial industry, and private sector to prioritize and invest in productive sectors with high export potential. This approach is expected to help address the structural imbalance that has led to the country’s persistent foreign exchange shortages. As Maliketi Banda noted, "kutengera kwa dziko" (the country’s development) depends on finding a lasting solution to the foreign exchange challenge.
The Financial Market Dealers Association president, Leslie Fatch, also weighed in on the issue, stating that the reduced supply of foreign exchange has affected commercial banks’ ability to service the market, leading to rationing of foreign exchange. Fatch emphasized that banks have to prioritize which bills to service with the limited resources, highlighting the need for a long-term solution to the foreign exchange challenge. As the business community in Malawi navigates these challenges, it is essential to "kugwira ntchito" (work together) to find solutions that support the growth of the economy and the development of the private sector.
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