By Taonga Sabola:
Government Monday withdrew Bill No 43 of 2022: Foreign Exchange which had been due to be debated in Parliament since mid-last year.
Leader of the House, Richard Chimwendo Banda moved a motion to withdraw the bill.
“Considering that Bill No 43 of 2022: Foreign Exchange has appeared on the Order Paper since the 49th Session of Parliament and that the government has filed a Notice of Withdrawal of that Bill; this House resolves that the Bill should be withdrawn from the Order Paper. I beg to move,” Chimwendo Banda said.
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The bill sought to repeal the Exchange Control act (Cap. 45:02), an act which was enacted in 1984, and replace it with a new Foreign Exchange act.
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According to the bill, the main reason for introducing this new act was to reflect the shift of the policy of the Reserve Bank of Malawi from not only focusing on controlling foreign exchange transactions in Malawi but also the regulation of foreign exchange flows entering or exiting the country.
This, according to the bill, had been necessitated by the foreign exchange challenges the country has been facing lately.
Among the notable changes, the withdrawn bill sought to fix a period over which a person could hold foreign exchange in Malawi.
It also sought to introduce provisions on reporting requirements by an authorised dealer in relation to cross boarder financial flows; and also sought to give powers to the RBM to issue directives.
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“[The bill] provides for administrative penalties on authorised dealers and international foreign exchange broker who contravene the provisions of the act apart from the criminal penalties provided in the bill.
“It seeks to standardise penalties for offences provided in the bill and other related pieces of legislation; and provides for forfeiture provisions for the courts, on convicted persons,” the bill proposed.
Last year, the World Bank warned that the proposed Foreign Exchange Act may have unintended consequences on investment.
In its 17th Malawi Economic Monitor, the World Bank said the bill puts more restrictive capital controls and transfer restrictions on multinational companies and places restrictions on domestic firms’ access to foreign exchange.
The World Bank observed that the measures could have an adverse impact on attracting new foreign investment and potentially undermine the competitiveness of the domestic private sector that may not be able to import critical inputs for production or services they provide.
“In finalising this legislation, it will be important to find a balance between bringing stronger controls into the foreign exchange market and ensuring that this does not create additional barriers for much-needed investment,” the MEM reads.
