By Pemphero Malimba:
Financial Market Dealers Association (Fimda) has made a fresh call to the authorities to review regulations that are fueling the shortage of forex on the market.
Fimda President Leslie Fatch said this following the arrest of two foreign nationals on allegations that they were keeping huge sums of foreign currency (US dollars) without permission.
The two—43-year-old Honey Toque from the Philippines and 45-year-old Liu Cheng from China—were arrested by police in Lilongwe on Thursday through a special operation they carried out using a search warrant which was granted by the court.
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Fatch said while it was good to enforce the law, the authorities needed to review policies to support the growth of the economy.
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According to Fatch, the regulations include the policy which asks non-governmental organisations (NGOs) to surrender 70 percent of their proceeds to the Reserve Bank of Malawi (RBM).
“There’s a regulation that was effected in December, asking NGOs to surrender 70 percent of their proceeds to RBM, which starves the market of the much needed forex. This has created shortages in the market, hence recent panic and speculative tendencies like cases of forex hoarding being on the rise,” he said.
He said there was a need for the authorities to ensure that they created a conducive environment that discouraged forex hoarding.
“Of late, we have seen how the implementation of certain policies and regulations that have affected the supply of foreign currency,” he said.
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RBM spokesperson Boston Maliketi Banda was not immediately available for a comment on the matter.
But speaking in an earlier interview, Banda said the central bank had made strides in its quest to curb black market forex trading.
“In collaboration with law enforcement agencies in the country, the bank has been studying the malpractices of these illegal forex traders. The bank now has an in-depth understanding of these malpractices and will soon launch a crackdown on this unpatriotic vice,” Banda said.
He said the fight against parallel markets would be won through collaborative efforts.
“It [black market work] is conducted in dark places by evil people and lack of information is one factor [fueling the practice]. This fight can only be won with the cooperation and coordination of many players–the law enforcement agencies and the general public. We call upon the general public to share information on perpetrators and the practices they use,” he said.
The scarcity of forex, particularly the US dollar, has seen the flourishing of the black market where the dollar is going at more than K4,000 against the recommended price of K1,750.
