The Reserve Bank of Malawi (RBM) has conceded that the black market could be holding a significant amount of forex.
The acknowledgement comes barely a month after the central bank announced that the Kwacha would marginally depreciate by 2.68 percent on June 21, from K1,036 to the United States (US) dollar to K1,063.86.
This followed the second forex auction that RBM conducted on June 20 this year.
However, analysists questioned the magnitude of the depreciation at that time, describing it as negligible since the Kwacha had been selling at an average of K1,600 to the US dollar on the black market and foreign exchange bureaux.
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And, in its presentation Wednesday, when RBM Governor Wilson Banda and his management team appeared before members of the Budget and Finance Committee of Parliament to answer queries on suspected externalisation of forex and money laundering, the bank acknowledged that the black market continues to pose a risk to the formal system.
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Our spot-checks Wednesday indicated that the black market was selling the local unit at K1,800 to the US dollar, providing a steady source of forex to importers at a premium.
However, RBM indicates in the presentation to Parliament that it understands the extent of the problem, such that it has been working with the Malawi Police Service to address it.
It said its officials have been conducting countrywide joint operations in a bid to stem forex black market trading and illegal forex possession.
RBM claims that, in June this year, Fiscal Police arrested six black market forex operators in Blantyre.
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Briefing reporters after the meeting, RBM spokesperson Mark Lungu said the bank has put in place measures to curb the malpractice.
“We have facilitated joint investigations and prosecution on cases of illegal externalisation and abuse of forex with Financial Intelligence Authority Malawi Revenue Authority and Malawi Police Service,” Lungu said.
On his part, Chairperson for the Budget and Finance Committee of Parliament Noel Lipipa asked RBM officials to close all loopholes on money laundering.
“We are losing a lot of forex that could have helped in the purchase of medical supplies, fuel and fertiliser,” Lipipa said.
