The Reserve Bank of Malawi (RBM) has reportedly issued a verbal directive to commercial banks, instructing them to transfer foreign currency-denominated accounts in their custody to RBM’s control.
However, industry players have described the move as retrogressive.
Highly placed sources within the banking sector revealed Thursday that they received the verbal communication during a virtual meeting.
One source confided in us that commercial banks were still deliberating on the way forward.
“We are meeting to discuss this matter. If necessary, we will issue formal communication,” the source said.
However, RBM spokesperson Mark Lungu denied that the directive had been issued.
“The government cannot issue directives regarding private accounts,” Lungu said, before referring us to the Accountant General (AG), whose mandate includes overseeing the opening of accounts for government entities.
The AG was unavailable for comment when we went to press.
This development comes as the country grapples with an acute shortage of foreign currency, a situation that has severely impacted several sectors of the economy.
Malawi is still facing fuel shortages, which have been linked to the forex shortage, among other factors, with importers struggling to secure enough dollars to meet the country’s fuel needs.
Last week, Attorney General (AG) Thabo Chakaka Nyirenda accused some of the country’s non-governmental organisations (NGOs) of engaging in illegal foreign currency trading, allegedly depriving the nation of crucial forex.
In a letter addressed to the NGO Regulatory Authority, Nyirenda accused the NGOs of colluding with banks and private businesses to facilitate the movement of forex received from abroad, benefiting private traders.
The AG warned that, legally, banks should only transfer foreign currency to third parties after it has been deposited with them, not directly from the foreign currency accounts of individuals or institutions, such as NGOs.
In the letter, which was addressed to the Chief Executive Officer of the Bankers Association of Malawi and copied to the Secretary to the President and Cabinet, as well as RBM, the AG claimed that the government was missing out on benefits that could have been accrued had banks sold the forex legally.
Chakaka Nyirenda threatened legal action against the alleged malpractice and singled out some senior officials in the banking industry as culprits.
He further claimed that his office had gathered evidence of collusion among the financial controllers of local and international NGOs, donor-funded projects and treasury departments within commercial banks.
He also criticised RBM for its purportedly inadequate enforcement of the Exchange Control Act in addressing the issue.
We were unable to confirm whether the latest developments are linked to the threats issued by the AG.
The Exchange Control Act is primarily aimed at safeguarding Malawi’s foreign exchange reserves and ensuring that forex transactions comply with national economic policies.
It grants RBM the authority to oversee all transactions involving foreign currency, including regulating the buying, selling and transfer of foreign currency between individuals, businesses and financial institutions.
