Reserve Bank of Malawi (RBM) Governor Macdonald Mafuta Mwale has hailed Parliament for passing the Foreign Exchange Bill of 2025.
The bill seeks to repeal the Exchange Control Act, which was enacted in 1984, and replace it with a new Foreign Exchange Act.
On Monday, Parliament passed the bill, which proposes a policy shift of the government from the control of foreign exchange transactions to management of foreign exchange transactions.
In an interview, the RBM chief said the passing of the bill represented a progressive step towards a more transparent forex market and a shift in Malawi’s approach from controlling to managing the foreign exchange market.
Mafuta Mwale said, if assented to by the President, the new Act would address long-standing challenges such as foreign exchange parallel (black) market activities, which have undermined the functioning of Malawi’s forex market and the economy in general.
“The [proposed] Act has substantially enhanced some provisions on foreign exchange operations which were not adequately covered under the old Exchange Control Act, thereby closing loopholes for forex leakage and abuse,” he said.
He added that the new Act had introduced a strong sanctions regime that was deterrent and ensured that malpractices would be punished heavily.
For example, fines for some offences that were punishable only by as low a fine of K10,000 in the old Exchange Control Act have now been revised upwards to levels of K200 million in the new Foreign Exchange Act.
In all cases, the punishment also includes imprisonment for authorised foreign exchange dealers’ officials and any individuals that are involved to ensure that non-compliance is dealt with once and for all.
“The spectrum of punishable malpractices has also been broadened, ranging from failure to reconcile import payments, to failure to timely repatriate export proceeds to Malawi, to dealing in forex without authorisation including engaging in Hawala activities, to unauthorised use of forex to quote prices or receive payment for local transactions,” he said.
The former secretary to the Treasury said not only does the new Act deal with curbing forex abuse and non-compliance, but also provides for a forex regime and incentives for businesses to thrive in Malawi.
Mafuta Mwale said the new Act enhanced transparency of foreign exchange transactions by avoiding discretion and encouraging automatic processes that were objective.
There was a heated debate in Parliament on the bill before it was passed.
