35 research outputs found
Sources and application of forex for Malawian imported services
Malawi suffers from massive trade imbalance as it is a net importer of goods and this causes acute forex shortage. The situation is further exacerbated by the fact that imported services which greatly outweigh exported services appear not to be included in the trade deficit figure and therefore source of financing for the imported services is not known. There is a possibility of huge parallel forex market thriving in Malawi and this should be a cause of concern for monetary authorities and the general citizenry. It is recommended that monetary authorities should undertake further investigations in this regard
Randization of Malawian Economy through South African Diaspora could be the rescue of Malawian forex shortage
There is a long established history of migration of Malawians to South Africa to look for jobs and other economic opportunities dating back to precolonial era. The remittances from South Africa have been quite substantial and have uplifted livelihood of thousands of Malawians. The said remittances currently accounts to more than eighty percent of the annual inflows in that category yet there appears to be no concrete strategy to enhance the trade between Malawi and South Africa on the strength of those revenue streams in areas such as importation of official government vehicles, durable and original products, arrange for structured and trade finance based on the needs of Malawi while promoting indigenous traders to provide more goods and services to Government of Malawi. Malawi can be freed of USD obsession
Was it Debt Swap or Collateralised Foreign Currency Loan? Substance over Legal Form Considerations
This is a transaction analysis in which deposit placement by PTA Bank in Malawi was classified as debt swap instead of a medium term loan. There was violation of substance over legal form principle and the study recommends that proper disclosures be made to rectify probable material misstatement of the financial statements
Could reduction of violations in forex market be a key to mitigate risks of the depreciation and devaluation of Malawi Kwacha?
The acute depreciation and devaluation of the Malawi Kwacha in the past ten years seems to stem out in part due to massive illegal externalisation of forex by unscrupulous business people aided by banks despite the existence of various Acts of Parliament and Reserve Bank of Malawi’s Directives, Press Releases and Forex Trading Guidelines. There appears to be little willingness to severely punish the perpetrators as penalties meted out on wayward banks are not publicly disclosed and this is unsustainable as the rewards for mischievous behaviour seems to outweigh any penalties thereof. It is the local ordinary citizen who suffers from high prices of inorganic fertiliser and hence possibility of food insecurity, rising fuel prices and shortage of drugs in the hospitals. Now is time to act
Malawian Parliamentary Oversight on Economy could be the sustainable solution to the acute forex shortage in the country thereby guarantee success of MIP 1 of Vision 2063
Malawi has been battling with inflationary factors attributed to traders quoting their goods and services in USD albeit with little success. Furthermore, the significant trade imbalances is not verified stoking fear this is more to do with illegal externalisation of forex in the absence of pre-shipment inspection services in Malawi. This study has also confirmed that petroleum products and inorganic fertilisers are not the biggest users of forex in Malawi but that printed materials and industrial machinery had significant chunk as well. It is recommended that Malawian Parliament should enhance its oversight role to protect country’s forex and curb cost-push inflation
Considerations for devaluation and depreciation of Malawi Kwacha against major trading currencies in National Development Agendas – Litmus Test for Malawi Vision 2063
This paper strived to evaluate the impact of exchange rate of Malawi Kwacha more specifically as result of devaluation and depreciation against major currencies in the attainment of the country’s developmental agendas. The results indicate that the country has failed to achieve meaningful gains in its developmental agendas in view significant adverse movement in the exchange rate. There was however one exception with Malawi Growth and Development Strategy (2006-2011) when the exchange rate was stable. National Planning Commission should consider safeguards in the Vision 2063 by curbing illegal externalisation of forex as sustainable tool to avoid depreciation and devaluation of the Malawi Kwacha
Sustainability of external debt on Malawi’s import cover – Considerations for Malawi’s Vision 2063
Malawi is currently relying on external debt to cushion its forex reserves and support country’s import cover. This is unsustainable in medium to long-term and World Bank has already expressed concerns on this matter. Malawi’s debt stress levels are currently at high levels but the country is expected to borrow heavily from external sources to support bankable and flagship projects running from 2021 through 2030 under MIP-1 which is a ten-year medium strategy of Malawi’s Vision 2063. There is need to find reasonable export strategies to boost export proceeds but at the same time reduce massive illegal externalisation of forex to give MIP-1 a better chance of success
Reviewing deficiencies in international trade and export strategies in Malawi’s developmental agendas
Malawi is an undoubtedly the net importer of goods and services. It is deemed less competitive on the global scale despite putting significant effort to widen export base as often prescribed in the country’s developmental agendas such as the Malawi Growth and Development Strategies (MDGDs) I, II and III, National Export Strategy (NES) and National Export Strategy (NES) II as well as the Vision 2063 through MIP 1 (2021-2030). This adverse scenario is attributed to the lack of clear set targets to be achieved by our trade attachés, porous borders leading to uncounted exports, failure to record exports in some years and other factors. It is recommended that MIP1 and NES II should address the shortfalls for better Malawi
Fiscal policies are more potent to redress acute foreign currency exchange shortage in Malawi
The ultimate guardrail of forex reserves in Malawi should be the National Assembly whose sole existence is to serve the needs of the Malawians. The monetary authorities can intervene in the market forces to stabilise the value of the Malawi Kwacha against major trading currencies but have limited capacity to influence on how forex in Malawi can be externalised or what measures can be done to keep more forex only meant for crucial imports. Parliament through fiscal policies is able to do so and it is now time Malawi must adopt contractionary fiscal policies by spending less on non-essential expenses such as foreign travel, suspend purchase of new fleets of vehicles but above all, use the tax code to discourage importation of non-essential items into Malawi
Legalising Recreational Cannabis Sativa as forex cash cow for Malawi – Focussing on what buyer wants
Any discussions surrounding legalisation of recreational cannabis is a taboo in Malawi in view of stiff penalties under the Dangerous Drugs Act 1956 as well as strong roots of religious beliefs against it. This is despite the country paying a blind eye to recreational cannabis tourism for its renowned local cannabis strains known across the global as Malawi Gold. This paper argues that Malawi has a tough choice on whether to decriminalise the industry to earn at least half a billion USD annually or let the black market continue to thrive to the detriment of Malawians’ well-being