Plans by government to introduce currency repatriation between Malawi and its neighbouring countries have stalled as no official agreement is yet to be signed, six years down the line.
At the height of foreign exchange shortage in the country in 2010, former Minister of Finance Ken Kandodo toyed with the idea of currency repatriation by announcing in the 2010/11 National Budget Statement that Malawi and its three neighbours Mozambique, Tanzania and Zambia would seal a currency repatriation deal to boost trading activities among the countries.
This could probably have been a knee-jerk reaction to deal with the worsening shortage of foreign currency that brought with it untold misery such as shortage of fuel and rising prices of imports.
In financial terms, currency repatriation is the process of converting a foreign currency into the currency of one’s own country.
Reserve Bank of Malawi (RBM) spokesperson Mbane Ngwira, in a written response to an e-mailed query on Tuesday, said no official agreement with regard to the currency repatriation pact has been made.
He said by 2010, initial draft agreements between Malawi, Mozambique and Zambia had been drawn, but the exercise stalled before it was extended to Tanzania.
He said: “The parties are still conducting consultations with relevant stakeholders on the possibility and practicability of implementing the currency repatriation agreement, but formal agreement has not yet been concluded.”
Ngwira said surveys on the same indicate that in total, informal cross-border trade between Malawi and its neighbouring countries reached up to $250 million (K182 billion).
Kandodo said then that the agreement would allow the countries to accept each other’s currency around borders to facilitate trading of goods and services and help to safeguard the country’s foreign exchange reserves and cross-border trading.
A cross-border trader at Blantyre Market said on Sunday there is need for government to consult widely because issues to do with money are sensitive.
But Catholic University head of economics Gilbert Kachamba said on Wednesday currency repatriation could be an ideal move to help soften and stabilise the local currency.
However, he cautioned that the development may fuel money laundering, urging authorities to ensure that tight measures are put in place to ensure that people declare their money when coming into the country.
Agreeing with Kachamba, University of Malawi’s (Unima) Chancellor College economics professor Ben Kaluwa said with the enormous cross-border trading activities taking place, this could be an ideal solution to help the kwacha soften.
Elsewhere, currency repatriation is working in India and powers have been given to foreign exchange bureaus to do it.
In Nigeria, foreign airlines sell air tickets in their local currencies.