Illegal externalisation of foreign exchange coupled with transfer pricing cases have drained in excess of K500 billion as at the close of last year in Malawi, Reserve Bank of Malawi (RBM) has disclosed.
The money—almost a third of the 2819/19 K1.5 trillion National Budget—comes from unsupported foreign exchange transactions remitted without imports being returned into the country to various countries.
RBM Governor Dalitso Kabambe, speaking in an interview on Wednesday in Blantyre, said the bank has been recording several issues in line with foreign exchange externalisation and the amounts are alarming, presently in excess of K500 billion.
He said: “The issue of foreign exchange externalisation is very serious in the country. At the moment, we have cleared 38 cases and we have as much as 48 cases outstanding of which the amounts are large.
“Some of the cases are transfer pricing cases where people would deliberately under declare exports or imports with the view to externalise foreign exchange.” he said
To counter the situation, Kabambe said the bank has given its council a target to ensure that out of the 40 plus cases that are there, at least 10 must be cleared in 2019.
“We cleared 38 cases in 2018 largely because those cases had been in courts for a while and therefore able to push many of them to be cleared. But most of these other new cases are cases that will have to brought to courts and we believe that if we will be able to clear 10 of these that will be a big success because the amounts are large,” he said.
Recently, anti-money laundering expert Jai Banda, who is also a private practice lawyer, called for adequate coordination and intelligence exchange between financial agencies on suspicious transactions.
“Potential investors should be subjected to screening process that they have no criminal history while non-Malawians should be encouraged to invest in Malawi so that money is not taken out,” he said.