Reserve Bank of Malawi (RBM) says the country continues to spend huge sums of money on replacing currency due to counterfeiters, damaged notes and through illegal externalisation and transfer pricing.
RBM Governor Dalitso Kabambe made the sentiments on Wednesday in Zomba during a workshop the bank organised for High Court and Supreme Court judges under the theme Counterfeit Currency, Illegal Foreign Exchange Externalisation and Transfer Pricing.
He said when counterfeit currency happens at a large scale, it erodes the value of the currency, fuels inflation while the international community loses confidence in that currency, thereby affecting the entire economy.
He gave an example of Australia which in 1996 which changed its entire currency series due to currency counterfeits, New Zealand and Canada in 2000 and 2001, respectively as well as the United States of America (USA) enhanced security features on their $100 note and United Kingdom (UK) changed its £1 coin in 2017 due to counterfeit challenges.
In the case of Malawi, for instance, in the past 12 months, a total of 10 cases have been investigated and prosecuted involving 2 496 pieces, the larger one being the case of a culprit who had 2 388 pieces of K2 000 counterfeit notes valued at K4 776 000.
“RBM and the Malawi Police Service [MPS] remain vigilant in investigating and nipping these activities and some of the cases have been successfully persecuted in the courts,” he said.
Kabambe also expressed concern over the wilful damaging of currency saying this year alone, the bank will spend K10.5 billion to replace mutilated and worn out currency which is in circulation.
“We have, therefore, engaged law enforcement agencies to enforce the law by arresting and prosecuting offenders of the law until the malpractice is eliminated and appropriate punishment to these offenders would also send a strong signal to the public if they deliberately damage the currency,” he said.
On illegal externalisation of foreign exchange and transfer pricing, the governor said 22 cases involving $475.32 million (K346.5 billion) are actively being persuaded at different levels of investigations and prosecutions.
Of these cases, eight have already been successfully prosecuted and those involved in externalisation of $795 000 (K587 million) have been recovered and remitted to government.
“Let me, therefore, plead with the Judiciary that when such cases are brought before the courts please assist in meting out the stiffest punishments possible so that the malpractices are totally eradicated,” he said.
In response, Chief Justice Andrew Nyirenda said it is paramount for the citizenry to jealously safeguard its currency at all cost and all the time.
“The courts are committed to mete out appropriate sentences to anyone found tampering with the currency as their action will not only affect RBM but the nation at large,” he said.