The Reserve Bank of Malawi (RBM) has announced that it will exempt certain companies from the mandatory conversion of export proceeds under its newly issued repatriation of export proceeds directive. The move, the bank explained, is aimed at promoting export growth, encouraging value addition, and boosting the use of local raw materials.
The directive, signed by the Minister of Finance and Economic Affairs, Mr. Simplex Chithyola, requires exporters to surrender 25 percent of their export earnings to the central bank within a few days of receiving the proceeds. Exporters who fail to comply risk penalties of up to K200 million. However, exemptions will now be granted to exporters who meet specific conditions set by RBM.
According to the framework released by the central bank, the decision to grant exemptions will be tied to six key criteria. These include: export growth, value addition in production, usage of local raw materials, creation of employment for Malawians, reliance on local services in operations, and the alignment of product prices with global market standards.
The bank explained that each criterion carries a specific weight, and exporters who meet them will earn credits that qualify them for exemption from the 25 percent surrender requirement. RBM further clarified that the framework has been designed to ensure different sectors of the economy are assessed appropriately, taking into account the unique nature of their operations.
In a statement, the central bank noted: “The framework has been developed so that exporters who will benefit from the exemption will also contribute significantly to economic growth. The criteria and weights apply differently to various sectors of the economy. The Bank intends to apply this framework in the interim until the foreign exchange situation improves.”
Economists and industry stakeholders have largely welcomed the development, describing it as a positive step toward strengthening Malawi’s export sector while also ensuring forex stability.
Dr. Bertha Bangara-Chikadza, president of the Economics Association of Malawi and a lecturer at the University of Malawi, said the move was effectively a productivity-linked incentive. She explained that by linking exemptions to measurable outcomes such as value addition and job creation, the central bank was encouraging exporters to contribute to long-term structural transformation.
“By tying flexibility to factors such as export growth, value addition, local raw materials use and job creation, the bank is encouraging exporters to contribute more directly to Malawi’s structural transformation. This policy enforces discipline through not only penalties but also rewards firms that strengthen local value chains and competitiveness. If it is well implemented, it can stimulate productivity, expand employment and improve Malawi’s long-term export performance,” she said.
Financial analyst Mr. Brian Kampanje described the penalty clause as a necessary deterrent against illegal or fraudulent exporters. He argued that while the exemption policy was encouraging, it should be backed by tighter border monitoring and oversight to prevent foreign exchange leakages.
“This is a step in the right direction, but a lot more needs to be done to overcome illegal and unauthorised exports, which slip through our borders every day, translating to substantial forex leakage,” Mr. Kampanje said.
At the same time, National Planning Commission director general, Mr. Fredrick Changaya, urged policymakers to review the broader regulatory framework to ensure that such measures achieve the desired results. He warned that tinkering with forex policies without addressing underlying structural issues could undermine the overall impact.
“Changing regulatory space for forex without addressing the real fundamentals would leave us where we are or even worse,” he cautioned.
Former Minister of Finance, Mr. Joseph Mwanamvekha, also weighed in, noting that the new exemption framework could help the country build stronger foreign exchange reserves while discouraging black-market dealings. He said ensuring that more exporters operate within the formal system will help to stabilise the local currency and build investor confidence.
It would be recalled that in March 2025, RBM had amended its foreign exchange controls by reducing the mandatory conversion ratio of export proceeds from 30 percent to 25 percent. That earlier decision was designed to give exporters some breathing space, but the latest exemption framework goes further by rewarding companies that contribute to value addition and employment generation.
For exporters, the framework provides both an incentive and a challenge: those who invest in local raw materials, expand production capacity, and create more jobs for Malawians stand to benefit from greater flexibility in managing their forex. On the other hand, companies that fail to meet these benchmarks will continue to face the mandatory conversion requirement and possible penalties for non-compliance.
Analysts believe the policy could stimulate productivity in the medium term if properly enforced. By prioritising exporters who build stronger value chains within the country, Malawi could move closer to diversifying its economy, reducing dependency on raw commodity exports, and strengthening its forex reserves.
