National Bank of Malawi (NBM) has announced that it will no longer offer pre-set foreign exchange (forex) limits for its card products effective January 13th, 2025.
The decision comes amid a persistent forex shortage in the country.
In a statement, NBM has cited limitations in the availability of forex to settle obligations as the reason for the change.
The bank has emphasized that even though pre-set limits will no longer apply, customers can still ask for forex for specific travel or needs.
“This change has come about due to limitations in availability of forex to settle the obligations once such cards are utilised. Based on this change, if you plan to use your card(s) for foreign travel or transactions – including online payments, you will need to apply for specific approvals through your Service Centre at least 7 days before use,” reads the statement.
Meanwhile, Economic Expert Kingsley Jasi has told Nthanda Times in an interview that he believes the discontinuation of the pre-approved forex limits reflects the ongoing impact of the forex shortage on the Malawian economy.
He pointed out that the Reserve Bank of Malawi has been implementing stricter forex controls to rank essential imports.
“The banks don’t generate forex. It is the businesses, the industries that generate forex, and then they deposit the forex in the banks. So, this only shows that the bank is not making or is not keeping enough forex to allow continuation of this pre-approved forex for those that are trying to access forex with banks.
“We also have to understand that the regulatory environment is changing because the Reserve Bank of Malawi continues to tighten things, the forex controls, in trying to make sure that the little that is there is kept for essential things, essential imports,” said Jasi.
Jasi has further highlighted that businesses and individuals who rely on foreign exchange for online transactions or international payments will likely face challenges due to this change.
The forex shortage is attributed to several factors, including limited forex generation by local businesses, insufficient foreign direct investment, and declining foreign aid inflows.
“It means that privilege is no longer there. So, that will only deepen the access to forex, right? So, it means it’s going to slow down their businesses and obviously their income will also be affected. So, all these are just in the results of the general problem that we have as a country that is not generating enough forex,” added Jasi.
The country continues to grapple with a persistent scarcity of foreign exchange, straining the country’s economy and impacting businesses and individuals alike, as government is working to address this issue, including efforts to rebuild international reserves and reduce external vulnerabilities.
In November 2023, the Reserve Bank of Malawi (RBM) devalued the kwacha by 44 percent as a key condition for securing a $175 million (about K306.4 billion) four-year International Monetary Fund (IMF) Extended Credit Facility (ECF) program.
