On Sept. 23, 2026, Malawians, traders and tourists woke up to news of a crackdown on foreign cash after the Reserve Bank of Malawi announced restrictions on the physical possession and movement of foreign currency. Anyone caught holding more than $1,000 without central bank permission now risks being penalized.
The announcement has drawn mixed reactions. While some have welcomed the restrictions, others have criticized the central bank, accusing it of showing signs of desperation in its management of foreign currency. At the heart of the debate is whether the measures are compatible with Malawi’s liberalized foreign exchange market.
Malawi operates under an economic system in which government has removed price controls and state monopolies to allow private businesses to compete freely.
The new controls have therefore raised concerns among traders and people who regularly travel outside the country.
Malawi is facing a twin foreign exchange challenge: scarcity and the growing informalization of the limited foreign exchange available. This means regulation alone may not provide a lasting solution to the underlying imbalance between supply and demand.
University of Malawi economics lecturer Edward Leman said the new controls could help the RBM manage the limited foreign exchange available but would not, on their own, increase the country’s reserves.
“Ultimately, it is difficult to resolve structural economic problems through regulation alone. The controls may help manage the symptoms, but sustainable improvement requires policies that increase export earnings, attract foreign capital and investment, strengthen formal remittance channels and restore confidence in the formal foreign-exchange market,” Leman said.
Economic analyst Milward Tobias shares a similar view, describing the measures as a crisis-management intervention that should be temporary while authorities work to increase foreign exchange inflows.
“This measure is not really addressing the foreign exchange shortage, but it’s a measure to just help survive within the crisis,” he said.
Tobias, who previously served as late Vice President Saulos Chilima’s economics adviser and contested as an independent presidential candidate in the Sept. 16, 2025, general election, likened the restrictions to rationing resources in a household facing scarcity.
He said Malawi should use the period to address the underlying causes of the foreign exchange shortage.
He highlighted exports, foreign direct investment, remittances and development partner support as key channels through which Malawi needs to increase foreign exchange inflows and rebuild its reserves.
Cross-Border Traders Association of Malawi Chairperson Steven Yohane said the forex shortage was already forcing some traders to source foreign currency outside formal channels.
“We cannot access the forex in the formal channel, but most of the traders access forex through the black market,” he said.
RBM foreign exchange figures paint a difficult picture.
The central bank’s July 2026 Monthly Economic Review shows that total reserves declined from $616.1 million, equivalent to 2.5 months of imports, in June to $600.6 million, or 2.4 months, in July.
The July position was also below the $607.7 million, equivalent to 2.4 months of imports, recorded in July 2025.
Economist Henry Kamkwamba, who teaches agricultural economics at Lilongwe University of Agriculture and Natural Resources, also described the new foreign exchange measure as a sign of desperation in the management of the country’s foreign currency. Reacting to the new policy, Kamkwamba said the measure “screams desperation.”
“US$1,000 is pocket change. I feel that they’re missing the forest for the trees. The problem is not the small quantities. It’s the big deals that slip through unaccounted for, holding our usual problems at their ceteris paribus levels — lack of exports, a large import bill, collectively huge trade deficits and current-account deficits, including debt servicing,” he said.
Kamkwamba added: “I don’t think your US$1,000 will solve our forex crisis. Aggressive import substitution would.”
RBM attributed the month-on-month deterioration mainly to a decline in estimated private-sector reserves, although gross official reserves improved slightly.
Another senior economist, who opted for anonymity because he works for a government institution, said the measure has both positives and negatives.
On the positive side, he said the measure could improve tracking of foreign currency transactions through formal channels, potentially helping to contain illicit financial flows, depending on the seriousness of implementation by authorities.
“On the flipside, this measure will make black market even more hidden and the price of foreign cash will be adjusting upwards because physical cash will be scarce as pangolin animal. Small-scale traders will be most stranded and hard-hit,” he said.
Through the Foreign Exchange (Limit on Physical Possession of Foreign Currency) Notice, 2026, the central bank has prohibited people from physically possessing more than $1,000 — or its equivalent in another foreign currency — without permission.
The notice was made Sept. 7 and published in the Malawi Government Gazette on Sept. 18.
Under the notice, anyone taking or sending more than $1,000 in foreign currency outside Malawi must provide documentary evidence that the money was purchased from an authorized dealer or obtain permission from the RBM.
The central bank has also capped the amount of Malawi kwacha that may be taken or sent outside the country without its permission at the equivalent of $5,000 for cross-border traders and $100 for other travelers.
The measures come amid persistent foreign exchange shortages and widening external imbalances. The RBM has acknowledged difficulties allocating foreign exchange to essential sectors because of inadequate reserves.
National Statistical Office data show that Malawi’s trade deficit widened by 15% in 2025 to $2.67 billion, from $2.2 billion in 2024, driven by increased imports and declining exports.
The data show that Malawi imported goods worth $3.6 billion in 2025, while exports were valued at $936.3 million.
The RBM’s July 2026 Monthly Economic Review shows that total reserves declined from $616.1 million, equivalent to 2.5 months of imports, in June to $600.6 million, or 2.4 months, in July.
The July position was also below the $607.7 million, equivalent to 2.4 months of imports, recorded in July 2025.
RBM attributed the month-on-month deterioration mainly to a decline in estimated private-sector reserves, although gross official reserves improved slightly.
