By Duncan Mlanjira
Reserve Bank of Malawi (RBM) officially launched its 2019 to 2021 Strategic Plan to guide its operations for the next three years and has also developed the Malawi Kwacha Smartphone Application in its efforts to bring down counterfeit currency.
Launching the Plan and the App at their Blantyre offices, RBM Governor Dalitso Kabambe said the central bank will be reviewing its every strategic plan every three years to ensure that it remains relevant and focused on its mandate while at the same time being responsive to the dynamic and ever changing environment and needs of the Malawi nation.
“Building on the successes of 2018, the Bank has developed the new Strategic Plan which in the medium term, is to achieve an inflation target of 5 percent by the first quarter of 2021.
“To achieve this, the Bank has set out its path for monetary policy, and at any point, the Bank will make adjustments necessary to ensure that this objective is achieved.
“It is also expected that by that time, the Policy Rate will also have followed reductions in inflation and settled at around 11 percent, while effective rates by Commercial Banks will have followed suit.”
He added that in the new plan, RBM is expected to grow export revenues through the activities of the Export Development Fund (EDF) from less than US$100 million per year currently to US$600 million per annum by 2021 and working with other agencies such as the Ministry of Foreign Affairs and International Corporation and Malawi Embassies abroad, Diaspora remittances are also expected to increase from US$186 million registered in 2018 to US$500 million per annum by 2021.
“The Bank is also expected to completely eradicate challenges of transfer pricing and illegal externalisation of foreign exchange in collaboration with the Malawi Revenue Authority, the Malawi Police Service, the Immigration Department, the Financial Intelligence Authority, Office of the Director for Public Prosecutions and the Judiciary.
“Our official foreign exchange reserves are also expected to improve further to 6 months of imports from the current average of about 3 months. Economic Growth is also expected to pick to 7.0 percent and above while the exchange rate will continue to remain stable.”
He said in the financial sector, the main objective of RBM for the next three years will be to continue maintaining a safe, sound, stable and resilient financial sector by ensuring that the country has the necessary pieces of regulation and legislation throughout the period and will also endeavour to contribute to capital market development.
“The number of listed companies on the Malawi Stock Exchange is expected to grow from the current 13 to 20. In addition, the Bank will also collaborate with relevant stakeholders to create the necessary environment for a steady rise in the number of bond listings and individual investors on the stock and bond markets.
“The Bank will also collaborate with relevant stakeholders to create an environment for increasing the number of licensed banks, microfinance institutions, SACCOs and interbank transactions in the country.
“The Bank will also facilitate increased private sector credit against total domestic credit from an average of 9.6% to date to 16% by 2021 and also increase contribution of the microfinance and SACCO sectors to total credit from 6% to 12% by 2021.
“Furthermore, there are plans to facilitate scaling up of intermediation of pension funds towards infrastructure development and long term projects from the current 13.20% to 25% by 2021 and increase insurance penetration from the current 2.01% to around 3% by 2021.
“The Bank will also continue to improve the integrity and efficiency of the payment and settlement system as well as currency and banking services. In this vein, the Bank targets to increase the volume and value of retail electronic payments by 110% and 200%, respectively, by 2021.”
On the Malawi Kwacha Smartphone Application, Kabambe said RBM intends to bring down pieces of counterfeit currency towards zero by 2021 and also ensure that no irregular Government cheques pass through the system.
“To this end, the Reserve Bank of Malawi in collaboration with its currency printers have developed a smartphone App that shows and demonstrates the security features of our banknotes. It is no secret that most people do not know the security features that are placed on our banknotes.
“It is also worth noting that most counterfeits have been discovered by local traders and not by bank professionals. That is why the Bank embarked on a major sensitisation programme to equip the citizenry with the capabilities to identify fake currencies.
“The smartphone Application therefore makes it handy for smartphone users to understand and appreciate how genuine the currency looks like. This initiative marks the beginning of yet another milestone in the fight against counterfeit currency in the country.”
He added that RBM is concerned with counterfeit currency, saying the year 2018, they recorded 1,757 pieces of counterfeit notes.
“If unchecked, counterfeit currency can adversely affect the economy as it negatively impacts on prices and undermines credibility. The malpractice can also lead to losses in business or on a personal level.
“It is for these reasons that we need to safeguard the integrity of the Malawi kwacha currency at all times. The Bank has from time to time conducted awareness initiatives that enable people to properly identify the Malawi kwacha currency.
“These include television and radio announcements, public outreach campaigns, training workshops with key stakeholders, use of print media, just to mention but a few. As you are aware, we are living in modern times where technology is always improving. As such, we should make every effort to ensure that such technology is used to reach out to the public.
“We are aware that a good number of people use smart phones and other related gadgets. Most of the youngsters are technology savvy and understand issues faster and easier if presented digitally. It is for this reason that the Bank decided to develop an application that can enable such users to verify the authenticity of Malawi kwacha in their offices, homes, business premises or wherever they are.”
He said the Malawi Kwacha Application can be downloaded from Google Play Store or Apple Play Store and it is very user friendly.