* The directive aims to enhance foreign exchange inflows, promote transparency and ensured a level playing field for all participants in the industry
* After the government softened sale of tobacco allowing some merchants to be using local currency until they were able to accumulate enough forex
By Duncan Mlanjira
The Reserve Bank of Malawi (RBM) has issued a directive to the Tobacco Commission that all transactions at the auction floors should be conducted exclusively in foreign currency, especially the United States dollar — effective from the upcoming tobacco marketing season.
Advertisement
The RBM says the directive aims to enhance foreign exchange inflows, promote transparency and ensured a level playing field for all participants in the industry.
The financial services regulator indicates that the government softened the industry’s sale of tobacco allowing some merchants to be using local currency until they were able to accumulate enough foreign currency.
This was done some five years ago under the Malawi Congress Party (MCP) administration, accepting the kwacha on the auction floors — but the “current economic dynamics and the need to strengthen external reserves have necessitated a review of this policy.
RBM explains that they believe stakeholders who were provided with the window to be using the kwacha to buy tobacco on the aucfloors have now accumulated enough foreign exchange for the operations.
The Tobacco Commission is thus request to facilitate the implementation of the new policy and communicate prompts to all stakeholders, with emphasis that “cooperation will be critical in ensuring a smooth transition and compliance across the sector.
“Additionally, merchants are required to be declaring all foreign exchange brought into the country for operations purposes,” says RBM Deputy Governor, Kisu Simwaka. “This transparency will enable the Bank to maintain accurate records and ensure that the sector contributes effectively to national foreign exchange reserves.”
The RBM further reminds all tobacco merchants of their obligations under the Foreign Exchange Act No. 18 of 2025 and the Foreign Exchange (Repatriation of Export Proceeds) Directive, 2025 — which require that “all export proceeds be repatriated into Malawi within 120 days of shipment”.
“Full adherence to this requirement is essential for accurate accounting of foreign exchange inflows and for supporting the country’s macroe stability.
“Therefore, the Bank would like to see that tobacco merchants in Malawi who are involved in the exportation of tobacco leaf fully comply with this requirement.”
The RBM further reassures its commitment to working with the Tobacco Commission and other stakeholders to promote sustainable economic growth in the country, while appreciating the partnership that exists in implementing policies that advance the interests of the tobacco industry and the nation at large.
Advertisement