Name: Malawi battles forex shortage amid digital payment crisis
Uploaded: 2025-12-04T21:38:25.638Z
Duration: 3 min 5 s
Description: Malawi is struggling with a severe foreign exchange crisis, leaving banks unable to supply businesses with the forex they need. Online transactions using digital cards have become increasingly unreliable, forcing traders to seek costly alternatives as stock shortages worsen.

Malawi is struggling with a severe foreign exchange crisis, leaving banks unable to supply businesses with the forex they need. Online transactions using digital cards have become increasingly unreliable, forcing traders to seek costly alternatives as stock shortages worsen.

Lilongwe

Malawi is grappling with a severe shortage of foreign exchange reserves, which has led to widespread failures in digital payment transactions for businesses. Entrepreneurs are unable to purchase goods online or access foreign currency through official banking channels, pushing many to the informal market where exchange rates are significantly higher than the official rate.

The scarcity of forex is straining the economy, as Malawi relies heavily on imports for both goods and raw materials. Business owners report declining sales and rising prices, while experts warn that without intervention, companies dependent on digital payments may collapse. The Reserve Bank of Malawi has stated it is working on a solution, but business owners currently face uncertainty.

Malawi battles forex shortage amid digital payment crisis

Sheila Mpunda, a 38-year-old entrepreneur in Lilongwe, is trying to buy cosmetic products online for her shop using her bank-issued visa card, but the transaction fails, again and again. For months, Sheila has faced repeated payment declines. Each time we try to buy using the visa card, it declines, and even when we visit the banks, they say that they are not being able to access any products, so this is really upsetting. Her shops are running empty, and her business is on the brink. Malawi's foreign exchange reserves have hit critical lows. Banks cannot provide enough U.S. dollars, euros or pounds, making international transactions nearly impossible. Business operators now placed between a rock and a hard surface, they are left with few options to either close their businesses or buy forex on the informal market, trading at around $4,500 per dollar, way above the official rate of $1,750 per dollar. Malawi's economy is under strain. Export production is minimal, while imports dominate the market. Traders like Samatha Belson are frustrated as they struggle to access forex and process online payments. At the moment, that means if we have to transact, that means we still have to use the illegal way, which is the black market. So at the moment, with the forex scarcity as well, and then we're failing to buy things online, we can't even pay things online. So I think that has taken a major toll on the business, as we haven't made much sales from last year up to this year as well. I think they should be able to have in the system to know these people have legit business, and then they should be able to allocate some funds to those people that have businesses and business places. Experts warn that if the government fails to address the forex shortage soon, businesses relying on digital payment systems could collapse. Malawi is in a global village, and we don't produce almost everything that we consume. And even the things that we trade domestically, most of them are actually purchased outside the country. And businesses, most of the businesses in Malawi, they are using even raw materials that are purchased from outside. However, when business people are failing to remit their payments or to pay for the things that they ordered online, it also affects the businesses. So we can see that most of the businesses are not actually doing well. We have seen even increases in prices because people are now obtaining the forex on the black market because they still have to make payments for these goods. They still have to be in business. The Reserve Bank of Malawi says it is working on a solution. Until then, entrepreneurs like Sheila can only hope that their next transaction will go through. But there are no guarantees.

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