Economists urge faster digital payment uptake as Malawi’s banknote costs climb

Malawi’s heavy reliance on cash is driving up the cost of replacing damaged banknotes, with economists calling for faster uptake of digital payment systems to ease pressure on the country’s currency.

The Reserve Bank of Malawi expects to spend around 69.8 billion kwacha replacing worn and damaged notes this year, up from 50.6 billion kwacha in 2025.

Bertha Bangara Chikadza, president of the Economics Association of Malawi and a senior lecturer in macroeconomics at the University of Malawi, said in an interview that limited use of digital payment platforms was increasing how often banknotes change hands, shortening their lifespan.

“Daily transactions in Malawi are heavily cash dependent. Government levies on digital money transfers also encourage continued use of cash, resulting in increased handling and faster deterioration of banknotes,” she said.

She added that social and cultural gatherings, including weddings and religious fundraisers, also take a toll on currency, as money is often mishandled during such events.

Poor storage habits, such as excessive folding and keeping notes in unsafe conditions, further shorten their lifespan, she said.

Chikadza said wider use of digital payments would help ease pressure on physical cash by cutting down how often notes are handled, pointing to central bank data showing rising use of mobile money and interbank transfers alongside falling ATM withdrawals and cheque transactions.

Even so, she said high transaction costs, limited access to digital services in rural areas and unreliable internet connectivity continued to slow the shift towards electronic payments.

She called on the government and central bank to keep investing in digital payment infrastructure, financial literacy and affordable electronic payment services, alongside public awareness campaigns on the proper handling of banknotes.

She also urged businesses to improve cash handling practices and the public to take greater care of the notes they use.

At a media workshop in Salima, Reserve Bank officials attributed the rising cost of replacing banknotes to poor handling, including writing on notes, stapling, excessive folding, exposure to moisture and dirt, and damage sustained during social events.

The central bank said reducing such practices would help lower replacement costs and preserve the quality of currency in circulation.

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