Govt losing out as over K1.5bn is transferred from US to Malawi every month through informal channels
We can reveal that a minimum of $600,000 (about K1.05 billion) is remitted by Malawians living in the United States of America every month through informal channels.
This was disclosed in Dallas, Texas, on Sunday night during an interface between President Lazarus Chakwera and Malawians living in Texas.
Malawi’s Ambassador to the United States of America Justice Esmie Chombo said a study her office conducted revealed that the government is losing out on the remittances as they are not captured by the formal financial system.
“From my collection, there has been evidence that over $600,000 a month is remitted to Malawi. But these are the uncharted channels because there doesn’t seem to be an environment that is conducive for the people to remit their money through the legal channels.
“But they want to send money home. They want to support their friends, they want to support their families, they want to support projects they have,” Chombo said.
She observed that Kenya does remittances but that what they do is that when the money has been remitted to Kenya, they are allowed to withdraw the money in US dollars and the bank keeps a certain percentage.
“And so people are free to remit the money in dollars and when they go to Kenya, they are allowed to withdraw in US dollars. The problem at the moment with Malawi is that people can deposit their money in dollars but they are not allowed to withdraw that money in dollars.
“So it is like discouraging the people in the diaspora to deposit their money and withdraw that same money in US dollars. So, if something was to be done, I know that at the moment, it is illegal or criminal to withdraw the money in a currency other than the Malawi Kwacha. But maybe we need to look at the times in which we are moving. Things are no longer the same in Malawi. We need the dollars,” Chombo said. President for Texas Diaspora Community Edgar Kalima said the problem lies in exorbitant charges that are levied on remittances through the formal channels.
He added that remitting funds through the formal channels attracts a lower exchange rate which ends up in people in the diaspora losing out a lot.
Finance Minister Simplex Chithyola Banda admitted that $600,000 being remitted through uncharted channels is a big loss to the government.
Chithyola Banda said the authorities will have to look at the legal framework to ensure that when people in the diaspora send money to Malawi, they get the same value as the dollar.
On his part, Chakwera urged Malawians in Texas to continue working hard and to be men and women of integrity.
He said by flagging out some of the challenges they face in the area of remittances, it shows that the diaspora cares about Malawi.
Chakwera observed that Malawi has massive opportunities which people in the diaspora need to take advantage of to invest in and develop their country.
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