Malawi devalues the Kwacha by 25%

27 May 2022
Kwacha 2

On 27th May, the Federal Reserve Bank of Malawi announced a return to a market-determined foreign exchange rate regime to support dwindling foreign currency reserves. The move came in reaction to rising commodity prices which have hit Malawi hard, amid declining revenue from tobacco, its major export.

At 0752 GMT on the 27th May, the currency was trading at 1012.69 to the dollar, a reduction of more than 25%.

Read the 27 May Reserve Bank of Malawi statement on the SMP website

Reuters is reporting that without an IMF Extended Credit Facility programme, currently now being re-negotiated, Malawi's economy has been hit by foreign currency shortages resulting in major airlines suspending ticketing, while shops are running out of essential goods like cooking oil and sugar.

Any major shift in the value of the Kwacha like this will obviously have significant human impact in Malawi, most especially in those areas of the economy which rely on imported commodities.

While projects and partnership in Malawi, funded in GBP or USD, will find they can purchase more Kwacha, we are keen to encourage members and funders not to assume this will mean greater outputs. This situation is complex, dynamic and the most important thing is to listen to partners in Malawi over the coming days and weeks; to understand their changing situation and what support and flexibility would support them. It is likely that Kwacha costs in Malawi will significantly increase in the coming days.

We are keen to signpost members to:

We will endeavour to update this page with further information but we recommend that members use the above links to get the latest information.