Malawi continues to improve its trade financing systems. The economy is largely cash-based, but there are gains made in usage of credit, debit cards, and electronic bank transfers. The economy is liberalized, but the Central Bank intervenes, when necessary, mostly in the foreign exchange market. The banking sector is profitable, and almost all Malawian banks consistently register profits after tax. The Central Bank is the custodian of regulations and policies in the financial sector.

Methods of Payment 

Imports into Malawi are primarily financed through letters of credit (LCs). Commercial banks require importers to provide cash up front to secure the LCs to hedge against the risk of possible foreign exchange losses. Money is then transferred to foreign suppliers through correspondent banks. The Central Bank Payment System office issues regulations and manages payment systems. Most companies pay each other through checks and bank transfers. 

The retail economy relies on cash, but credit and debit cards are slowly entering the market as payment mechanisms. Mobile phone-based money transfers are an increasingly popular payment method. Both major mobile phone companies offer phone-based money transfers, and many retailers and most of the major banks participate in one or both networks.

In 2020, the Reserve Bank of Malawi issued the Business Licensing (Deployment and Usage of Electronic Payment Channels) Regulations, 2019 to mandate licensed entities to deploy and use one or more electronic payment channels for payment of goods and services to provide a convenient, safe, and efficient experience for customers. Regulations require entities to register and mandate the use of electronic fiscal devices under the Value Added Tax Act or businesses with annual revenue turnover over $5,711 must deploy Point of Sale (POS) devices at their premises. All other business entities are required to have at least one electronic payment channel of their choice, such as mobile money, mobile banking, or internet banking.

Some companies offer negotiated payment schedules to well-established companies in business-to-business transactions and to the government, which frequently requires flexible payment terms due to cash flow issues. Widespread lack of confidence in the Malawi government’s management of resources affects Malawi’s credit rating.

Banking Systems

Malawi has a generally sound banking sector, overseen and regulated by the RBM. According to the Institute of Bankers in Malawi, only 25 percent of the adult population in Malawi use banking services. Access to credit remains one of the biggest challenges for businesses and particularly SMEs, mostly due to the cost of credit. The base-lending rate in June 2025 was 25.1 percent. Malawi has eight full-service commercial banks. The four domestic, privately-owned banks managed 63 percent of total net assets in 2023, up from 56 percent in 2022. The remaining four banks are foreign owned and managed 37 percent of total net assets in 2023, down from 44 percent reported in 2022. The National Bank of Malawi and Standard Bank Malawi dominate the sector with a combined market share of 44.8 percent for both total assets and total deposits as of December 2023. These banks also account for 47.7 percent of total loans and 55.8 percent of total equity capital. In July 2024, the total net aggregate of bank assets reached $3.4 billion up from $2.93 billion in January 2024.

Malawi neither has nor requires depositor insurance, but the RBM enforces safeguards and capital requirements. The RBM has guidelines on capital adequacy, liquidity ratio, etc., and adopted Basel II standards in January 2014. International accounting standards adopted by the Institute of Chartered Accountants in Malawi (ICAM) apply to all banks in country. Bank financial statements follow these standards and are audited by internationally recognized firms including AMG Global, Ernst & Young, and Deloitte. More information is available on the RBM website.

Foreign Exchange Controls 

Although foreign exchange markets operate freely, the RBM has a mandate, as does any other central bank, to manage the exchange rate to maintain a sustainable balance of payments position, attain stable domestic prices, and foster growth in real income. The kwacha freely floated from 2012 until early 2022 with periodic intervention from the RBM to stabilize values. Players in the financial sector suggest the RBM continued to exert influence on the rate, making it difficult for market forces to determine the official rate. 

The official exchange rate is usually below the black market and bureau rates tend to price kwacha at a slight discount to the U.S. dollar. Recent foreign exchange pressures resulted in the RBM announcing a 34 percent devaluation of the kwacha in November 2023. The RBM assured investors and other stakeholders that it will maintain a managed floating exchange rate regime. Malawi’s forex remain low, resulting in shortages of essential, imported commodities such as fuel, fertilizer, and medicine. 

In a bid to further control foreign exchange, the RBM amended regulations of the exchange control act in December 2024 specifically for public bodies, research institutions, universities, NGOs, charities, and religious organizations that receive foreign funding. These entities must open foreign currency accounts at the RBM and convert a significant portion of their foreign currency into local currency. Specifically, 80 percent of funds for public bodies and 70 percent for NGOs must be converted at the official exchange rate, with the remaining balance retained in foreign currency for specific uses. These regulations aim to monitor and control foreign exchange transactions to prevent illegal dealings and ensure proper use of funds. For a U.S. entity looking to operate in Malawi, these regulations present challenges such as the mandatory conversion of a large portion of foreign currency into local currency, which could affect financial planning and liquidity. Additionally, the requirement to open and maintain accounts at the Reserve Bank and comply with detailed reporting obligations may add administrative burdens and complicate financial operations. 

A new foreign exchange bill passed by parliament in April 2025 imposes stricter controls and heavier penalties for offences such as improper transfer pricing, obtaining foreign currency through false pretenses, and misrepresenting information to RBM. The revised bill also provides RBM with the power to prescribe the amount of export proceeds to be converted or retained by exporters. The conversion rate currently stands at 25 percent with exporters of manufactured products being able to apply for a waiver on mandatory conversion. The bill also gives RBM the mandate to regulate the domestic sale and export of reserved minerals. The bill contains additional restrictions on where individuals and firms can conduct foreign exchange transactions within Malawi, how long an individual or company can hold foreign currency in cash and on residents lending money to a security or corporate body that is non-resident. The new bill also shifts the policy of the government from the control of foreign exchange transactions to the management of foreign exchange transactions.

Further details on legislation regarding exchange controls can be referenced at RBM Exchange Control. 
The primary sources of foreign exchange in Malawi are the foreign exchange bureaus, donor inflows, foreign direct investments, the tobacco companies, and sugar, tea, and pulses exports.

U.S. Banks and Local Correspondent Banks 

Malawi has eight banks:  CDH Investment Bank Ltd; Ecobank Malawi Limited; FDH Bank Plc; First Capital Bank Malawi Plc; National Bank of Malawi Plc; NBS Bank Plc; Centenary Bank Malawi Ltd; and Standard Bank Malawi Plc. 

There are no U.S. banks in the market. 

The two largest banks, National Bank of Malawi and Standard Bank, maintain banking relationships with several foreign banks including Citibank New York, Standard Chartered Bank of London, First National Bank of South Africa, Standard Bank of South Africa, ABSA Bank Limited of South Africa, Citibank of South Africa, Standard Chartered Bank Ltd, Bank of Montreal, Standard Chartered Bank Ltd, Danske Bank, Skandinaviska Enskilda Banken AB, Standard Chartered Bank Botswana Ltd, Standard Chartered Bank Kenya Ltd, Standard Chartered, Bank Zambia Ltd, Nedbank Swaziland Limited, Deutsche Bank AG, Deutsche Bank Trust, Citibank, Chemical Bank, Bank of New York Mellon, Bank of America, Equator Bank, and Bank of China. 

Banking services include demand-deposit accounts, telegraphic transfers, and travelers’ checks. The other six banks also maintain banking relationships with several international banks including Citibank, ABSA Bank of South Africa, Natxis Bank of France, and DCB Bank of India. Banking services include demand deposit accounts and telegraphic transfers.