Malawi is now asking foreign tourists to pay for hotel stays and related services in dollars, euros, or other major currencies, part of a new push to rebuild its shrinking foreign reserves. Finance Minister Joseph Mwanamvekha announced the move on Friday during a mid-year budget review, signalling a significant tightening of the country’s foreign-exchange rules.
The change comes after Malawi’s reserves took a hit following the end of the IMF’s Extended Credit Facility earlier this year. With the programme expired and several donors cutting budget support, the government says it must act to “save every dollar” coming into the economy. Mwanamvekha emphasised that boosting reserves is key to stabilising the kwacha and ensuring essential imports can continue.
Under the new rules, hotels, lodges, and tour operators must now apply for special licences to handle foreign currency directly with the Reserve Bank of Malawi. The government says this system will make sure tourism-generated hard currency enters the formal banking system rather than being diverted or circulating informally. Though smaller than some neighbouring countries, Malawi’s tourism sector remains an important source of foreign currency, and officials argue that tighter oversight will help plug leaks and strengthen national reserves.
Exporters are also facing stricter rules. Foreign earnings must now be returned within 90 days instead of the previous 120, with any surplus currency handed over to the authorities. This applies to major sectors like agriculture, mining, and manufacturing, and companies will need to adjust their cashflows to comply.
In addition, the government has suspended short-term foreign-exchange derivatives, which some banks had reportedly abused, contributing to instability in the kwacha market. These contracts will only return once stronger regulatory safeguards are in place. Banks and financial institutions may feel the immediate impact, but the government insists the move is necessary to restore order.
While these reforms aim to protect Malawi’s reserves, analysts warn the government must strike a balance. The new measures introduce more compliance for businesses, particularly in tourism and exports, and could affect investor confidence. Mwanamvekha defended the steps, saying Malawi cannot afford continued reserve slippage at a time of weak exports and reduced donor inflows.