A 36-year-old Charity Waya of Nkolokosa Township in Blantyre is a frustrated lady. She is seeing her long time ambition of improving self- economic livelihood through cross-border trade, shrinking quickly.

Waya, used to import raw material from Zimbabwe to sell back home. She recalls, the profit she used to make from the business of selling school uniform cloth was enough to support her family.

But this has not been the case since the year 2022. She is no longer able to get foreign exchange especially United States Dollars and South African Rand, to keep the ball running, therefore, she closed the business.

As an alternative, Waya, ventured into agri-business. She now buys crop produce from local farmers and exports to the same country - Zimbabwe. However, the challenge of shortage of foreign exchange still haunts her.

“I am in trouble. It has become harder to get United States Dollars or South African Rand. I submitted a request to a local bank two months ago to get 1000 dollars but I am yet to get feedback, how can I do my business in that situation? I am no longer able to support my family on basic needs. I am yet to pay school fees for my ward, yet the school term has now come to an end,” said Waya.     

In Mzuzu City, Pronia Mkandawire, has similarly shutdown her business. Since 2012, she was importing electronics and clothes from South Africa and Tanzania to sell at her shop in the “green city”.    

The 47-year-old single parent who looks after two children and five other dependents has now ventured into farming.

“I closed my shop last year because I was no longer able to import the merchandises due to the shortage of foreign exchange. I used to visit banks looking for forex but to no avail,” she said.

Edith Mateyu, aged 36, is another female trader who is struggling to remain in business because she is unable to get foreign exchange, to import clothes from Dar es Salaam – Tanzania.    

It is a year now, since the Mulanje based business operator travelled to Dar es Salaam to import the merchandise.  

“I now go to Lilongwe to buy clothes on wholesale for resale here in Mulanje, because I can no longer afford to go abroad,” she said.      

Due to the shortage of foreign exchange, local banks are now rationing provision of forex to local traders. It is a must for every cross border trader to get a minimum of 1000 UDS, which is approximately per business trip.

The traders are arguing that the amount is not enough to make meaningful business transactions in such a trip.

The Cross Border Traders Association of Malawi says there is an increase in the number of local traders who have stopped exporting as well as importing goods due to the foreign exchange challenges.

President of the association, Steve Yohane, says the body has been engaging government and other relevant stakeholders to find lasting solutions to the problem which he says has serious consequences on both economic and social life of thousands of Malawians. 

“This challenge is now creating poverty among the business traders. Even the change rate is unstable. It is like a wound that is failing to heal,” he said.      

Yohane added that the Simplified Change Regime between Malawi and Zambia has been facing challenges because of foreign exchange challenges and instability of the Malawi Kwacha.

The Simplified Change Regime is an initiative led by the Common Market for Eastern and Southern Africa – COMESA to facilitate smooth implementation of business activities among small-scale cross border traders between Malawi and Zambia through a number of ways such as simplification of custom procedures.

But COMESA, says the business operators underutilize several system which the regional body established to remove barriers affecting cross border trade.

COMESA Clearing House - Executive Secretary, Jedidah Ndebele, says in Malawi, stakeholders need to join hands sensitizing the traders on measures they have to follow to fully benefit.

She says for instance, COMESA launched a payment system called the Digital Retail Payments Platform- DRPP which enables business operators in cross border trade to make digital payments in local currency to ease the burden of requiring foreign exchange to either export or import goods.  

“We have been working on this initiatives for some time now. We do have our Regional Payments and Settlements System which has been in operation for ten years. We are now responding to the needs of the market and going to the retail sector so that we can take care of our small and medium enterprises, COMESA is very responsive to that, what we need is the usage”, she said.          

Meanwhile, Reserve Bank of Malawi Deputy Governor Responsible for Operations, Dr. Kisu Simwaka, says Malawi will promote use of the DRPP which was launched in October last year, to reduce overreliance on foreign exchange in cross border trade.

Through DRPP cross border traders make digital transactions in local currency in payments of goods they are either importing or exporting. 

Bankers Association of Malawi – BAM President, Phillip Mdinga, says the association is aware that the shortage of foreign exchange challenge is negatively impacting on cross border trade.

He expressed optimism that transacting in local currency in cross border trade will assist to promote business activities even in sectors such as mining.  

The Cross Border Traders Association of Malawi President Yohane, wants government to consider removing tax on digital payments for Malawians to fully benefit from the system.

Meanwhile, Cross Border Traders Association of Zambia President, Goodson Mbewe, has expressed hope that initiatives which COMESA is implementing will assist addressing challenges that are affecting cross border trade.

“COMESA has been promoting the digital platforms to reduce physical movements, exchange and payments thereby, addressing challenges traders face. There is need for sensitization and system assurances on protection against any form of loss”, he said.