Malawi is struggling with a severe foreign exchange crisis, leaving banks unable to supply businesses with the forex they need. Online transactions using digital cards have become increasingly unreliable, forcing traders to seek costly alternatives as stock shortages worsen.
00:00Sheila Mbunda, a 38-year-old entrepreneur in Lilongwe, is trying to buy cosmetic products online for her shop using her bank-issued Visa card.
00:11But the transaction fails again and again.
00:15For months, Sheila has faced repeated payment declines.
00:20This time we try to buy using the Visa card, it declines, and even when you visit the banks, you cannot be able to access any products.
00:31So this is really a thing.
00:32Her shelves are running empty, and her business is on the brink.
00:38Malawi's foreign exchange reserves have hit critical lows.
00:42Banks cannot provide enough U.S. dollars, euros, or pounds, making international transactions nearly impossible.
00:51Business operators now placed between a rock and a hard surface.
00:54They are left with few options to either close their businesses or buy forex on the informal market, trading at around 4,500 kwadja per dollar, way above the official rate of 1,750 Malawi kwadja.
01:09Malawi's economy is under strain.
01:12Export production is minimal, while imports dominate the market.
01:17Traders like Samantha Belson are frustrated, as they struggle to access forex and process online payments.
01:24At the moment, that means if we have to transact, that means we still have to use the illegal, which is the black market.
01:31So, and at the moment, with the forex scarcity as well, and then we're failing to buy things online, you can even pay things online.
01:40So I think that has taken a major toll on the business, as in you haven't made much sales from last year up to this year as well.
01:47I think they should be able to have in the system to know these people have legit business, and then they should be able to allocate some funds to those people that have businesses and business places.
01:59Experts warn that if the government fails to address the forex shortage soon, businesses relying on digital payment systems could collapse.
02:08Malawi is in a global village, and we don't produce almost everything that we consume, and even the things that we trade domestically.
02:17Most of them are actually purchased outside the country.
02:20And businesses, most of the businesses in Malawi, they are using raw materials that are purchased from outside.
02:26However, when business people are failing to remit their payments or to pay for the things that they ordered online, it also affects the businesses.
02:36So we can see that most of the businesses are not actually doing well.
02:41We have seen even increases in prices because people are now obtaining the forex on the black market because they still have to make payments for these goods.
02:49They still have to be in business.
02:50The Reserve Bank of Malawi says it is working on a solution.
02:55Until then, entrepreneurs like Sheila can only hope that their next transaction will go through.
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