perks m ligoya : safeguarding malawi ’ s foreign exchange reserves speech by dr perks m ligoya, governor of the reserve bank of malawi, at the official launch of the exchange control manual, blantyre, 29 december 2009. * * * president, bankers ’ association of malawi chief executives of commercial banks distinguished guests ladies and gentlemen compliments of the season. it gives me great pleasure to officially launch the exchange control manual. on behalf of reserve bank of malawi and indeed on my own behalf, i welcome you all to this memorable event. distinguished guests, ladies and gentlemen, the objectives of the official launch of the exchange control manual are three - fold : a ) to present the exchange control manual to its ultimate users - authorized dealer banks and the business community. b ) to assure exporters and importers that the reserve bank of malawi is fully committed to economic liberalization that it embarked upon some fifteen ( 15 ) years ago. c ) to garner support and cooperation of banks and the business community in ensuring prudent use of foreign exchange reserves. in order to achieve these objectives, let me start by mentioning that the main challenge ( and particularly so in recent times ) for malawi as an emerging economy is the generation of sufficient foreign exchange reserves to meet the economy ’ s growing import demand. malawi ’ s foreign exchange reserves are volatile due to the economy ’ s over - reliance on primary commodity exports and in particular a few agriculture exports. this reliance will continue to undermine the country ’ s foreign reserves position unless significant progress is made in growth and diversification of exports. while export diversification on its own may not be a panacea for an improvement in foreign exchange reserves, the principle that export diversification can contribute to reducing instability of export earnings is widely accepted. thus, government in its quest to mitigate malawi ’ s external vulnerability and, more generally, the country ’ s overall economic performance and welfare, continues to take initiatives to promote export diversification. the generation of adequate foreign exchange reserves is key to malawi ’ s growth prospects. apart from supporting the malawi kwacha exchange rate, reserves are also essential in supporting economic growth through imports of industrial raw materials, agricultural inputs, medicines and other basic necessities. government, in this regard, continues to undertake initiatives to boost and preserve the country ’ s foreign exchange reserves. one such initiative is the computerization of export proceeds tracking system. we are all aware that in november 2008, the bank rolled out the

and in this regard, the government through the world bank funded financial sector technical assistance project ( fstap ), plans to automate trading on the exchange are at an advanced stage. it is envisaged that successful implementation of these projects will enhance market efficiency, improve market visibility and increase market liquidity. in addition to allowing efficient trading and settlement, the systems will enable surveillance and risk control by many market participants. another development in the pipeline is a central securities depository system for corporate equity and debt instruments to provide electronic issuance and custody of financial instruments to enable efficiency, reliability and security of the transactions in the market. i am in no doubt that as the government continues to pursue sound macroeconomic policies ; 3 / 4 bis central bankers'speeches coupled with implementation of the electronic systems and other capital market growth strategies pursued by market participants, the exchange and capital markets in general are poised to contribute to the growth and development of the economy. with these few remarks. i hope that i have earned the right to offer the registrar ’ s congratulations to the exchange on its 20th anniversary. allow me to acknowledge the commitment and hard work of the board of directors, management and staff of the exchange, and all the market participants for bringing the mse to where it is now. this anniversary celebration is well deserved. i wish all of you well. and may god bless malawi. i thank you. 4 / 4 bis central bankers'speeches