VIII.  Trade and Project Financing

Brief Description of the Banking System

Malawi's central bank is the Reserve Bank of Malawi (RBM).  There
are two full service commercial banks:  National Bank of Malawi
(NBM) and Commercial Bank of Malawi (CBM).  In addition, there
are the following financial institutions:  Investment and
Development Bank of Malawi (INDEBANK), Finance Corporation of
Malawi (FINCOM), Leasing and Finance Company of Malawi (LFC), the
Post Office Savings Bank (POSB), the New Building Society (NBS),
National Mercantile Credit Limited (NMC), and the National
Insurance Company (NICO).  Applications by two foreign banks
seeking admission to Malawi are currently pending.  Positive
decisions are expected in the near future.

Foreign Exchange Regime

In February of 1994, the GOM eliminated exchange controls and
introduced a market-determined exchange rate system for the
malawi kwacha (mk).  The new foreign exchange regime was
introduced to consolidate and support liberalization in the
economy.  With the exception of "a small number" of transactions,
the new exchange rate system no longer requires importers to
obtain RBM approval prior to placing international supply orders
or to paying for imports.  The presently excepted transactions
include freight and clearing charges, intercompany transfers,
dividends, and principal and interest payments.

Malawi residents, both individuals and corporations, are also no
longer required to surrender foreign exchange.  Those earning
foreign exchange "on a regular basis" may open foreign currency
denominated accounts with local banks. Under the new regime,
Malawian residents are entitled to purchase USD 3,000.00 for
vacations spent outside of the country, USD 4,000.00 for medical
treatment outside of malawi, and USD 5,000.00 for business trips
necessitating international travel.  In practice, residents
presenting requests for these funds have found it difficult to
obtain the foreign exchange.

General Financing Availability

Local MK-denominated financing is available from Malawi's
commercial institutions.  Effective April 1994, the base lending
rate was raised to 30 percent.

Local financing for hard-currency denominated transactions is
more problematic.  Faced with consistent shortages of foreign
exchange, Malawi's commercial credit-worthiness is limited.
Within the past two years, imports into Malawi have primarily
been financed through secured letters of credit.

Export Financing

Malawi's international commercial credit-worthiness is limited.
During 1993 and the first half of 1994, no EXIM financing was
authorized for transactions with Malawi.

Project Financing

The World Bank (WB) is Malawi's most consistent international
source of project financing.  Through its International
Development Agency (IDA), the WB has financed projects in
Malawi's agricultural, financial, and social sectors.

The GOM is actively engaged in a structural adjustment program
which it implements with the advice of the International Monetary
Fund (IMF).

Malawi continues to meet its adjustment goals, thus ensuring its
continued access to WB financing.

The African Development Bank (ADB), and its affiliated fund,
provide financing for projects in Malawi.  Unlike a number of
other African member states, Malawi is not delinquent in its
obligations to the ADB.

Malawi Banks and Corresponding U.S.-Based Banking Arrangements

National Bank of Malawi (NBM) - banking relationships with
Barclays Bank New York, Citibank New York, Standard New York,
Chase Manhattan New York, Bank of New York, and Equator Bank.
Banking arrangements include demand deposit account, telegraphic
transfers, and travellers checks.

Commercial Bank of Malawi (CBM) - banking relationships with
Citibank New York, Chemical Bank, Bank of New York, Bank of
America, and Equator Bank.  Banking arrangements include demand
deposit account, telegraphic transfers, and Citibank travellers
checks.

Finance Corporation of Malawi (FINCOM) - banking relationships
with Citibank and Equator Bank.  Banking arrangements include
demand deposit account and telegraphic transfers.

Investment and Development Bank of Malawi (INDEBANK) - banking
relationship with Citibank.  Banking arrangements include demand
deposit account, telegraphic transfers, and travellers checks.

The remaining financial institutions do not have established
relationships with U.S.-based banks.