The Reserve Bank of Malawi (RBM) has adjusted the percentage of foreign currency which an exporter can retain in their Foreign Currency Denominated Accounts (FCDA) on their forex earnings.

The central bank says the move is an incentive to encourage exports.

A statement signed by RBM Governor, Charles Chuka, said exporters will now be allowed to retain 80 percent of their foreign exchange earnings in their FCDA, selling only 20 percent to receiving banks.

Previously, exporters could only retain 60 percent of forex earned in their accounts.

"The move is in line with not just the liberalised foreign exchange markets but also helps Malawi to move closer to the exchange control liberalisation framework enshrined in protocols under Sadc and Comesa," said Chuka.

"The bank will continue to monitor the situation," he said.

The export incentive scheme was introduced in 1994 to allow exporters retain some of their proceeds in FCDAs.

According to the RBM, the scheme started with a retention/conversion ratio of 10/90 percent in 1994.

In reaction to the move, one private sector executive said it may take time for exporters to realise benefits from the adjustment because the country is currently short of forex.

"For instance, I am aware that for companies to access forex, they are queuing for it and the speed of payments depends on the volumes requested.

"For example, external payments in excess of US$20,000 are taking a month or even more to clear if there are no issues with the RBM. Hypothetically, in an ideal situation, the retention quota upward adjustment is a positive move but not in the prevailing economic condition," said the executive.