The Malawian kwacha

How Malawi decimalised its pound

The kwacha took over from the Malawian pound at two to one, and in doing so Malawi followed South Africa, Australia and New Zealand in basing its decimal unit on half a pound, not on the pound itself. The new money also displaced the sterling, South African rand and Rhodesian dollars that had been circulating in the economy.

The name came from next door: Zambia had introduced its own kwacha in 1968, from the Chinyanja or Chichewa word for "it has dawned". Malawi's tambala, the rooster, completes the image: a hundred roosters announce the dawn.

Who issues the kwacha and how its rate moves

The Reserve Bank of Malawi was set up in 1964 and took over the central banking work of the Federal Bank of Rhodesia and Nyasaland. It issues the notes and coins. The rate was once set by fixed periodic adjustments. Since 1994 it has floated, although the central bank has still devalued it, by 25% in May 2022 and by 44% in November 2023.

What the notes have carried

The first kwacha notes of 1971 were dated 1964 and ran from 50 tambala to 10 kwacha. Larger values followed: 20 kwacha in 1983, 50 and 100 in 1993, 200 in 1995 and 500 in 2001. A 2,000 note came in late 2016 to ease a shortage of cash, and a 5,000 in 2022.

That last step followed a rule. The Reserve Bank's currency policy says the top denomination should not make up more than 60% of the value of currency in circulation, and the Reserve Bank added the 5,000 as a second step under it, after the 2,000.

Early notes carried the portrait of Hastings Banda, and during his rule every note bore a rooster watermark, the symbol of his Malawi Congress Party. The 1995 series swapped the rooster for a fish. From 1997 a series carried the Reverend John Chilembwe instead of a sitting president.

A new family of smaller notes arrived in 2012 to cut printing costs, among them a 1,000 kwacha note printed by De La Rue with maize silos at Mzuzu on the back. It came with two problems. The building on the back of the 20 kwacha, labelled the Domasi Teacher's Training College, turned out to be the Machinga Teacher's Training College. The Malawi Union of the Blind said the raised dots meant to tell the values apart were too small to use, and the Reserve Bank said it would revise the notes.

Why the coins barely circulate

The coins of 1971 ran from 1 to 20 tambala. A 50 tambala and a 1 kwacha coin followed in 1986, and in January 2007 coins of 5 and 10 kwacha went into circulation, although they bear the date 2006. The small coins are plated steel, copper on the 1 and 2 tambala and brass on the 50 tambala and the kwacha. Inflation has overtaken them, and coins below 10 kwacha are very rarely used.