Senior Government officials
Reserve Bank of Malawi Officials
Taskforce members
Champions from the business community
Members of the Press
Ladies and Gentlemen

I am pleased to be here today to officially launch the Foreign Exchange Statistical Database System.
On behalf of Reserve Bank of Malawi and the Malawi Government, which is co-sponsoring the FESDS project, I welcome you all to this event.
The official launch basically has the following objectives:
• To publicly announce that the system, which we have been working on for the past two years is now up and running.
• To present post-test experience of the past weeks when the system has been live.
• To garner your support and cooperation in the Bank’s quest to improve the tracking system of export proceeds and receipts which would increase the position of our foreign exchange reserves.
One of the challenges for Malawi as an emerging economy is the generation of sufficient foreign exchange to meet its import demands. Malawi’s foreign reserves are low and volatile since the economy relies on agriculture exports particularly tobacco, tea and sugar. This reliance on a few primary commodities will continue to undermine the country’s foreign reserves position unless significant progress is made in growth and diversification of exports. The country’s foreign exchange reserves are supplemented by donor inflows, which have in recent times assumed increasing importance in our economy. However, experience has demonstrated that donor inflows are not a reliable source of foreign reserves as any policy to withhold financial support would greatly affect levels of our foreign reserves.  In order to reduce associated risks, Malawi needs to reduce its reliance on donor inflows, hence the focus on exports.
The importance of foreign reserves on the Malawi economy cannot be overemphasized. 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. It is, therefore, imperative for Government to design and implement policies aimed at creating a conducive environment for foreign reserves growth.
Government has, therefore, been taking various steps to encourage production of exports and boost the reserves position. Malawi has a vast export potential which has not been exploited fully. In particular, should vigorously encourage performance of other sectors such as tourism, mining, and agro based manufacturing. The Malawi Growth and Development Strategies (MGDS) provide a road map on these issues.
Apart from creating a sound macroeconomic base, the Government is undertaking specific initiatives to boost the capacity to earn foreign reserves. One such initiative is the computerization of export proceeds tracking system. In order to monitor and enforce repatriation of export proceeds, the Bank has been using a manual system in the past.  This method was inefficient for ensuring timely receipt of export proceeds and enforcement of repatriation rules.  We believe that automation of these procedures will be more efficient and improve the build up in foreign reserves.
In addition to the direct benefit by way availability and build-up of reserves, the system will generate a wealth of information that will enable the Bank and Government to formulate external sector policies that can adequately complement fiscal and monetary policies to deliver overall macroeconomic stability, which is a prerequisite for poverty reduction. The information will greatly improve our compilation of Balance of Payments Statistics and, to some extent, Malawi's International Investment Position, which will serve as a financial crises early warning system that will alert policy makers to take pre-emptive actions to stop or to minimise crises. This should also support policy and strategic decision making in macroeconomic planning in the context of a liberalized private sector. Experience in East Asia and other emerging markets showed that private sector borrowing can constrain the ability of the policy makers to implement macroeconomic policy.
While the information may be used for regulatory purposes to enhance compliance with various Exchange Control requirements, I wish to emphasise that the information will be gathered and analysed primarily for statistical purposes and to enhance policy making.  It is also worth noting that the computerised system enhances confidentiality of data when compared to the manual system.
In order to effectively carry out this mandate and ensure its success, the Bank needs the cooperation and active participation of all institutions and individuals gathered here. Starting with the exporter as the main producer of the reserves, Malawi Revenue Authority (MRA) ensures that exports are cleared while banks facilitate receipt of export proceeds.
The system became live on 27 October 2008 as indicated in our Press Release in the papers. The experience so far has been mixed:
First, exporters have, over the past two weeks, been creating CD1 Form using the system. I wish to commend exporters for seamlessly embracing the new technology.
Second, we have received reports that authorized dealer banks have not provided as much support to their clients with respect to creation of CD1 Forms as well as discharging electronically created CD1 Forms. Again, on outflows, we have noted that the system is only registering a few transactions. Obviously these lapses can be explained and we are engaging the banks to find a lasting solution to these problems. I wish to encourage banks, to be pro active on the use of the system otherwise we will not realize the objectives for investing in such a system.
Finally, behind the scenes, there is Malawi Revenue Authority and Reserve Bank of Malawi. So far, the two institutions have performed very well and I wish to encourage them to continue doing that.
It is now my humble duty to officially launch the Foreign Exchange Statistical Database, which is set to lead to an improvement in the availability of foreign exchange reserves in the country. Your support and cooperation in this endeavor will go a long way in moving Malawi forward in a global environment that is dynamic, unpredictable and volatile.
I thank you for your attention