The kwacha is the official currency of Malawi. Malawi is a small, landlocked nation of southeast Africa, and the kwacha has been its national currency since 1971. The kwacha is subdivided into 100 tambala, but tambala-denominated coins are rarely used today. The name of the currency was first used in Zambia, deriving from a word in the Bemba language meaning dawn. The Reserve Bank of Malawi issues the kwacha, which has been on a controlled exchange rate since 2005.
The kwacha was introduced by the Reserve Bank of Malawi in 1971 as a replacement for the Malawian pound, which had been in use since 1932. However, many foreign currencies were in use unofficially alongside the Malawian pound, and this was one of the primary reasons for adopting the new currency. Another reason for adopting the kwacha was to decimalise the currency because the pound used subdivisions of 20 shillings or 120 pence to the pound. At its introduction, one pound exchanged for two kwacha. Today, kwacha is primarily distributed as a series of banknotes ranging in denominations from 5 kwacha to 500 kwacha. Coins in denominations of 1, 5 and 10 kwacha are also used.
The Reserve Bank of Malawi, the sole issuing authority of the Kwacha was established in 1965. Ten years after introducing the Kwacha, the bank expanded and moved to its current location in Lilongwe. In 1989, the bank was converted into a modern central bank with the primary goal of stabilising the national economy. Before this time, the Reserve Bank of Malawi was a division of the Treasury, but the RBM Act of 1989 made it an autonomous agency. As such, the bank now has full power to develop national monetary policy. However, national fiscal policy is set by the Ministry of Finance.
Malawi is officially listed as one of the world’s least developed countries. It is densely populated with a largely impoverished people. The economy is agricultural, accounting for one-third of the GDP and 90 percent of exports. It is also supported by aid from the World Bank and the International Monetary Fund (IMF). Although economic growth was at nearly 10 percent in 2008, Malawi faces several obstacles in developing its economy. The infrastructure does not currently offer reliable electrical service, water distribution and telecommunications. AIDS is at epidemic proportions, and the people do not have sufficient education and health care.