Mining
RBM purchasing gold at higher price than world market rate
May 06, 2025 / Wahard Betha
RBM Building in Lilongwe
The Reserve Bank of Malawi (RBM), which is operating the gold structured market through its subsidiary Export Development Fund (EDF) is buying the precious mineral at a price higher than the price on the international gold market.
Mining & Trade Review has established that the Central Bank is buying gold at MK260, 000 per gram surpassing the international market price which is now at around US$100.24 equivalent to MK172,795 per gram on a rate of Mk1,727.38 to a dollar.
Commenting on the development, Coordinator for Chamber of Mines and Energy Grain Malunga opined that the decision by RBM is aimed at competing with the black market whose prices keep on escalating. Malunga said even though the target is to dominate the market, the central bank is at risk of losing more money in a move to curb illegal trading.
He said: “The RBM is trying to capture all the gold being produced in Malawi and is setting its price competing against the illegal market.”
“The negative impact is that the Bank will lose a lot of money while trying to curb illegal trading.”
MD for Maleta Gems and Jewelry, Percy Maleta said buying gold at that price has negative impact to the countries’ economy including inefficiencies in the economy and putting pressure on foreign exchange reserves.
Maleta said: “Buying gold at a K260,000 premiums over international prices could lead to inflation, distort market dynamics, and strain the country's budget.”
“It may create inefficiencies in the economy and put pressure on foreign exchange reserves.”
ASM consultant Chikomeni Manda commented that RBM is likely make loses the time they will think of selling the gold. Manda said: “It is very surprising to see RBM offering the highest buying price of gold in the whole world.”
“I think they are doing this to compete with the black market buyers, who are buying the gold using the black market dollar exchange rate.”
“With such an abnormal price, it will be very impossible for RBM to make a profit out of the gold.”
In a separate interview, Mining Expert Ignatius Kamwanje however said RBM’s offer of high gold purchasing prices to ASMs is an encouragement to local miners to start taking mining as a serious business in return to increasing the Bank’s reserves. On the other hand, he feels that the decision would influence smuggling of gold from outside the country to be sold at RBM at a higher price.
Kamwanje said: “The government is pegging highly possibly because they want to accumulate enough reserves by encouraging locals to mine and sell to RBM.”
“By doing so there is rampant gold mining, unfortunately others are still doing it illegally.”
“But the negative impact could arise from those who smuggle gold from outside the country to sell in Malawi leading to competition with locals and this externalizes the much-needed forex in one way or another leading to forex shortage.”
RBM, which also buys precious gemstones from ASMs, established the structured gold market in 2021 and has to date managed to purchase gold amounting to 293 kilograms valued at US$27 million which is about MK47 billion.
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