By Suleman Chitera

Malawi could face one of the largest financial compensation claims in its history after the defunct Finance Bank of Malawi (FBM) demanded over K1.02 trillion in damages and interest from the Reserve Bank of Malawi (RBM), following a landmark ruling by the Malawi Supreme Court of Appeal (MSCA).

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The compensation battle stems from a February 3, 2026 judgment in which the MSCA ruled that RBM unlawfully revoked Finance Bank’s licence in 2005 over allegations of financial malpractice, including claims involving ghost accounts and the externalisation of foreign currency.

The court has now scheduled May 25, 2026 for the formal assessment of damages, a process that could determine whether taxpayers ultimately shoulder the enormous financial burden.

Supreme Court Orders Damages Assessment

According to an official notice issued by the court, all parties have been summoned to appear before the assistant registrar of the Supreme Court of Appeal for the assessment hearing.

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The notice states that witness statements from Mkuzo Kenneth Kuwani and Sokwani Peter Chilembo, alongside skeleton arguments filed by the appellant, will support FBM’s compensation demand.

Attorney General confirmed that his office is working closely with the Reserve Bank of Malawi to challenge the valuation aggressively.

The Judiciary also confirmed receipt of the submissions ahead of the hearing.

How Finance Bank Calculated the K1.02 Trillion Claim

Finance Bank’s compensation package combines claims for lost profits, constitutional violations, contractual breaches, and accumulated interest.

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In submissions filed on April 17, 2026 by First Merchant Bank on behalf of Finance Bank, FBM is seeking approximately $551.9 million for lost business opportunities and profits, plus K61.7 billion in accrued interest.

The bank’s financial adviser, Mkuzo Kenneth Kuwani of the Mahtani Group of Companies, used two valuation approaches to arrive at the figures:

Base Valuation

The initial loss estimate quantified Finance Bank’s lost business and profits at $134 million. The valuation was expressed in US dollars because FBM was considered a foreign direct investment (FDI) institution operating in Malawi.

See also 20 Years of Justice Delayed: Who Benefited from the Finance Bank Case Dragging On?

Comparative Market Valuation

The figure was later scaled to $551.9 million using comparative market valuation methodologies that assessed how the bank could have grown had it continued operating.

Liquidated Claims and Interest

The claim also includes:

• K61.7 billion in accumulated interest and liquidated sums
• K27.8 million for allegedly inducing breaches of employment contracts
• General damages for alleged violations of constitutional property and economic rights
• Damages linked to alleged public office malfeasance

Finance Bank is also seeking interest calculated using prevailing commercial bank lending rates, a factor that significantly inflates the total compensation amount.

See also CDEDI Yachenjeza: Chigamulo cha Supreme Court pa Finance Bank Chitha Kuipitsa Chuma cha Malawi

RBM and Government Move to Block Massive Payout

The Reserve Bank of Malawi and the Attorney General’s chambers are preparing a strong legal challenge against the proposed figures.

Attorney General Mbeta indicated that the government intends to contest both the methodology and scale of the damages.

Legal experts say the state’s defence will likely focus on whether the projected future profits are too speculative and whether the interest calculations are legally sustainable.

Private practice lawyer said while unlawful conduct may justify compensation, courts must balance awards against fairness, public interest, and economic realities.

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He warned that the court would need to carefully evaluate the potential impact on taxpayers, inflation, public expenditure, and economic stability.

Economists Warn of Severe Economic Consequences

The potential K1.02 trillion payout has triggered concern among governance and economic analysts, especially as Malawi continues to battle inflation, forex shortages, unemployment, and growing public debt.

National Anti-Corruption Alliance (NACA) chairperson described the claim as alarming for Malawi’s already fragile economy.

Kaiyatsa warned that such a payout could affect:

• Government spending on public services
• Debt sustainability
• Investor confidence
• Economic recovery efforts
• Inflation management

He called for maximum transparency throughout the legal process to ensure public trust and accountability.

A Legal Battle Dating Back More Than 20 Years

The dispute dates back to May 2005 when the case was first filed in the Commercial Division of the High Court of Malawi after RBM revoked Finance Bank’s operating licence.

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RBM had accused the bank of serious financial irregularities. Following the revocation, Finance Bank briefly reopened under central bank supervision before eventually shutting down in January 2006.

In October 2014, the High Court ruled in favour of RBM and awarded the central bank K13 million while dismissing Finance Bank’s counterclaim.

However, the Malawi Supreme Court of Appeal overturned that position in February 2026, ruling that the licence revocation was unlawful and paving the way for the current compensation proceedings.

What Happens Next?

The May 25, 2026 assessment hearing will determine the scale of damages, if any, that Finance Bank may recover from the state.

The outcome could become one of the most consequential financial and legal rulings in Malawi’s banking history, with implications for:

• Financial regulation
• Investor protection
• Government liability
• Banking sector oversight
• Public finances

For many Malawians, the case has become a symbol of the high financial stakes associated with governance, regulatory accountability, and judicial decisions in the country’s financial sector.