By Kingsley Jassi:
State-owned enterprises (SOEs) have turned around their performance from a combined loss of K66.5 billion in 2024 to a profit of K34.1 billion this year.
An annual report on their performance has attributed this mainly to high performances in the aviation, transport and energy sectors.
However, the report said the water sector remained the weakest performer, with recurrent deficits registered during the year despite its continued dominance in assets.
“Cost-recovery challenges persisted, particularly in the water sector, where non-cost-reflective tariffs, rising input costs and operational inefficiencies continued to undermine financial sustainability,” the report reads.
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Debt dynamics improved modestly in 2025, with total liabilities declining from K1.71 trillion in 2024 to K1.53 trillion in 2025, reflecting reductions in on-lent and guaranteed debt.
However, the report observes that liquidity constraints worsened, with the debt service ratio for service-provision entities falling to -0.3 percent, signaling insufficient cashflow to meet interest obligations.
“Fiscal flows continued to reflect structural imbalances as the government grants increased sharply, especially in the agriculture sector, rising to K118 billion in 2025, while dividend remittances dropped from K20.5 billion in 2024 to K4.4 billion in 2025 due to severe cashflow constraints and rising trade receivables,” the report says.
It further says although government arrears to SOEs declined from K41.2 billion to K9.5 billion, significant intra-SOEs arrears persisted, particularly among utilities, reinforcing liquidity pressures.
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Recently, Economics Professor Winford Masanjala faulted the Central Government for standing in the way of the SOEs’ performance through controls on pricing and governance.
Addressing patrons during a panel discussion that reflected on the World Bank report on public finance review, Masanjala said indirect subsidies had not only affected SOEs’ performances but also caused poor service delivery.
“The government is so loving that it even kills its own people,” Masanjala said, in reference to consequences of inefficiencies in public service delivery following poor performance of the SOEs in critical sectors.
The World Bank report also observes that SOEs face serious governance and efficiency issues, including political interference and lack of autonomy.
“Government-imposed distortions—such as tariffs set below cost-recovery levels and non-commercial objectives—create unsustainable conditions,” the bank says.
It further says weak performance in agriculture and energy, combined with poor transparency, exacerbate inefficiencies and fiscal risks. Malawi has about 70 SOEs across several sectors that include agriculture, finance, transport, energy, water, aviation, among others.
