By Kingsley Jassi:
Loss-making Blantyre Water Board (BWB) continued performing poorly last year, posting a K33.6 billion loss, figures in the Government Annual Economic Report show.
This is the largest loss registered in the report that lists 18 selected State Owned Enterprises (SOEs), and this loss grew from K20.7 billion the troubled utility company registered in 2023.
In the year under review, three SOEs made losses out of the 18 and they also include Malawi Broadcasting Corporation (MBC) with K1.28 billion loss and Central Medical Stores Trust (CMST) with the second largest loss valued at K8.6 billion.
- Advertisement -
However, the 18 listed SOEs had a combined net profit of K13.36 billion, a turnaround performance from a combined loss of K6.5 billion.
- Advertisement -
In the outlook, the SOEs projects a combined profit growth to K49.3 billion, thanks to improved performances of BWB and CMST that projects reduced losses, amounting to K2.18 billion and K2.6 billion, respectively.
A financial expert, Lesley Mkandawire, said with reforms in key areas, the SOEs have potential to contribute significant revenue to the national pulse through taxes and dividends.
He cited the need for improved corporate governance with high quality appointments in the boards to bring value in the strategic decision making and controls and rues political interference as one major stumbling block towards improving their performances.
“If there are areas of reform they should include giving these parastatals some leeway to operate as commercial entities. If there are certain restrictions then there must be subsidies given,” Mkandawire said.
- Advertisement -
He further cited controlled pricing of goods and services that weighs heavily against their performances while outdated infrastructure and equipment compromises efficiency across several parastatals.
This agrees to what BWB cited as a reason for their worsening financial performance in recent years.
“The primary cause of this worsening financial condition is the non-implementation of the expected 10 percent tariff hike, which led to lost revenue of nearly 2.5 billion and made cash flow challenges worse,” the BWB financial statement in the report reads.
When presenting the budget statement last Friday, finance minister, Simplex Chithyola Banda, acknowledged profitability of more SOEs as a result of ongoing reforms to eliminate fiscal pressure.
According to the US government Bureau of Economic Affairs under the department of state, Malawi has about 67 SOEs of which 29 are commercial while the rest are subvented, operating in the public utilities sector, agriculture, housing, finance, education, construction, energy, media, services, and aviation.
