Delay in using bond funds costly–experts


Economic experts have faulted the government for taking long to implement some of the long-term development projects whose funds were raised through issuance of bonds on the Malawi Stock Exchange last year.

This follows revelations that the K13.5 billion raised during the initial long-term development bond issuance has not been fully used as contractors for most of the shortlisted projects were yet to be identified.

In an interview, Ministry of Finance spokesperson Taurai Samuel Banda said some of the projects they are running include the aquatic centre in Lilongwe and the Jenda-Edingeni Road.


“Bonds are issued on a quarterly basis. We issued a second bond in early March 2022. We issue bonds according to the issuance calendar which we publish on the website of the Reserve Bank every quarter. The next bond issuance is on April 26 2022,” Banda said.

But Director for Centre for Research and Consultancy Milward Tobias bemoaned the slow pace of implementing the projects.

“It is expensive to borrow money and keep it idle even when it’s a long term borrowing instrument. The longer you delay to use it, the longer you are delaying projects,” Tobias said.


Malawi University of Business and Applied Sciences (Mubas) based economist BetchaniTchereni said the more time it takes to use the funds, the government should remember that interest is accumulating, which will be paid by Malawians through taxes.

“If we have not invested the money in short-term activities, then we are losing as a country and it raises more questions than answers as to why they rushed to borrow the money when the contracts have not been finalised,” Tchereni said.

In an earlier interview, Economics Association of Malawi Executive Director Frank Chikuta said the funds being ring fenced is a good way of ensuring that they are used only for the intended purpose.

However, he was quick to point out that the challenge is how to synchronise the time of raising the funds from the capital markets and the time of the planned expenditures.

In August last year, the government issued a 10- year infrastructure bond, raising K13.35 billion at a face value of K18.45 billion.

The money was meant to fund the Balaka Market- Nkhotakota-Nkhatabay Road (M5), Ntcheu- Tsangano-Neno-Mwanza Road, construction of the aquatic complex at Kamuzu Institute for Sports, Jenda-Edingeni- Engalaweni-Manyamula Road and the Dzaleka- Ntchisi-Mpalo-Malomo Road.

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