Industry paints gloomy outlook
Financial sector players in the country are predicting a slippery business environment in the short to medium terms due to effects of harsh weather conditions, among other factors.
In their respective financial statements, commercial banks and some microfinance institutions say the outlook remains mixed.
Malawi Stock Exchange (MSE)-listed National Bank of Malawi says although the economy was expected to grow by 2.7 percent, Cyclone Freddy, power woes and foreign exchange supply scarcity would weigh heavily on the growth prospects.
“The board envisages a continuing challenging operating environment due the factors enumerated above,” the bank’s statement reads.
Another MSE-listed commercial bank, Standard Bank, says the local economy would continue facing challenges driven by global supply chain disruptions.
“Headline inflation rate may ease on the back of base effects from the food and foreign exchange markets.
“Supply of foreign exchange will remain a challenge thereby exerting pressure on the Kwacha. The group is cautiously optimistic about the year ahead,” the bank’s statement reads.
In its financial statement for the year ended December 31 2023, issued Wednesday, Finca Malawi says economic growth aspirations are likely to be challenged by effects of the cyclone, insufficient power supply and shortage of foreign exchange.
Amid the economic volatility, the industry remains resilient, posting a combined substantial growth in profitability.
Market analyst Bond Mtembezeka said banks always thrive during times of economic turbulence as they feed into all other sectors.
“For example, interest rates rise and that has a direct bearing on the pricing of loans and economic agents also borrow more from banks and even government borrows more from financial institutions,” he said.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.
