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Malawi government losing MSB sale money

Malawi government could lose about half the value of the money it got from the sale of Malawi Savings Bank (MSB) to devaluation and inflation if it keeps delaying investing the money, The Daily Times understands.

Government disposed of its 75 percent stake in MSB and between 51 and 75 percent of its shares in Indebank and amassed about K12.1 billion which now lies unused with the Public Private Partnership Commission (PPPC).

Ministry of Finance Public Relations Officer, Nations Msowoya, on Tuesday said “the government is not yet ready with an investment idea”.

Economics guru and commentator Henry Kachaje said it is unfortunate if government has not yet made a firm decision on what to invest the proceeds from the sale of the banks in.

“Although there was an assurance that the money is kept in an interest earning instrument, there is still a risk of erosion of the value considering that inflation averaged 24 percent in 2015 and that the kwacha devalued by almost 42 percent,” said Kachaje in an email response.

In August 2015 it came to light that government had engaged the African Development Bank (ADB) to assess the possibility of setting up an Agriculture Cooperatives Bank and to probably provide technical expertise on how the financial institution can be formed using proceeds from the sale of the MSB.

By the end of October 2015, four months after the sale of the banks, cabinet was yet to meet to decide the fate of the proceeds.

While Finance Minister, Goodall Gondwe, confirmed [in an August interview] the coming of the ADB team, he maintained that government had not decided yet on how the money from the sale would be used and that the Agriculture Cooperatives Bank was just one of the many feasible proposals on government’s table.

“The Malawi Savings Bank was a public facility and government is looking at the possibility of returning the money from the sale to the public and we believe setting up the bank will be the best way of ensuring that the proceeds are still in the public’s hands,” said Gondwe.

Smallholder farmer cooperatives, he indicated, would have full control of the bank and that government would not do any shareholding in it.

At the time Gondwe said such proceeds need some serious thinking over and that government was okay with the money remaining at ‘PPP for some time.’

Ever since government sold MSB various stakeholders, including the Civil Society Agriculture Network (Cisanet) and Road Transport Operators have come up with various proposals on how the money can be used.

Cisanet suggested in a statement that the money be used in improving the learning conditions at Bunda College campus at Lilongwe University of Agriculture and Natural Resources (Luanar) which it says is in an appalling condition.

Kachaje offered his piece of advice, saying government should resist the urge to spend the money and instead invest it in a productive venture such as the Green Belt Initiative.

Consumer rights activist, John Kapito, is on record to have described the ‘veil of secrecy’ surrounding how the bank’s proceeds would be used as a testament of government’s lack of transparency and accountability considering controversy that characterised the sale.

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