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Malawi Stock Exchange chair dares financial dealers

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LAUDED—Malawi Stock Exchange

Malawi Stock Exchange (MSE) Chairperson James Kamwachale Khomba has challenged financial market dealers to help raise awareness on investment opportunities on the capital market.

Khomba was speaking in Mangochi when he delivered a keynote presentation during the 2020 Financial Market Dealers Association (Fimda) Annual Lakeshore Conference held under the theme ‘Navigating Financial Tides: Creation of Wealth through the Capital Markets.’

He said the capital market provides a cheaper option for firms and the government to raise capital which could be used for projects.

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“Capital markets also offer better pricing and longer maturities as the issuance is open to a wider spectrum of investors compared to commercial bank funding, which can be limited to one bank or a syndicate of two to three banks,” Khomba said.

He added that local financial intermediation does not expose government and corporate players to foreign exchange risk, thereby assisting in preserving the value of the local currency and foreign exchange reserves.

“In Malawi, the capital market has the capacity to assist entities like State-owned enterprise (SOEs) for instance the Malawi Housing Corporation, Electricity Generation Company, water boards, the city assemblies, and other private companies on infrastructure development by providing long-term capital required for such projects.

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“Such infrastructure projects as housing, electricity, potable water and gas production have economic benefits to the country as a whole. For example, NBS Bank plc raised capital through rights issues from the Malawi Stock Exchange and provided the same capital to Roads Fund Administration for the construction of the interchange in the capital city, Lilongwe,” Khomba said.

According to Khomba, the capital market also provides alternative investments with better returns in the long run than bank deposits to lenders.

Outgoing Fimda President Maclewen Sikwese said the global and local economy has been going through increased turbulence, with problems such as foreign exchange supply, exchange rate pressures and inflationary pressures.

He said financial intermediaries play an important role in channeling resources from savers to borrowers which is well aligned to the Malawi 2063 aspiration of a youth centric inclusive wealth creating and self-reliant nation.

“The country cannot progress economically if we do not empower businesses and individuals by ensuring access to pools of resources to invest in their businesses and also provide affordable and readily available funding to the government.

“The capital market houses some of the biggest pools of financial resources that public and private sector individuals and businesses can access to help build wealth,” Sikwese said.

According to Sikwese, it is important to bring players to capital markets to bring clarity and direction to government, individuals and business on how they can access this funding, invest in capital markets and manage the risks associated with investing or raising by funds.

“More important is how we can all work together to help deepen the market so as to ensure improved access to liquidity for investment both by the public and private sector,” Sikwese said.

The conference attracted over 100 dealers from the country’s financial markets.

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