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Think outside the box, Vice President tells dealers

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Vice President, Saulos Chilima, has challenged financial market dealers in the country to be more creative to come up with products that will help deepen the market.

Chilima was speaking in Mangochi on Saturday when he delivered a keynote address during the 2016 Financial Market Dealers Association (Fimda) annual conference.

He observed that though the country has benefited from some levels on creative thinking in recent years, there was still more needed to be done.

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“Despite these positive developments, you will agree with me that we still have a lot more to do if the financial sector is to meet the growing needs for more diverse sources of finance. I believe the financial sector can have a larger impact on the economy if several principal tasks are achieved through greater innovation,” Chilima said.

He urged the professionals to first address the challenge of what he described as missing markets.

Among other things, Chilima pointed out the absence of long-term financing that is required to support long-term investments that expand the productive capacity of the economy.

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“These include infrastructure, factories, equipment, new housing, commercial buildings, education, research and development. These types of investments are considered key drivers of economic growth since they enable private enterprises to produce more goods and services. They require financing which is available for an extended period of time.

“But the financial system is currently not structured to provide adequate and suitable finance for development,” he said.

The Veep said the financial system should be able to fulfill the core function of channeling national savings into an adequate supply of financing with longer maturities to meet the long-term investment needs of the economy. He said a broad range of financial instruments therefore should be available to support long-term investment.

“Another missing segment of the financial sector that requires creative thinking and action is the mortgage market. Access to affordable housing finance remains a huge challenge for Malawians.

“The high cost of mortgage finance in Malawi has resulted in very few people [mostly through employee housing schemes] accessing housing finance from banks. Demand for housing continues to grow with each passing year, yet the financial system lacks appropriate instruments to finance this,” he said.

The indaba attracted over 100 dealers from the forex, money, capital and commodities markets.

Other speakers at the meeting included Malawi Stock Exchange Chief Executive Officer, John Kamanga, and CDH Investment Bank Managing Director, Misheck Esau.

Kamanga, among other things, said the local bourse provides a lot of opportunities for government and private sector operators to raise cheap capital to invest in various projects.

Fimda president, Alfred Nhlema, said the conference provides a platform for the dealers to discuss challenges as well as draft a way forward to improve the profession.

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