Two government firms seek downgrade
Secretary to Treasury Macdonald Mafuta Mwale has disclosed that his office has received applications from two State Owned Enterprises (SOEs) to be reclassified downwards from being commercial to subvented organisations.
Mafuta Mwale disclosed this in Lilongwe when he signed contracts with heads of all State Owned Enterprises.
“Recently, my office received some requests to reclassify some SOEs. Of concern is that the application is for reclassification downwards from commercial to subvented.
“The expectation of the government is the other way. When we are setting up parastatals, over a period of time they should graduate from being subvented to being self-sustainable,” Mafuta Mwale said.
In an interview, Finance Minister Sosten Gwengwe said the ministry had received bailout and reclassification applications from Malawi Post Corporation and Auction Holdings Limited.
“Our take is that SOEs should be self-sustaining and they should be able to grow their revenue base and be able to stand on their own.
“So it is a little bit surprising to be getting applications that instead of graduating from being subvented to a fully-fledged institution, they are now asking to move back from a fully-fledged institution like a trading SOE to go back to start being subvented,” Gwengwe said.
According to Gwengwe, the applications show that somewhere things are not going okay.
He observed that it is crucial to look at the ailing firms’ cost structure so as to make sure that they are profitable even if it means allowing them to charge cost recovery rates, so that they are not subsidising their services.
Comptroller of Statutory Corporations Peter Simbani, said the wishes are not in tandem with the wishes of the government. According to Simbani the proposal to reclassify downwards is difficult and impossible.