Finance Minister Chithyola Banda
* Government’s directives on austerity demands a collective effort to curtail spending
* It is imperative that SOEs lead by example thereby reducing expenditure and fostering national savings
By Leonard Masauli, MANA
Minister of Finance & Economic Affairs, Simplex Chithyola Banda is strongly urging state-owned enterprises (SOEs) to enact significant cuts in expenditures in a bid to align with government imposed austerity measures.
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Addressing stakeholders during the signing ceremony of the 2024/2025 Shareholders Letters of Expectations at the Bingu International Convention Centre in Lilongwe on Thursday, Chithyola Banda emphasised the necessity for SOEs to adhere to the prescribed austerity measures outlined by the government.
“Government’s directives on austerity demands a collective effort to curtail spending,” he said. “It is imperative that SOEs lead by example thereby reducing expenditure and fostering national savings.”
The Minister underscored the pivotal role played by SOEs in delivering essential services to citizens and emphasised the need for them to improve operational efficiencies while adhering to mandated service provisions.
“As key providers of essential services, SOEs play a critical role in the socio-economic landscape. Today’s ceremony marks a commitment from these enterprises to fulfill their mandates while simultaneously enhancing their operational performances,” he said.
Chithyola Banda reiterated government’s unwavering commitment to fiscal discipline and called upon all stakeholders to collectively work towards realising economic stability and growth in Malawi.
Dr Betchani Tchereni
Expressing concerns over the financial health of many SOEs, Secretary to the Treasury, Dr Betchani Tchereni lamented excessive expenditures despite several entities operating at a loss while also urging SOEs to strive for profitability and contribute dividends to government coffers.
“The prevailing financial state of numerous SOEs necessitates urgent action towards achieving profitability,” he said. “It is imperative for these entities to redouble their efforts, enhance operational efficiencies and ultimately contribute dividends to the government.”
Chairperson for Lilongwe Water Board (LWB), Paramount Chief M’mbelwa announced notable profits and dividends paid to the government, saying: “LWB is proud to report a profit of K2.4 billion, underscoring our commitment to financial prudence.
“Furthermore, we have disbursed dividends totalling K200 million to Treasury, showcasing our dedication and compliance to national development,” he said.
Lilongwe Water Board
Meanwhile, in his presentation of the 2024-2025 National Budget in Parliament in February — which has since been passed — Chithyola Banda touched on proper management of SOEs, saying in addition to the annual consolidated report that are submitted to Parliament for transparency and accountability, the Ministry has developed a performance assessment framework to ensure that best-performing SOEs are properly recognized.
“This will promote a culture of excellence in SOEs for better financial management and service delivery,” he reported. “The goal is to improve the performance of SOEs so that over and above service delivery, they should generate returns on Government investments and remit dividends.
“To further enhance the monitoring of revenue collected by SOEs, all 22 regulatory SOEs have fully migrated their revenue accounts to the Reserve Bank of Malawi (RBM).
“In the 2024/2025 Financial Year, my Ministry will roll out this arrangement to the remaining SOEs, including subvented organizations and trading SOEs.
“This arrangement will significantly improve dividends and surplus remittances, thereby widening the non-tax revenue base — and also reduce the tendency of the Government to borrow its own resources.”
President Chakwera in Parliament during questions and answers session
During his questions and answers session, President Lazarus Chakwera defended the decisions on SOEs, saying they are part of a wider reform agenda of the parastatal sector.
The legislators asked why Chakwera’s administration has moved 22 accounts of SOEs to the RBM and he responded — just as he already explained in his State of the Nation Address (SONA) — that the decision was to stop the government from borrowing its own money from commercial banks.
Chakwera maintained that the migration of SOEs’ bank accounts to RBM is one of the areas to reform the parastatal sector and emphasized that the government will continue with the migration policy to include fully sub-vented organisations and commercial SOEs.
“The migration process is done in phases to minimise instances of disrupting operations, which can affect the quality and speed of service delivery to Malawians,” he said.
“It is fundamentally and morally wrong to continue this policy of allowing a few entities to control the wealth of Malawians for their own self-enrichment.”—Additional reporting by Maravi Express
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