Mining & Trade News

Barely two weeks after the Indigenous Business Persons Association of Malawi (IBAM) called on the State to support Small and Medium Enterprises (SMEs) affected by Covid-19, Minister of Industries Roy Kachale says government is monitoring the situation and geared to offer different rescue interventions.

In the wake of a steady drop in the number of Covid-19 positive cases, IBAM challenged government to inject stimulus financial packages to resuscitate struggling businesses that have the capacity to meaningfully contribute to the national economy once the pandemic is gone.

 “We cannot specifically point at one area in the industry that has been negatively affected by the pandemic, but for sure SMEs have suffered a lot,” Kachale said.

He pointed out that access to finance and markets are major solutions towards the challenge being faced by the SMEs.

“Government is working hand in hand with development partners to bail out the country from the siege,” he said explaining that developing partners are willing to finance the survival of the country’s SMEs.

 “Since the future looks brighter and that there is interest to support the industry, we need strict measures to ensure that the money is used for its intended purposes,” he said.

One of the Africa’s non-profit organisations working on fostering the agenda of emerging entrepreneurs, Kukaya Foundation, will Saturday host a luncheon for participants gracing the Global Entrepreneurs Week (GEW) commemoration currently underway in Blantyre, Malawi.

Speaking in an interview with Mining and Trade Review, CEO for the Zimbabwe based foundation Ruzivo Chipeta said the luncheon will be held at Dzuka hub in Blantyre.

She explained that the event will create a platform for local entrepreneurs to share ideas and experiences to inspire future innovators and entrepreneurs in Malawi.

“Our mission as an organization is to inspire people to dream, believe, design, create and own their life stories in a way that impacts the world positively,” she said promising that activities during the luncheon will not only inspire future entrepreneurs but will also create networks that can bear powerful collaborations and partnerships.

Chipeta explained that the word ‘Kukaya’ means ‘home’ and in the context of the Foundation, it represents an African proverb that says; “Children are raised by the village where everyone in the society has a role to raise, mentor and empower young people to become responsible adults”.

Kukaya Foundation operates in 12 African countries where it promotes innovation, creativity and leadership among high school youths.

The GEW commemorations are held across the globe for one week every November. Participants are inspired through campaigns to explore their potential as self-starters, innovators and job creators who can bring ideas to life, drive economic growth and expand human welfare.

As part of commemorations, local entrepreneurs will also be given an opportunity to take part in the #IAmAnEntrepreneur  40 seconds video challenge and the winner will receive a free trip to the next Global Entrepreneurship Congress in Riyadh, Saudi Arabia in March 2021. 

The Indigenous Business Persons Association of Malawi (IBAM) says it is optimistic that business prospects will pick up in the wake of the slow-down in number of people testing positive for coronavirus (Covid-19) pandemic in the country.

The Covid-19 pandemic depressed Malawi’s economy as businesses slowed, productivity was reduced, and companies downsized and closed operations while tax revenue decreased.

Malawi’s economy is dominated by the informal sector characterized by small and medium businesses which account for 89 per cent of the country’s labour force.

IBAM president, Mike Mlombwa, says when the pandemic broke out in the country, small and medium enterprises (SMEs) panicked and were forced to borrow money and obtain goods and services on loan to sustain their operations.

Following the declaration of a State of Disaster on March 20, government announced Covid -19 preventive measures which included suspension and reduction of some social and economic activities as well as regulating access to public places, buildings and structures including business premises.

“We now have seen that Covid-19 cases are dropping and we have higher expectations to see our members bailed out from financial hiccups,” Mlombwa says in anticipation that government will put in place measures to cushion and spur small indigenous businesses from the effects of the pandemic.

At the peak of the pandemic, the Monetary Policy Committee of the Reserve Bank of Malawi (RBM) released a K12 billion stimulus package through the commercial banks to support private sector businesses hard hit by the pandemic.

Commercial banks and Micro-Finance Institutions were also directed to observe a three-month moratorium on interest and principal repayments on all loans contracted by micro, small and medium enterprises.

Despite an economic meltdown as a result of the novel coronavirus pandemic (Covid-19), mobile communication network provider Airtel Malawi Plc has registered a huge growth in profit after tax.

According to the unmodified financial statement for half of the year ended June 30, 2020 the Company has registered a profit of K11,415-Million up from K2,016-Million for last year.

Airtel Malawi Board Chair Alex Chitsime says in the statement the huge rise in profits is mainly due to an increase in operating profit and lower finance cost.

“Lower finance cost was due to lower interest expense on account of repayment of Shareholder loan in 2019 and also due to stability of the kwacha against the Us Dollar,” says Chitsime.

The results peg Airtel’s revenue growth at 23.7% which was largely driven by the growth of its customer base up by 20.6% to 4-million.

“Revenue growth was broad based across all key segments; voice up 8.5%, data up 55.3% and other revenue up 36.7%. 

Chitsime says despite the economic impacts of Covid-19, the Company’s view on the medium term opportunity for growth in Malawi has not changed as the telco sector will continue to benefit from population growth and need for increased connectivity. “We expect to continue to implement our strategy focusing on increasing mobile penetration in Malawi through investments in rural unserved market as well as digitalize the economy by increasing penetration of data usage,” he says.   

Standard Bank Malawi has announced its financial results for the six months ended June 30, 2020 which indicate that the Group’s profit after tax for the first half of the year went up by 56%.

In a statement signed by CEO William le Roux, the Group made good performance in the first half of the year notwithstanding a challenging operating environment that was characterized by unstable political environment and coronavirus (COVID-19) pandemic.

Le Roux says: “Total assets grew by 8% when compared with same period in the prior year. The total asset growth was a result of the Group’s focus on growing its customer base which grew by 5% year on year. Growth of the funding base in the first half resulted in a corresponding increase in loans and advances to customers which grew by 22% year on year and financial investments which also grew by 22% year on year”.

“The low interest rate environment prevailed in the first half and resulted in a modest 2% growth in net interest income despite sizeable growth of interest earning assets. Non- interest revenue grew by 17% year on year arising from the Groups focus on growing the transactional business as well as one off gain on disposal of securities.”

 He, however, says operating costs were 11% above prior year mainly due to increase in prices of goods and services.

Le Roux says the Group will continue with its cost management drive to ensure a healthy cost to income ratio and efforts to recover previously written off loans as well as focus on prudent risk taking and management.

The Bank expects foreign exchange supply to remain weak which will continue to exert pressure on the kwacha.

“The impact of the COVID-19 on supply chains and exchange rate dynamics will have strong influence on the direction of the inflation rate and interest rates. Therefore, economic growth is expected to be muted.”

Despite foreign exchange market disruptions caused by the COVID-19 pandemic, the local currency still held its ground to trade at just under MK750 to the US Dollar during the first half of the year.

CDH Investment Bank says it is expecting supply chains to improve during the second half of the year after torrid times in the first half due to the coronavirus (Covid-19) pandemic.

In its unaudited financial results for the financial year ended June 30 signed by Chief Finance Officer, Mosiwa Ndovi, the Bank laments that the impact of the Covid-19 pandemic disrupted economic and business supply chains both locally and internationally.

Ndovi said: “Despite the various challenges, inflation and interest rates remained relatively stable. Many countries are slowly reopening and easing restrictions. It is expected that Malawi will also follow suit amid measures deployed by government to slow down the spread of the virus.”

“Therefore, supply chains are expected to improve during the second half of the year. The Bank has, however, taken appropriate steps to assess the likely impact of the pandemic on business and management is closely monitoring potential disruptions caused by the pandemic.”

He said Bank’s business for the second half of the year will leverage on the positive outcomes experienced during the period under review arising from the advisory, tailor-made and structured transactions to sustain growth, capital optimization and cost discipline.

In the period under review, the Bank registered profit after tax of K927 million against prior year performance of K549 million representing an increase of 69% mainly due to an increase in operating income before impairments on loans and advances of 26% from prior year.

The operating income before impairments on loans and advances grew from K2,803 million to K5,012 million mainly on account of growth in net interest income by 13% and non-interest income by 56%.

CDH investment Bank is a leading investment bank in Malawi which aims to build a vibrant, profitable and technology-driven banking entity through new products and services.

My Bucks Banking Corporation says it is scaling up utilization of digital banking platforms in order to offer consistent and relevant customer services amidst the novel coronavirus (Covid-19) pandemic.

In a summary of unaudited financial results for the half year ended June 30th, 2020, the banking group says it plans to embark on the journey towards becoming a truly digital bank by offering enhanced digital platforms amid cost reductions, and ease doing business while passing on the benefits to the customers.

“In order to achieve excellent customer experience, the Bank will also focus on the rationalisation of its cost base, the effective and prudent management of risks and liquidity, the diversification of its balance sheet, blended with efficient portfolio allocations, which will effectively result in the maintenance of a robust capital position,” says the Bank in a statement signed by Board Chairman Francis Pelekamoyo and MD Zandile Shaba.

It forecasts that Malawi’s macroeconomic outlook is expected to remain stable for the most part of the year 2020 while the growth path for 2020 rests much on what happens in the remaining months as the country continues to be challenged with increasing cases of Covid-19 pandemic.

My Bucks states that despite the challenges generated by the Covid-19, monetary authorities in the country are committed to keeping a low inflationary environment objective in the medium term.

Economic growth is expected to be driven from agriculture, manufacturing, mining, construction and transportation sectors.

It says: “There has been significant improvement in the power sectors that will ably anchor the sectoral growth prospects.”

“The current framework being implemented by the monetary authorities is also a catalyst of growth, as the objective of a lower interest rate, inflation and stable currency environment is currently reality.”

In the financial year under review, My Bucks successfully concluded the acquisition of 100% shareholding and claims of the Nedbank Malawi which is a strategic development for the group to expand its retail product offering across the country in areas where it did not have presence before.

It says: “The additional points of representation will be enhanced with digital product offerings in a number of areas with an overarching aim of achieving customer satisfaction to our focused segment of the market for both domestic and foreign currency banking products and services.”

“The group will also continue to expand using organic growth acquisitions and mergers where valuable opportunities exists in the Malawi market and the region as part of its expansion strategy.”

Meanwhile, the global economic growth for 2020 has been revised downward to 2.4% from an earlier projection of 2.9% enticing the slowdown in global economic activities following the coronavirus pandemic.

Malawi’s general macroeconomic operating environment for the first half of the year has been stable despite the country registering fewer covid-19 cases at the beginning of March 2020.

My Bucks bank has recorded a profit after tax of MK1.8 billion in the first half of the year 2020 surpassing MK817 million the same period in June 2019, representing 130% growth.

The group registered an asset growth of 70%, to MK100 billion from MK59 billion in June 2019, and the main driver of growth has been the loan book which grew by 63% to MK34 billion from MK21 billion same period ended June 2019.

My Bucks also recorded growth in customer deposits of 98% year on year.

On account of growth in the asset base, the total interest income for the first half of the year was 7% higher compared to the same period last year, while credit impairments reduced by 7% to MK191 million from MK204 million year on year.

The group’s operation costs in the first half of the year grew by 84% year on year to support the growth of the group after the successful acquisition of Nedbank Malawi, combined with business rationalisation costs and the expansion of the points of representation of the My Bucks Brand across the country.

Ecobank Malawi says its profit before tax grew by 5% to K5.4-billion while profit after tax increased by 8% to K4-billion in the financial year ended June 30.

In a summary unaudited financial statement for the year ended June 30, 2020 signed by MD Charles Asiedu and Chairman Leonard Chikadya, the financial house says the results manifest resilience of the Bank in light of the coronavirus (Covid-19) pandemic and political instability owing to the disputed 2019 elections, which had a knock on effect on business.

“The financial performance underscores the resilience of the Bank arising from our leadership position in trade finance, the digitization of our products and services and better efficiency in delivering our customer-centric services,” says Asiedu.

He states that in the year ended June 30, 2020, the Bank’s operating income at MK9.6 billion declined year-on-year by 8% on account of slowdown in business due to the political uncertainty and Covid-19.

Asiedu says benefiting from continued strategic cost, management and reduced business, operating costs were flat year-on-year at Mk4.2 billion resulting in cost to income ratio of 44%.

He also says impairment loss charges reduced year-on-year by 96% to MK54 million arising from improved risk management practices.

The Bank’s total assets increased to K278 billion representing growth of 19% which was driven by an increase of 13% in deposits from customers and funding from other banks which grew by 54% to MK124 billion.

The loan book decreased to K35 billion representing a reduction of 8%, which resulted from lower utilization of facilities by the bank’s major customers.

During the year under review, the Bank was awarded the Banking Brand of the Year 2020 while its MD scooped the Banking CEO of the Year from the Global Banking and Finance of the UK.

“The awards underpin the confidence that customers, stakeholders and the public have in the Bank and its leadership,” says Asiedu.

Meanwhile, the Bank has projected a challenging economic outlook in the second half of the year 2020 due to Covid-19 whose cases are increasing at an alarming rate in the country.

Asiedu says: “Accordingly, earlier projections of Gross Domestic products (GDP) growth, inflation, interest rates and exchange rates may be negatively impacted by Covid-19 in the short to medium term.”

“The ushering in of a new government after the fresh presidential elections could affect policy making and implementation. The Bank has put in place strategic initiatives aimed at mitigating the effects of Covid-19 on the Bank and staff.”

The Bank is accelerating the sale of its world class digital solutions targeting every Malawian in the second half of the year.

 “We are cautiously optimistic about the future and we will continue to make the appropriate investments to bring more value to our customers and other stakeholders,” says Asiedu.

Business consulting firm, Project Innovation Center (PIC), says it is eyeing to raise 1 Million Entrepreneurs by 2025 through a project dubbed “Ending Self Engineered poverty”.

During the 5-year project which started in November last year, PIC is targeting Innovators and Entrepreneurs in Health, Information and Communication Technology, Agribusiness, Energy and Tourism sectors, and among other interventions the center is providing free business coaching.

Speaking in an interview with Mining and Trade Review, PIC CEO Kondwani Kachamba explained that the main objective of the initiative is to woo many young people to embrace entrepreneurship and innovation as tools for transformation and the firm is working in coordination with Malawi’s Credit Data and Africa Development Bank (AfDB) in the initiative.

Kachamba said; “The role of PIC is to identify and train aspiring entrepreneurs and innovators, polishing their ideas into Bankable business plans, and we link them to AfDB for funding (AfDB), and through AfDB entrepreneurs can access loans ranging from K15-Million to K200- million, whilst for those in tourism sector the sum goes up to K250-million.”

“As for Credit Data, its main role is to track applicants and ensuring that the beneficiaries are servicing their loans.”

Kachamba also said that mainly the center is focusing on participants with life changing ideas in the aforementioned sectors including software development in ICT and Value Addition in Agribusiness, which are essential for Malawi’s economic growth.

In the meantime, the firm has 143-thousand entrepreneurs in one network, who have been roped into the project for the past 5-months.

“Being a 5-year project, we shall conduct a postmortem once this tenure elapses, where among others we shall analyse pros and cons of the program, and from there we shall see if there will be a need to continue with the program or to change the criteria,” he said.

However, Kwachamba lamented over government’s restrictions on public gatherings as a containment measure against Covid-19 pandemic saying they have affected their operations which involve live meetings.

“Previously we used to conduct our business trainings in public places such as Amyrlls Hotel in Blantyre but due to the pandemic, we have channeled these trainings to online sessions thus excluding entrepreneurs with no access to Internet.”

Recently, the firm partnered with Women Lawyers Association in an effort to bridge the gap between women entrepreneurs and the legal experts in the country.