Malawi government rental arrears owed to property management firm Mpico plc increased to K5.8 billion in the first half of 2025, worsening the company’s liquidity situation which is affecting its operations.
The Malawi Stock Exchange (MSE)-listed company’s data show that Treasury has not made any rental payment between January and June this year, a situation that has ballooned the arrears from K3.5 billion in December 2024 to K5.8 billion.
Experts have since described the situation as unfortunate considering that rental income is the main source of revenue for the property sector and that it is key for profit, tax and cash flow.
Reads part of the financial results co-signed by Mpico plc chairperson Edmund Hami and director Martha Mkandawire: “Government rental arrears increased to K5.8 billion as at 30 June 2025 from K3.5 billion on 31 December 2024 as no payment was received during the period.
“This continued to negatively impact the group’s operations and management continues with efforts to significantly improve the position.”
The results show that government’s non-payment of rentals affected Mpico plc’s rental income, which grew marginally to K4.4 billion from K3.9 billion in corresponding period last year and prompted the company to control operating costs that were maintained at K3.6 billion.
The results further show that Mpico plc’s reported K7.6 billion profit from K5.7 billion the previous year was largely supported by the property revaluation gains at K7.4 billion, not actual revenue generated.
In an interview on Tuesday, Knight Frank managing director Desmond Namangale said rental income is crucial to the property sector as it provides a steady and predictable cash flow for investors, which helps cover expenses such as maintenance and service charges and taxes among others, while also generating profit.
He said: “Beyond immediate income, rental properties benefit from long-term capital appreciation and tax advantages, making them a cornerstone for building wealth and financial independence through consistent earnings and increased property value.
“Now, failure to make rental payments by the government would result in the landlords and/or property managers failure to service the buildings, failure to maintain the properties and keep them in good aesthetic manner and again failure to pay the operating costs of the building and indeed failure to pay for the salaries of the staff who manages such buildings.”
In a separate interview, Stockbrokers Malawi Limited equity investment analyst Kondwani Makwakwa described rental income as the lifeblood of property companies because it provides steady cash flow to cover financing costs, maintenance and shareholder returns.
“When government arrears accumulate, as in Mpico plc’s case, liquidity pressures mount and operations are disrupted. Overall, the property sector may struggle to realise its full potential unless these challenges are tackled,” he said.
Makwakwa said such delayed payments, which are driven by economic factors such as high inflation and interest rates, are also affecting property companies performance on MSE.
He said: “Property counters have generally shown resilience, but growth has been slow, reflecting high interest rates, inflation and weak demand. Sector players remain vulnerable to delayed payments and rising costs, which squeezes margins.
“In the medium-term, recovery depends on fiscal discipline and improved economic stability, without which rental yields may stagnate.”
Minority Shareholders Association of Listed Companies secretary general Frank Harawa observed that Mpico plc’s performance “has not been impressive” during the period, saying there is a lot that needs to be done for a turn-around.
“Unless we improve occupational issues and the rentals are paid, the future may remain flat,” he said.
The group has 27 properties in the country, mainly in Lilongwe and Blantyre, according to published financial results.
Two years ago, Mpico sealed the Ministry of Lands offices in Lilongwe when the rental arrears reached K5.8 billion.
By then officials from the Ministry of Lands told the Parliamentary Committee on Transport and Public Infrastructure that the ministry is committed to service the arrears but said insufficient funding from the government affects its budgets.
