This interview between Nation Publications Limited (NPL) senior business news analyst ERIC MTEMANG’OMBE and the Economics Association of Malawi (Ecama) president Bertha Bangala-Chikadza follows the release of two key reports that have renewed scrutiny of the performance and governance of State- Owned Enterprises (SOEs) in Malawi.
The World Bank’s Public Finance Review identifies SOEs as a growing source of f iscal risk, citing weak governance, repeated bailouts and limited performance oversight. Meanwhile, the Ministry of Finance, Economic Planning and Decentralisation’s 2025 SOE Consolidated Report shows that although SOEs recorded K34.1 billion in profits, 86 percent of these earnings were generated by regulators, underscoring persistent weaknesses in commercially oriented enterprises. Against this backdrop—and amid recent changes to SOE boards and senior management— Weekend Nation examines what the data reveals about fiscal exposure, governance failures and the prospects for reform
This interview between Nation Publications Limited (NPL) senior business news analyst ERIC MTEMANG’OMBE and the Economics Association of Malawi (Ecama) president Bertha Bangala-Chikadza follows the release of two key reports that have renewed scrutiny of the performance and governance of State- Owned Enterprises (SOEs) in Malawi.
The World Bank’s Public Finance Review identifies SOEs as a growing source of f iscal risk, citing weak governance, repeated bailouts and limited performance oversight. Meanwhile, the Ministry of Finance, Economic Planning and Decentralisation’s 2025 SOE Consolidated Report shows that although SOEs recorded K34.1 billion in profits, 86 percent of these earnings were generated by regulators, underscoring persistent weaknesses in commercially oriented enterprises. Against this backdrop—and amid recent changes to SOE boards and senior management— Weekend Nation examines what the data reveals about fiscal exposure, governance failures and the prospects for reform.
Q1: The World Bank’s Public Finance Review identifies State-Owned Enterprises as a major contingent liability for government. From an economic standpoint, how significant is the SOE sector in driving Malawi’s fiscal pressures, and where do the biggest risks lie if reforms stall?
A1: State-Owned Enterprises form a substantial part of both the economy and the public sector. They are central to the provision of essential services such as utilities, transport, infrastructure and finance, and—if well managed—can contribute meaningfully to economic growth.
However, in Malawi, the overall performance of SOEs has been weak. Persistent political interference and governance challenges have undermined efficiency and financial sustainability. As a result, many SOEs fail to generate expected returns and instead place pressure on public finances.
The fiscal risks arise through lower-than-expected dividends, implicit subsidies, unpaid loans, g o v e r n m e n t guarantees on SOE borrowing and repeated equity injections to cover accumulated losses. If reforms are delayed, SOEs will continue to strain the national budget and worsen the public debt situation.
Q2: Both the Public Finance Review and the 2025 SOE Consolidated Report point to governance weaknesses—particularly board effectiveness, political interference and blurred commercial mandates. Which governance failures are most damaging to performance, and how should they be prioritised for reform?
A2: The most damaging governance failures include weak transparency and accountability, poor risk management and ineffective board composition. In many cases, boards lack the independence, expertise or availability required to provide meaningful oversight.
Reform should prioritise strengthening SOE boards by appointing experienced, knowledgeable and competent professionals who can understand sector-specific challenges and guide strategic decision-making without undue political influence.
Q3: There have been recent cases where boards and chief executives were removed even when some SOEs showed signs of improved performance. What signal does this send to managers and investors, and how might it affect incentives for turnaround and long-term efficiency?
A3: Such actions send a negative signal to both managers and potential investors. They create uncertainty a r o u n d performance incentives and weaken confidence that results, rather than political considerations, determine leadership decisions.
Unless those removed are replaced by demonstrably better-performing office bearers, the cycle of underperformance will persist. Over time, this undermines service delivery and further worsens government finances.
Q4: Looking ahead, what would a credible SOE reform framework look like for Malawi—one that balances fiscal discipline, service delivery and political realities—and what role should Parliament and the Ministry of Finance play?
A4: A credible reform framework must begin with insulating SOEs from political interference. Clear commercial and social mandates should be established, with performance measured against transparent and objective targets.
There is also a strong case for an independent SOE regulatory framework to oversee governance standards and performance monitoring. Parliament should strengthen oversight, while the Ministry of Finance must enforce fiscal discipline by linking financial support to compliance with governance and performance reforms.
