The Bankers Association of Malawi (BAM), Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and a Blantyre-based economist have weighed in on the decision by President Peter Mutharika to suspend the proposed disposal of government’s majority stake in Malawi Savings Bank (MSB).
While BAM president Misheck Esau believes the decision appears well intended but has come “a little too late” in the transaction, MCCCI chief executive officer Chancellor Kaferapanjira thinks it is “totally unacceptable to postpone the disposal of part of government shareholding”, saying the delay will cost taxpayers more.
But a Blantyre-based economist Collen Kaluwa said yesterday it is a good move that will provide a platform for constructive debate.
The decision to dispose government majority stake has attracted a barrage of criticism from opposition political parties and civil society organisations (CSOs), but a market analyst and Economics Association of Malawi (Ecama) said last week the uncertainty surrounding the bank’s sale could cause large number of customers to withdraw their deposits technically known as a bank run.
The Public Private Partnership Commission (PPPC), a government agency which was tasked to find a strategic equity partner in the bank, already concluded the transaction and designated FDH Financial Holdings Limited, the parent company of FDH Bank, as the preferred bidder.
In what appears to be a voice of reason, Esau said the engagement with interest groups was possible while the transaction was in process.
“Transactions of this nature are sensitive and one would expect swift action. The amount of transparency by the Public Private Partnership Commission was more than adequate for the sale of an institution such as a bank.
“I tend to think, whether rightly or wrongly, that the fact that MSB had one bidder is not the cause of the cries coming from interest groups. I believe it is the effect of those cries. We all know that capital hates wrangling. Investment likes peace,” he said.
Esau said the wrangling resulted in the MSB only having one bidder—FDH Financial Holdings Limited—who was prepared to take the risk of buying an asset where there is a controversy.
Echoing an earlier statement made by British High Commissioner Michael Nevin in an interview with Business News, Esau said what is crucial is for the country “to preserve financial sector stability”.
“The country has not seen how an unstable and unsound financial sector can retard an economy. Decisiveness on the part of the parties involved is what we need. At all cost, we should all avoid taking the country on the path of financial sector instability as the President has rightly put it,” he said.
Kaferapanjira faulted the public and the members of Parliament (MPs), saying their reaction has been based on lack of complete information from government.
“There was focus on the indebtedness of an individual, which was indeed a correct reaction by the public, but what we may not know is who else owes Malawi Savings Bank a fortune and who is borrowing en masse as we speak. That is the information that is missing, which would help in the configuration of the correct reaction,” he said.
Kaferapanjira said on the basis of the information that is available, Mutharika has to approve the sale of a portion of the bank to the investor and publish real facts behind the proposed shedding of the stake.
But economist Kaluwa yesterday said the move by Mutharika is commendable given the debate that has been going on regarding the sale of the bank.
In a statement on Wednesday, Mutharika said not all Malawians can speak with authority on matters affecting the financial services sector.
“Those who have ventured to do so have mostly spoken from a partisan point of view or without full knowledge or proper information. As a result, the real and actual financial status of Malawi Savings Bank has been blurred,” he said.
Mutharika said government’s position on the MSB saga is supported by the Institute of Chartered Accountants in Malawi (Icam), the private sector, the Reserve Bank of Malawi (RBM) as well as the donor community including the International Monetary Fund (IMF).