Capital market not fully utilised—RBM
The Reserve Bank of Malawi (RBM) has urged local businesses to tap from the local shares market and embrace the opportunities within the capital market.
RBM deputy governor William Matambo said this on Friday in Blantyre on the sidelines of the launch of Mzinga Incubation Programme, which seeks to support small and medium enterprises (SMEs) to raise long-term capital through the Malawi Stock Exchange (MSE).
He said: “Over time, the capital market has not grown as significantly as we would have loved. We, however, have a strategic plan and one of the areas in this is promoting the SMEs sector so that they can have access to long-term financing and patent capital that can help them grow their businesses and register on the stock exchange.”
Matambo said the RBM hopes the incubation programme will ensure that SMEs are properly cultivated for the market.
“We urge SMEs to rise up and grab this rare opportunity of cheap and patient capital,” he said.
MSE chief executive officer John Kamanga said the local shares market is opening up to benefit the small businesses with patient and long-term capital by providing them with capacity on business management, corporate governance and reporting and entrepreneurial skills.
He said: “Through this programme, SMEs will be handheld until they get listed. The SMEs will be attached to mentors who are financial experts.
“Under the programme, the management and corporate governance fees which they ought to pay these specialists will be paid through this project.”
Indigenous Businesses Association of Malawi president Mike Mlombwa welcomed the development, saying a number of local businesses have been skeptical to list on the shares market due to complex and high capital requirements, among others.
He said: “Businesses have the urge to list on the shares market as we are quite informed and aware that the MSE is the best option for raising cheap capital.
“The process to list has, however, been thorny, especially the capital requirement. It is, therefore, pleasing to note that MSE has considered helping SMEs in this manner.”
The incubation programme is in line with the MSE 2023-27 Strategic Plan and aligns with the Malawi Capital Market Development Plan. It is financed by the Financial Inclusion and Entrepreneurship Scaling project (FInES).
FinEs project seeks to increase access to financial services, promote entrepreneurship and capabilities of micro, small and medium enterprises.
The MSE through the incubation programme is targeting to enrol a minimum of 10 companies a year who will go through the 18-month incubation programme.
After the programme, the companies will then have to list on the MSE to raise capital for their businesses.
Meanwhile, the local shares market has reduced the minimum capital requirement to list on the market to K250 million from K500 million.
MSE has been in operation since 1994, but started equity trading in November 1996 when it first listed National Insurance Company Limited now Nico Holdings plc.
