Interview: We are not selling MSB to shield anybody—Gondwe

Minister of Finance, Economic Planning and Development Goodall Gondwe tells us why government has plans to dispose of some shares in Malawi Savings Bank. Excerpts:

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Q : What’s gone wrong with MSB that government should be forced to put it on the market?

A : When we came into government, a decision had already been made to offer some shares to the private sector so as to raise money and increase capitalisation of the bank. According to stringent Basel 2 requirements, the bank’s capital was short; in fact there’s need for a bank to have enough capital so that if a crisis takes place, it will be able to cover the amount of deposits from the general public. At that time MSB was not able to do that and according to the Reserve Bank of Malawi (RBM), the bank needed a figure close to K30 billion to make up for that requirement. Unfortunately, government couldn’t be able to do that and decided to sell the bank’s shares. As a matter of fact, they put that transaction in the hands of experts at the Public Private Partnership (PPP) and tenders were made as to who wanted to buy the shares.

Q : So, what happened when you came in?

A : When we came in, these tenders had not been answered yet, so we stalled the transaction until we had time to look at it. The RBM agreed to give us time of about four to six months and they could tolerate shortage of funds in the bank at that time. Now that six months have expired and we haven’t been able to find the money the RBM required. Hence, we made the same decision as the previous government.

Q : But you told Parliament that the IMF also told you to sell the bank?

A : Yes. We didn’t want to sell MSB until the IMF people came and demanded this be done because if one bank is weak, it affects the banking system of a country. Our fear is that if it’s established outside that Malawi is tolerating that they would close us from dealing with international banks. We were therefore asked to find a strategic partner who can buy shares in the bank and the money will be used to increase the capitalisation.

Q :But what’s this we are hearing that you are selling MSB at K800 million?

A : Unfortunately, in this matter there are a lot of rumours. Maybe the previous government did [intend to sell at that value], but as far as I am aware nobody has done a valuation of the shares and no amount has been determined at which the bank could be sold. In fact, the valuation activity is being done now so that we find out the value of the bank.What the buyers are offering is what will enable us to know the real value of the bank as well as determining who can buy the shares.

Q : Is it true that you had to re-tender the exercise?

A : Because that strategic partner was yet to be found we had to re-tender and this was done over a month ago. It was supposed to have been closed, but they reopened it and we have not yet determined who can buy MSB.

Q : Some MPs argued that you are selling the bank in order to shield some DPP sympathisers who owe the bank huge amounts?

A : There are indeed some people who owe the bank huge sums of money. At the time we were looking at the amounts, they were at K5 billion and for some years now, MSB hasn’t been able to claim that money. We want to put those loans aside and get a law firm to help us recover the loans outside the selling package and this process will be handled separately and independently by the lawyers. So, to put it in context, we are not selling MSB to shield anybody and this is why when government heard that MPs want the Budget and Finance Committee to take up the matter we were very happy.

Q : But you told the MPs that they wouldn’t ably handle the issue and you touched a raw nerve with those remarks?

A : This is an intricate professional job and they can’t do it. But I am sure they will hire some consultant that is knowledgeable about the bank who will go into it thoroughly and publicise the report to every Malawian. Nonetheless, we are very ready to have this taken up by the committee. What annoyed those opposition MPs was what I said to the effect that the committee should also look into whether it is legally binding to take what the committee decides. But the point is it has to be that way because we can’t go to the IMF and tell them that we can’t sell MSB because Parliament has told us so. From a legal point of view, this issue doesn’t concern Parliament; all we want is the committee to engage lawyers so we can tell IMF that according to lawyers, we can’t sell the bank. It’s not that I meant Parliament has no powers over the issues as some MPs insinuated.