Mining MSE proposal draws mixed reaction

The Malawi Stock Exchange (MSE) says the current legal and regulatory framework does not necessitate the establishment of a mining stock exchange as mining companies can raise the needed capital through the available platforms.

MSE stance comes in the wake of a proposal by the Minority Shareholders Association of Listed Companies to the Registrar of Financial Institutions in Malawi lobbying for the establishment of the mining stock exchange on the basis that the current stock exchange and the relevant regulatory environment is inadequate to address the needs of the market participants.

The association, which also wants the Mining Stock Exchange to be a subsidiary of MSE to fast-track the operationalisation of such bourse, is lobbying for the repeal of the Securities Act 2010 which it says is based on the obsolete Companies Act 1984 which was subsequently repealed by the Malawi Companies Act 2013.

This, they say, does not accommodate trading in any other currency rather than the Malawi Kwacha, which is against their proposal for the legal tender to be in United States dollar to attract capital as both existing and prospective investors would be shielded from the foreign currency exchange rate losses.

However, in an interview on Tuesday, MSE operations manager Kelline Kondowe said if the need ever arises for a dedicated subsidiary to cater to a specific sector or address particular challenges within the economy, the MSE will consider that at the appointed time.

She said: “The Malawi Stock Exchange rules provide for the listing of mining companies in Malawi under Section 11 of the rules.

“We, thus, believe that with the current legal and regulatory framework mining companies can raise the needed capital through the platforms available.”

Speaking on the sidelines of the Press Corporation Stakeholder engagement on Monday, Minority Shareholders Association of Listed Companies director Brian Kampanje said mining stock exchange would operate as a niche with an appetite for foreign currency exchange transactions, unlike the local bourse which is purely traded in the local currency.

He said: “We have approached them to consider establishing the mining stock exchange.

“We look at investments as planting trees. Therefore, we understand that we stand to benefit in the long-term.”

Speaking separately, minerals, geology, environment and corporate affairs expert Grain Malunga Grain said the proposal is progressive.

“My word of caution is that there is too much advice given to government without the government domesticating that advice in order to make it relevant and acceptable by beneficiary stakeholders,” he said.

On his part, RBM spokesperson Mark Lungu said the central bank “can only give our views when we get the official proposal and we appreciate the benefits and costs of such an understanding”.

A letter dated May 10 2024 signed by Minister of Mining Monica Chang’anamuno addressed to Minority Shareholders Association of Listed Companies confirmed that the aspect of Initial Public Offering (IPO) on the MSE is being given priority.

Data compiled by the Minority Shareholders Association of Listed Companies presented to the Ministry of Mining show that Malawi can earn about $600 million (about K1.039 trillion) by offloading shares from listing of the large-scale mining firms to the investing public.