Old Mutual Limited, the parent company of Old Mutual Malawi Limited, says although the country’s portfolio outperformed most of its benchmarks, investment returns were negatively impacted by volatile currency movements in the year.
Old Mutual Limited Africa region managing director Clement Chinaka said in an interview on Tuesday that the listed equity portfolio in Malawi returned 50.8 percent, slightly underperforming the Malawi Stock Exchange (MSE) by 4.3 percent due to underweight positions in the financial services sector.
of real returns from investments | Nation
He said due to the shortage of foreign exchange, the firm is experiencing challenges in fulfilling timely obligations to their international suppliers, including reinsurance arrangements.
Said Chinaka: “Additionally, on our value proposition, devaluation has challenged the sustainability of real returns from investments, especially in fixed income investments for Malawi.
“There was depressed appetite for individual investments in savings products, affecting the retail sector for Malawi.”
He said a new allocation for strategic assets was approved for Malawi towards the end of 2024, adding that they expect a shift in investment returns over the next few reporting cycles, given a transition to inflation protection asset classes.
Chinaka said due to the tough operating environment, some companies have been facing challenges in ensuring these contributions are made on time.
He said: “Delays in pension remittances can have serious repercussions, affecting the growth of retirement savings, employee trust, and the stability of the pension fund.
“The new Pensions Law in Malawi demands that every employee is on pension and there are stiffer penalties for employers who fail to honour their obligation of remitting pension funds on time. The long-term view is that employee benefits are not compromised.”
Looking into the future, Chinaka said focus will be on driving profitable growth in their portfolio, while driving capital efficiencies and improving cash generation.
During the year under review, Old Mutual Limited operating profit increased by four percent to 8.7 billion rand.
The group’s funds under management grew by 10 percent to 1.5 trillion rand, reflecting strong performance in equities and money market assets, predominantly in South Africa, Malawi and Kenya.
Old Mutual Malawi has business footprints in life assurance, asset management, pensions, infrastructure financing and alternative investments where it is involved in agriculture by partnering some investors to grow high-value crops such as macadamia nuts.
The company has also diversified to other services, including digital savings innovations where one is able to invest in unit trusts through either TNM Mpamba or Airtel Money.
