‘Parastatals financial performance down’

Ministry of Finance and Economic Affairs has said despite commercial State-Owned Enterprises (SoEs) being market-oriented entities, the number of loss-making ventures remains relatively high and on the rise.

A consolidated report for SoEs published by the Ministry of Finance and Economic Affairs last week shows that overall, 46 percent of all the commercial SOEs registered losses and deficits in 2020, an increase from 23 percent in 2019.

The report, which focuses on the aggregate financial and non-financial performance of the 28 commercial SoEs further shows the number of loss- making trading SoEs, has increased over the four-year period from five in 2017 to 10 in 2020.

Reads the report in part: “The narrow base for private customers restricts business with the public institutions among the trading SoEs, which subjects them to liquidity challenges as debt collection days exceed the recommended international thresholds.

“This further resulted in operating on overdrafts while putting efforts to collect the public institutions’ debt.”

The report indicates that key among the loss-making entities are water boards, whose performance reflects their worsening operating environment, especially on non-cost reflective tariffs.

Similarly, three trading SoEs in the energy sector, namely Electricity Supply Corporation of Malawi, National Oil Company of Malawi and Electricity Generation Company registered losses during the review period.

Commenting on SoEs performance, Martin Kansichi, former Malawi Confederation of Chambers of Commerce and Industry president, who later served in president Bingu wa Mutharika’s Cabinet, observed that the performances could be on account of some inconsistencies and mismanagement in a number of parastatals.

He said this calls for constant re-evaluation of their strategic objectives while at the same time investing  in the business to improve their services.

“For some time now, most entities have been making losses owing to, among other reasons, the fact that they have been rigid, which calls for serious diversification,” said Kansichi.

The report  recommended that the national budget should provide resources  to enable SoEs work efficiently.