The Reserve Bank of Malawi (RBM) and Malawi Investment and Trade Centre (Mitc) have commended local companies’ investment in regional markets, saying it could help in foreign exchange generation and raise the country’s business profile.
Their comments come at a time some Malawi Stock Exchange (MSE)-listed companies such as Nico Holdings plc, FMB Capital Holdings (FMBCH) plc and National Bank of Malawi (NBM) plc have successfully invested in regional markets.
Last week, MSE-listed FDH Bank plc also announced plans to acquire a controlling stake in an African bank.
Nico Holdings plc has subsidiaries in Zambia, trading as Nico Insurance Zambia and is also present in Uganda through Sanlam General Uganda and Mozambique through Sanlam Mozambique.
FMBCH, through its subsidiary First Capital Bank, is present in Zambia, Zimbabwe and Botswana while NBM plc owns 51 percent stake in Akiba Commercial Bank of Tanzania.
Speaking in an interview on Friday, RBM spokesperson Mark Lungu described such moves as positive, saying they have the potential to raise the profile of the country’s stock market while boosting their revenue base.
He said: “The banks’ revenue and profits will increase, which is good for shareholders. We are confident that the banks are taking a calculated move as entering foreign market will obviously expose them to risks in those foreign markets.
“At the same time, competition in foreign markets will compel the banks to improve their efficiency and that is a positive thing.”
In a separate interview on Friday, Mitc chief executive officer Paul Kwengwere said local companies’ investments outside Malawi is a worthwhile development, which could strengthen the country’s economy and help in foreign exchange generation.
He said: “I may not have details of all companies that have made progress in investing in neighbouring or regional markets, but I know that some companies have really done well and that is commendable.
“This could help the companies and the economy in many aspects, including the generation of foreign exchange.”
MSE chief executive officer John Kamanga said on Thursday that the exposure of its listed companies to global investors could bring diversity of business knowledge and help them to generate foreign exchange for their businesses and the country.
“The benefits to the country are the opportunities for foreign exchange earnings through dividends, but also other extended external business through the acquired businesses,” he said.
Financial consultant and former banking executive Misheck Esau described the regional expansion as a good development, adding that trade in services just like exports of goods is the way to go for local companies.
“I really do not have any advice to give them except to encourage them to ride on their strengths on the Malawi market to become a strong player,” he said, specifically commenting on FDH Bank plc announcement that it is closing in on acquiring majority stake in a regional bank.
In May last year, FDH Bank plc managing director Noel Mkuluchi said they conducted market research in Zambia and Mozambique as the bank moves to expand its regional footprint in line with it is strategic plan.
Last week, in a trading statement, FDH Bank plc cautioned shareholders to tread carefully when dealing with the bank’s shares as negotiations have advanced.
