State-owned enterprises (SOEs) in lands and housing, transport, energy, agriculture, trade and tourism sectors have registered a cost recovery of over 100 percent, reflecting their ability to generate adequate revenue to meet operating expenses.
But Treasury data contained in the Consolidated Report for State-Owned Enterprises in Malawi dated December 2024 shows that SOEs in the communication and water sectors registered a cost recovery under the threshold of 100 percent.
In the report, Ministry of Finance and Economic Affairs says to guarantee that the tariffs, fees and charges that are approved for the SOEs are cost-reflective, policy intervention is still required.
Reads the report in part: “The level of the subsidy must be explicitly stated and provided for in situations where the government approves tariffs below cost recovery to prevent the subsidy from impairing the SOEs operations.”
According to the data, the SoE that registered exceptional performance include Malawi Gaming Authority (984 percent), National Oil Company of Malawi (859 percent), Airport Development Limited (506 percent), Southern Region Water Board (324 percent), Lilongwe Handling Company (256 percent), Agriculture Development and Marketing Corporation (247 percent) and Malawi Bureau of Standards (214 percent).
Howeer, 28 commercial SOEs comprising 14 traders, five service providers and nine regulators registered a cost recovery below the threshold.
During the year under review, SOEs registered a cumulative K11.6 billion surplus, an improvement from a loss of K17 billion the previous year.
In a written response yesterday, Mzuzu University economist Christopher Mbukwa observed that over the years, political interference has been the major challenge contributing to the dismal financial performance of SOEs in the country.
“Some SOEs have been implementing programmes that are essentially more politically feasible than fostering positive returns. Furthermore, most SOEs have governance challenges,” he said.
Comptroller of statutory corporations Peter Simbani said he needed time to look at the report before responding.
Minister of Finance and Economic Affairs Simplex Chithyola Banda earlier urged parastatals to explore and implement activities that have the potential to grow their revenue base, saying it was the expectation of government that SOEs should go beyond delivery of quality service to Malawians to remit dividends to Account Number One.
SOEs in Malawi operate across strategic economic sectors including agriculture, communications and energy.
