Some listed firms See gloomy 2024

Some Malawi Stock Exchange (MSE)-listed firms are bracing for a challenging year due to mounting pressure on the economy characterised by high inflation and interest rates, foreign exchange scarcity and a cost of living crisis.

An analysis of published accounts of seven firms out of the 16 on MSE, namely Nico Holdings plc, NBS Bank plc, TNM plc, Airtel Malawi plc, Sunbird Tourism plc, FDH Bank plc and NBM plc paints a gloomy outlook for the firms in 2024.

According to published financial statements for the year ended December 31 2023, the firms expect the macro-economic environment to remain challenging in 2024, putting pressure on their  profitability.

The challenges include a volatile exchange rate, foreign currency scarcity, low agricultural output and pressure on inflation, supply chain disruptions and volatility of some commodity prices due to the Russia-Ukraine war and the instability in the Middle East.

Nico Holdings plc said it expects the kwacha to “likely remain under pressure against other currencies throughout 2024”, owing to substantial current account deficit and high public debt.

“Hence, the group expects high inflation and high interest rate environment to persist throughout 2024,” said the firm in its financial statement for the year ended December 31 2024.

NBS Bank plc, on the other, hand, feared that although the country’s economic performance is expected to improve in 2024 on the back of the resumption of direct budgetary support and prudent macroeconomic policies that are aligned with the International Monetary Fund (IMF) Extended Credit Facility (ECF) programme, downside risks could arise from weak agricultural output because of the adverse impacts of El Nino weather and tight monetary policy stance.

On its part, Airtel Malawi plc said in a published financial statement that “the  economy and company are exposed to currency volatility, continued scarcity of foreign currency and unfavourable agricultural output.”

National Bank of Malawi plc said the “positive outlook is clouded by El Niño-induced weather conditions and a highly uncertain global economic and geopolitical environment”.

The picture portrayed by the listed firms is contrary to a Malawi Confederation of Chambers of Commerce and Industry Business Climate Survey published in February this year which indicated that businesses expect better performance.

The expectation was premised on the stability of electricity supply, availability of foreign currency and the confidence that an inflow of foreign direct investments will follow.

MSE chief operations officer Kelline Kondowe said the macroeconomic environment has been challenging for the private sector, which has had an impact on their assessment of what they believe the outlook would be.

“As market operators, it is of concern to us as we would want investors to get good returns on their investment,” she said.

In an interview yesterday, market analyst Cosmas Chigwe said while the challenging environment offers insights into the broader economy, the outlook will likely manifest in cautious investor sentiment on the market.

“Consequently, we might observe increased volatility in stock prices, particularly for firms heavily reliant on imports or foreign investments,” he said.

MSE has 16 listed firms and the others have not published their financial statements to indicate how the economic environment will affect their operations  this year.