There goes the spineless Peter Mutharika

So, President Arthur Peter Mutharika — otherwise known as APM these days — has bent over backwards to accommodate a bunch of folks who claim to have been speaking on behalf of Malawians against government’s dilution of its shares in Malawi Savings Bank (MSB) — an institution that government wholly owns.

We all know that the arguments against the divestiture — just like the President’s basis for suspending the transaction — are largely premised on nostalgia and political grandstanding, not cold hard spreadsheet facts, which are clearly in favour of divestiture.

Let me remind everyone.

MSB is a significantly illiquid bank. It is also a critically undercapitalised financial house.

Its liquidity position stands at 15.7 percent against the required minimum of 30 percent.

According to the law, one of the measures is for the stressed bank to divest its equity, a process that the spineless APM has just frozen simply because he is too timid to make a decision.

Furthermore, MSB needs at least K23.7 billion to smooth out its minimum capital and liquidity requirement. This is money that the shareholder — government — does not have.

The Democratic Progressive Party-led government has admitted it does not have the money. And they are right.

Why should government pump in all that money into a bank whose dividend payout history is so pathetic?

Why should government throw bad money after bad when crucial ministries, departments and agencies have just had ruthless budget cuts in the 2015/16 National Budget simply because Capital Hill is embarrassingly broke?

If government wants to pander to some jokers masquerading as self-appointed defenders of our interests in MSB, how will it ensure that MSB has the resources to continue operating without forcing the Reserve Bank of Malawi (RBM) to lose its credibility among market players?

When he suspended the sale on Wednesday, the President did not indicate that his administration will pump in this kind of money.

Yet, by the end of the day, MSB must meet Basel II requirements, acceptable capital adequacy ratios and other regulatory obligations as stipulated by the RBM, which has been coddling MSB for too long while cracking the while on the commercial bank’s competitors — all of which has been giving unfair advantage to the State-owned institution over others in the market.

Additionally, Mutharika’s statements, when announcing the suspension, were so contradictory that one wonders if he knew what he was talking about or what he wants by the end of the day.

For example, he said in reaching the suspension decision, he had listened to both sides of the argument.

Yet, he said the sale freeze was to encourage debate on the matter. Hadn’t he just admitted that the country has already had a lengthy debate on the matter?

To me what this means is that APM wants to listen to the same arguments all over again. What he intends to achieve after listening to this chit-chat is as clear as opaque beer.

The point is that the President has already listened to both sides — what he needs to do is make the decision whether to divest MSB or not.

Postponing that decision in the shabby name of ‘encouraging more debate’ is a cowardly act only a leader without a backbone can pull-off.

This suspension will neither help Malawians nor the bank — in fact, it is bad for both. The cloud of uncertainty round MSB is what will send the bank further gasping for breath.

Any company — let alone a bank — that has no strategic direction cannot instil confidence in its clients and investors. And in banking, confidence is everything. This so-called review of the transaction may not yield much.

And given how long we take to ‘review’ things in this country — just look at the eight-month and counting oil and gas exploration license reviews — this will be a long, agonising path for MSB, which may bring it to its knees.

Another curious thing is that the President alluded to how similar dithering shrunk Air Malawi to near scrap value.

“We argued, quarrelled and rumbled about it [Air Malawi sale]. By the time we concluded the transaction, Air Malawi was a mere shell and government ended up with huge debts to settle.

“Government would like to avoid a similar situation happening in the case of Malawi Savings Bank because it would be more detrimental to the interests of the company than was the case with Air Malawi,” the President pointed out.

Excellent lesson learned and recalled, Mr. President, so, why are you dancing around in little circles, sir, instead of being decisive on the matter?