1998 SOUTHERN AFRICA ECONOMIC ... - National Treasury

M a l awi Stock Exchange
The stock exchange was established in 1994. T h e re is one
s t o c k b roking company, S t o c k b ro kers Malawi Limited, w h i c h
deals in listed company shares and acts as a bro ker in
government and other securities. The Malawi Stock Marke t
contracted a regional subsidiary of a UK investment bank to
assist with the setting up of the marke t . The same company has
also assisted with the establishments of the exchanges in
B o t swana and Namibia. After a thre e - year ap p rentice period,
c o n t rol of the stock exchange is now being passed over to an
all Malawian staff. Due to its moderate size the exchange does
not yet operate a central depository system and the settlement
time is curre n t ly T + 7 .
M A L AW I
C e rtain current invisible pay m e n t s , such as private trave l ,
business travel and medical expenses, a re subject to indicative
l i m i t s . Holders of temporary employment permits are
permitted remittances of up to two - t h i rds of their earnings.
Residents are permitted to hold fo reign currency accounts, a n d
e x p o rters may retain 40 percent of their fo reign exchange
e x p o rt earnings in such accounts.The other 60 percent must be
sold to an authorised dealer bank on re c e i p t .
Fo reign Tr a d e
M a l aw i ’s fo reign trade balance is, to a large extent, governed by
p roduction levels and world market prices for tobacco, tea and
M a l awi Stock Exchange (USDm)
Ye a r 1996 1997
Number of companies listed 1 3
M a r ket capitalisation 1 4 . 7 1 0 9 . 9
Volume of shares traded 2 5 8 , 6 0 0 3 , 0 2 5 , 9 5 8
Value of shares traded (USD) 3 7 , 3 9 0 5 3 0 , 4 4 0
Number of trading day s , 4 0 2 6 0
M a l awi all share index 112.5 1 3 7 . 6
Average dividend yield (annual ave r a g e ) 4 .0 8 . 8
Average price-earnings ratio of all listed companies 11 . 18 6 . 36
S o u rc e : M a l awi Stock Exchange. ( 1998 )
The first company listed on the Malawi Stock Exchange was the
National Insurance Company in November 1996. A second
c o m p a ny, B l a n t y re Hotels Limited, was listed in March 1997,
fo l l owed by Sucoma sugar company, majority owned by South
A f r i c a ’s Illovo, in November 1997. The last listing boosted the
m a r ket capitalisation from USD12.5 m to USD 110m.
Trading activity started on a slow note in 1996 and early 1997,
but picked up later in the year when SUCOMA listed. T h e
M a l awi all share index has risen form 112.5 in November 1996
to 154.6 in March 1998. A major highlight of the exchange
o c c u rred in early April 1998 when SUCOMA successfully placed
51.9m shares on UK and South African markets thro u g h
S t o c k b ro kers Malawi in a deal amounting to USD7.3m.
T h e re are good prospects for further listings with the
implementation of the privatisation pro g r a m m e. T h ree potential
listings of the Press Corporation Ltd, the country ’s largest
conglomerate with businesses ranging from supermarke t s , t o
clothing manu f a c t u rers and tea and tobacco estates, a re in the
p i p e - l i n e, as well as one of the leading banks, the Commerc i a l
Bank of Malaw i , and Packaging Industries Malawi Ltd. T h e s e
listings are expected to take place in June-August 1998.
E x c h a n ge Contro l s
I nvestors may repatriate pro f i t s , d i v i d e n d s ,i nvestment cap i t a l
and intere s t , and make principal payments for international
l o a n s . I nvestors also have free access to fo reign exchange in
M a l aw i , both for imports payments and transfe rring financial
p ayments abro a d . H oweve r, c apital account controls still exist.
Both inward and outward direct and port folio inve s t m e n t s
re q u i re prior ap p rov a l .
s u g a r. These three commodities account for around 85 perc e n t
of domestic export s , with tobacco being by far the largest
e x p o rt commodity. I m p o rts are dominated by capital goods and
industrial equipment. During years of dro u g h t , M a l aw i ’s fo o d
i m p o rts rise significantly. In recent years the direction of
M a l aw i ’s fo reign trade has diversified with South Africa emerging
as a major trading part n e r. M a l awi exports chiefly to
industrialised countries (55 percent of total export s ), m a i n
trading partners being the US, South A f r i c a ,G e r m a ny and the
N e t h e r l a n d s . I m p o rts are sourced mainly in the deve l o p i n g
world (74.4 perc e n t ), w h e re South Africa and Zimbabwe
re p resent main sources (more than 50 percent of total import s )
and the UK and Asian countries being other major sources of
i m p o rt .
Trade Liberalisation and Trade A g re e m e n t s
M a l aw i ’s tariff re form programme is designed to bring Malawi in
line with other southern African countries.Almost all non-tariff
b a rriers have been re m ove d , and import licenses have been
a b o l i s h e d , except for a small range of goods which have
implications on health, s a fe t y, national security and the
e nv i ro n m e n t . E x p o rt licenses have also been abolished for all
goods excluding maize, g ro u n d nuts and beans. In March 1998
the taxes on sugar, c o f fee and tea exports we re re d u c e d .
M a l awi has signed trade agreements with some countries and
has pre fe rential access to a number of marke t s :
* The European Union: M a l awi is a signatory to the Lomé
C o nve n t i o n ,ensuring that agricultural products and virt u a l ly all
m a nu f a c t u red goods have pre fe rential access to all EU marke t s .
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