Outgoing chairperson of National Bank of Malawi (NBM)plc, Mathews Chikaonda, says the current high cost of borrowing and power generation challenges poses great risk to achieving economic growth in the country.
Chikaonda, who is also a former Reserve Bank of Malawi (RBM) governor, said this would be despite improved weather conditions in the 2016/17 season which is expected to result into a rebound in gross domestic product (GDP) of 5.6 percent.
He said that at a growth rate of five percent, it would take the country 14 years to double its growth while the population is still growing.
“At five percent, it will take us 14 years to double growth but at the same time, the population will also be growing. And if you take the two, the per capita gap will be exactly where we are now. At five percent, this will be just enough to maintain our poverty for the next 14 to 20 years.
“We need to look at various sectors of this economy and ask ourselves a question of what it will take for us to grow the economy. Other countries with much less than what Malawi has are doing more including Singapore and Mauritius,” said Chikaonda during the bank’s 45th annual general meeting on Wednesday in Blantyre.
However, he added that direct budget support from the co-operating partners is not expected to resume soon and it is envisaged there will be challenges in meeting tax revenue targets emanating from the weakened economy.
“The fiscal deficit is therefore expected to increase thereby applying more pressure on inflation, interest rates and economic growth prospect,” he said.
In his remarks, NBM plc newly appointed chief executive officer (CEO) Macfussy Kawawa said the massive power load shedding the country experienced had a significant negative effect on the bank and its customers’ production capacity as well as cost efficiency.
“This in turn dampened appetite for certain bank products and services and for some, the ability to service borrowing obligations,” he said.
Press Corporation Limited plc group CEO George Partridge, formerly NBM CEO, has since been elected new NBM board chairperson.
During the year under review, the bank registered a29 percent increase in pre-tax profit of K25.2 billion from K19.6 billion the previous year. n