Ministry of Finance, Economic Planning and Development says Cabinet is yet to approve the much-awaited Dividend and Surplus Policy that will ensure that State Owned Enterprises (SOEs) are independent from Treasury and start remitting dividends.
The expected approval of the policy is part of the agreement between the International Monetary Fund (IMF) and the Malawi Government under the the three-year Extended Credit Facility (ECF).
When contacted yesterday to provide an update on the matter, the ministry’s spokesperson Davies Sado confirmed that the policy is yet to be approved, but said the process is at an advanced stage.
He said: “As a ministry, we finished all the processes and administratively, the document was sent last year to OPC [Office of the President and Cabinet] for approval. But I can assure you that the policy will be approved anytime soon.”
According to the IMF structural benchmarks for 2019/20 fiscal year with the Malawi Government contained in the IMF Country Report on Malawi, the global lender set December 2019 as a deadline for Cabinet to approve the policy.
But one week into the year, Business News understands that Cabinet is yet to approve the policy.
Our efforts to talk to OPC on the matter yesterday proved futile.
But Sado was upbeat that once approved, the policy will help in providing guidance on how parastatals should handle dividends, which he said is in tandem with shareholder letters of expectations.
Last year, government issued a shareholder letters of expectations to assist loss-making State enterprises devise solutions to improve their performance while helping profit-making entities to continue making their strides.
In the Letter of Intent to the IMF, both Minister of Finance, Economic Planning and Develoment Joseph Mwanamvekha and Reserve Bank of Malawi Governor Dalitso Kabambe assured the IMF that government plans to step up measures to enhance the oversight of all SoEs.
“We are committed to implementing dividend policy to ensure profits and surpluses realised by SoEs and statutory bodies are duly remitted to government.
“The share of dividends due to government will be increased and investment needs of statutory bodies will be met through budget appropriation rather than retention of surpluses,” reads the letter in part.
According to the letter, by March 2020, Treasury plans to submit to Parliament and publish on the Ministry of Finance website a consolidated annual report on SoEs.
The report will include risk analysis case studies on Electricity Generation Company, National Oil Company of Malawi, Agricultural Development and Marketing Corporation and Blantyre Water Board (BWB) that are in line with the recommendations of the IMF’s technical assistance.
Economic commentator Gilbert Kachamba yesterday said it is important for parastatals to pay dividends to government as this will help increase the revenue that government collects.