Market analyst Emmanuel Chokani says prospects of the capital market providing avenues for raising finance remain high post-Covid-19.
Speaking on the sidelines of Institute of Chartered Accountants in Malawi (Icam) Annual Lakeshore Conference in Mangochi on Friday, he said financial literacy remains a challenge.
Chokani, who is also chief executive officer (CEO) of Bridgepath Capital, said: “This is a difficult year. Once we go through the coronavirus issues and things settle down, the capital market will continue to provide an avenue.
“The problem that we have is that we have significant cash chasing few counters. However, issuers have preferred accessing capital from the private placement debt market and also from banks and not from the listed debt capital market.”
On his part, MSE CEOJohn Kamanga said in an interview that despite the existence of alternative sources of finance, commercial banks have dominated financing.
He, however, said there is a mismatch in terms of maturity because clients borrow short-term to finance long-term projects, which exerts financial pressure on firms and is a disadvantage in terms of their gearing rations.
Said Kamanga: “On MSE, one can raise capital through listing, debt instruments and the enterprise development platforms, which specifically looks at small and medium enterprises to raise funds with less stringent requirements. MSE has an equity market capitalisation of K1.7 trillion as at November 6 2020 with 16 companies.