Govt k5bn rental Arrears choke mpico

Mpico Limited, a Malawi Stock Exchange (MSE)-listed property management firm, has said the K5 billion rental arrears it is owed by government has the potential to affect its cash flow.

While government has tried to settle arrears through issuance of promissory notes, the firm’s board chairperson Edyth Jiya hopes it would do more to intervene to ensure that the company’s operations are sustained on the market.

“There is quite a substantial amount that the government owes currently, which is just about K5 billion. If I could talk about last year during the same, there has been a slight improvement.

“We have seen some repayments that have come through. If we talk of the 2016/17 fiscal year,  government has at least paid quite a significant number of months out of that,” she said on the sidelines of the company’s 44th Annual General Meeting (AGM) in Blantyre on Wednesday.

Jiya fears that if the arrears remain unpaid, it could affect the company’s operations, saying: “We don’t want Mpico Limited to go through the same situation that it was in when the cash flow was non-existent and we had to go to the banks to borrow money to be able to sustain our balance sheet.”

In July 2015, Mpico Limited locked out government ministries and departments from Gemini and Tikwere houses in Lilongwe over outstanding rental arrears estimated at K2.9 billion.

During that time, an official from the Ministry of Finance, Economic Planning and Development said it was unfortunate that Mpico resorted to locking out the ministries and departments, saying government has been a trusted tenant for many years.

Treasury spokesperson Alfred Kutengula had not responded to our questionnaire by the time of going to press.

But in his 2017/18 budget statement, Finance, Economic Planning and Development Minister Goodall Gondwe told Parliament that in view of the accumulation of domestic debt and a large amount of arrears, the budgetary support that the country has received will go towards repayment of debt and the settlement of arrears.

Earlier this year, Mpico Limited raised K9 billion on the Malawi Stock Exchange (MSE) through a rights issue to settle debt with financiers of Gateway Shopping Mall, which is located in the low density suburb of Area 47 in Lilongwe.

In the year ended December 2016, Mpico Limited registered a 156 percent increase in profit after tax from K800 million in 2015 to K2 billion.

The group has 28 investment properties mainly in Lilongwe, Mzuzu and Blantyre, which it lets out to government departments and the private sector.

Mpico Limited is 72 percent owned by Old Mutual Malawi, 23 percent while Lincoln Investments Limited and five percent by the public. n