As the country’s pension funds continue to grow, Reserve Bank of Malawi (RBM) has asked businesses in the country to put the resources into long-term profitable investments by, among others, investing in stocks on the Malawi Stock Exchange (MSE).
Since the new Pension Act enactment in 2011, Malawi’s pension industry has been among the region’s fastest growing following a sharp rise in pension savings and assets at an average of 34 percent annually.
According to RBM figures, pensions and life insurance funds amounted to K1.063 trillion in 2019 and are projected to rise further to K1.2 trillion by the end the year.
Speaking in an interview on the sidelines of the Airtel Malawi pre-listing cocktail in Blantyre on Tuesday, RBM Governor Dalitso Kabambe said companies should list on in the stock exchange to easily access the equity which is likely going to flood the market.
“Funds are growing rapidly outside the stock exchange especially for pension and life insurance funds. Our worry is that the money needs to have a home. We thus want to see more listings on the stock market,” he said.
He said government is working hard to reduce domestic debt and since a lot of that money was going into government securities and partly into listed equities on the stock market, there is need for more companies to list on the stock market and other avenues such as assets and infrastructure.
“Access funds in the economy are inflationary and this is not what we want because we want to maintain our medium-term inflation target of five percent. If more companies list on the MSE, these funds will find a home which is more lucrative and gives better return on investment as opposed to other avenues in which these funds can be invested,” he said.
Corporate and financial strategist James Kamwachali Khomba said in an earlier interview that pension funds present great opportunities for increased savings and investments to boost productive sectors.
He said government needs to enormously manage these resources, saying the billions that the country is currently sitting on in form of pensions could multiply if handled correctly.
“We encourage government to take a proactive action in as far as financial management is concerned not prudence but by investing in portfolios that give us the best returns. With this in place, we can make more billions than what we currently are and use this for other meaningful uses,” he said.n