Three years after disposing two commercial banks—Malawi Savings Bank (MSB) and Indebank—government is yet to decide on how to use the proceeds which have accumulated to K16.2 billion.
Proceeds from the sale of its wholly-owned bank MSB at K9.5 billion and Indebank at K6.7 billion in 2015 were initially deposited in interest-generating Public Private Partnership Commission (PPPC) bank account before the money was moved to a government account, according to PPPC chief executive officer Jimmy Lipunga.
Treasury confirmed that the proceeds were in a government account until a decision is made on what to do with the money.
In an e-mail response on Tuesday this week, Ministry of Finance, Economic Planning and Development spokesperson Davis Sado said that after concluding the sale and all formalities, proceeds of the sale were transferred to government account.
He said: “The money has not yet been used as government is looking at several options on the use of the proceeds of the sale.”
Minister of Finance, Economic Planning and Development Goodall Gondwe also confirmed that the money has not been used three years after the deal was completed.
He said government planned to use the proceeds as its contribution for the yet-to-be-established Agriculture Cooperative Bank.
In a related development, government was yet to make headway in the recovery of about K6.1 billion toxic loans from 12 individuals and companies that owed MSB before it was sold.
Two months before the sale of the bank, government offset through Reserve Bank of Malawi (RBM) promissory notes the K6.1 billion for the 12 individuals and companies hoping to recover the money through a specially set-up MSB Debt Collection Company
Chadwick Mphande, chairperson of the Special Collection Vehicle for MSB Loans, said in a telephone interview on Tuesday there was some movement in the recovering efforts, but said government would be in a better position to explain.
The minister confirmed that there was some progress towards the recovery because some individuals and companies are now being taken to court.
Topping the list of the toxic loans inherited by government is Mulli Brothers Limited (MBL) Holdings with K4.9 billion. The others are Varibo Spirits owned by Duncan Kaonga at K397 million, KJ Transways owned by a Mr Mkumba with a K172 million loan that has not been serviced while Ganizani Transport owned by Charles Fungula owes the bank K97 million.
Government was also failing to collect K83.9 million from Maranatha Institute of Education owned by Ernest Kaonga, K71 million from Consolidated Building Contractors owned by Peter Mhone, K69.8 million from CK Construction of Chester Makuwira, K65.9 million from a firm owned by Bintony Kutsaira, K30.7 million from MGI Trading of Macpharen Mpeta Phiri, K27 million of Injena Petroleum Limited, K20.7 million of Angel Wings owned by Angel Chaponda Nazombe and K12.7 million of Eranive Trading owned by Fanny Joshua.
MSB was sold to FDH Financial Holdings Limited while National Bank of Malawi bought off Indebank.