Mining & Trade News

CDH Investment Bank says it is expecting supply chains to improve during the second half of the year after torrid times in the first half due to the coronavirus (Covid-19) pandemic.

In its unaudited financial results for the financial year ended June 30 signed by Chief Finance Officer, Mosiwa Ndovi, the Bank laments that the impact of the Covid-19 pandemic disrupted economic and business supply chains both locally and internationally.

Ndovi said: “Despite the various challenges, inflation and interest rates remained relatively stable. Many countries are slowly reopening and easing restrictions. It is expected that Malawi will also follow suit amid measures deployed by government to slow down the spread of the virus.”

“Therefore, supply chains are expected to improve during the second half of the year. The Bank has, however, taken appropriate steps to assess the likely impact of the pandemic on business and management is closely monitoring potential disruptions caused by the pandemic.”

He said Bank’s business for the second half of the year will leverage on the positive outcomes experienced during the period under review arising from the advisory, tailor-made and structured transactions to sustain growth, capital optimization and cost discipline.

In the period under review, the Bank registered profit after tax of K927 million against prior year performance of K549 million representing an increase of 69% mainly due to an increase in operating income before impairments on loans and advances of 26% from prior year.

The operating income before impairments on loans and advances grew from K2,803 million to K5,012 million mainly on account of growth in net interest income by 13% and non-interest income by 56%.

CDH investment Bank is a leading investment bank in Malawi which aims to build a vibrant, profitable and technology-driven banking entity through new products and services.

My Bucks Banking Corporation says it is scaling up utilization of digital banking platforms in order to offer consistent and relevant customer services amidst the novel coronavirus (Covid-19) pandemic.

In a summary of unaudited financial results for the half year ended June 30th, 2020, the banking group says it plans to embark on the journey towards becoming a truly digital bank by offering enhanced digital platforms amid cost reductions, and ease doing business while passing on the benefits to the customers.

“In order to achieve excellent customer experience, the Bank will also focus on the rationalisation of its cost base, the effective and prudent management of risks and liquidity, the diversification of its balance sheet, blended with efficient portfolio allocations, which will effectively result in the maintenance of a robust capital position,” says the Bank in a statement signed by Board Chairman Francis Pelekamoyo and MD Zandile Shaba.

It forecasts that Malawi’s macroeconomic outlook is expected to remain stable for the most part of the year 2020 while the growth path for 2020 rests much on what happens in the remaining months as the country continues to be challenged with increasing cases of Covid-19 pandemic.

My Bucks states that despite the challenges generated by the Covid-19, monetary authorities in the country are committed to keeping a low inflationary environment objective in the medium term.

Economic growth is expected to be driven from agriculture, manufacturing, mining, construction and transportation sectors.

It says: “There has been significant improvement in the power sectors that will ably anchor the sectoral growth prospects.”

“The current framework being implemented by the monetary authorities is also a catalyst of growth, as the objective of a lower interest rate, inflation and stable currency environment is currently reality.”

In the financial year under review, My Bucks successfully concluded the acquisition of 100% shareholding and claims of the Nedbank Malawi which is a strategic development for the group to expand its retail product offering across the country in areas where it did not have presence before.

It says: “The additional points of representation will be enhanced with digital product offerings in a number of areas with an overarching aim of achieving customer satisfaction to our focused segment of the market for both domestic and foreign currency banking products and services.”

“The group will also continue to expand using organic growth acquisitions and mergers where valuable opportunities exists in the Malawi market and the region as part of its expansion strategy.”

Meanwhile, the global economic growth for 2020 has been revised downward to 2.4% from an earlier projection of 2.9% enticing the slowdown in global economic activities following the coronavirus pandemic.

Malawi’s general macroeconomic operating environment for the first half of the year has been stable despite the country registering fewer covid-19 cases at the beginning of March 2020.

My Bucks bank has recorded a profit after tax of MK1.8 billion in the first half of the year 2020 surpassing MK817 million the same period in June 2019, representing 130% growth.

The group registered an asset growth of 70%, to MK100 billion from MK59 billion in June 2019, and the main driver of growth has been the loan book which grew by 63% to MK34 billion from MK21 billion same period ended June 2019.

My Bucks also recorded growth in customer deposits of 98% year on year.

On account of growth in the asset base, the total interest income for the first half of the year was 7% higher compared to the same period last year, while credit impairments reduced by 7% to MK191 million from MK204 million year on year.

The group’s operation costs in the first half of the year grew by 84% year on year to support the growth of the group after the successful acquisition of Nedbank Malawi, combined with business rationalisation costs and the expansion of the points of representation of the My Bucks Brand across the country.

Ecobank Malawi says its profit before tax grew by 5% to K5.4-billion while profit after tax increased by 8% to K4-billion in the financial year ended June 30.

In a summary unaudited financial statement for the year ended June 30, 2020 signed by MD Charles Asiedu and Chairman Leonard Chikadya, the financial house says the results manifest resilience of the Bank in light of the coronavirus (Covid-19) pandemic and political instability owing to the disputed 2019 elections, which had a knock on effect on business.

“The financial performance underscores the resilience of the Bank arising from our leadership position in trade finance, the digitization of our products and services and better efficiency in delivering our customer-centric services,” says Asiedu.

He states that in the year ended June 30, 2020, the Bank’s operating income at MK9.6 billion declined year-on-year by 8% on account of slowdown in business due to the political uncertainty and Covid-19.

Asiedu says benefiting from continued strategic cost, management and reduced business, operating costs were flat year-on-year at Mk4.2 billion resulting in cost to income ratio of 44%.

He also says impairment loss charges reduced year-on-year by 96% to MK54 million arising from improved risk management practices.

The Bank’s total assets increased to K278 billion representing growth of 19% which was driven by an increase of 13% in deposits from customers and funding from other banks which grew by 54% to MK124 billion.

The loan book decreased to K35 billion representing a reduction of 8%, which resulted from lower utilization of facilities by the bank’s major customers.

During the year under review, the Bank was awarded the Banking Brand of the Year 2020 while its MD scooped the Banking CEO of the Year from the Global Banking and Finance of the UK.

“The awards underpin the confidence that customers, stakeholders and the public have in the Bank and its leadership,” says Asiedu.

Meanwhile, the Bank has projected a challenging economic outlook in the second half of the year 2020 due to Covid-19 whose cases are increasing at an alarming rate in the country.

Asiedu says: “Accordingly, earlier projections of Gross Domestic products (GDP) growth, inflation, interest rates and exchange rates may be negatively impacted by Covid-19 in the short to medium term.”

“The ushering in of a new government after the fresh presidential elections could affect policy making and implementation. The Bank has put in place strategic initiatives aimed at mitigating the effects of Covid-19 on the Bank and staff.”

The Bank is accelerating the sale of its world class digital solutions targeting every Malawian in the second half of the year.

 “We are cautiously optimistic about the future and we will continue to make the appropriate investments to bring more value to our customers and other stakeholders,” says Asiedu.

The Malawi Government says it is advancing with the procurement process for the long-awaited construction of Mpatamanga Hydropower plant on Shire River following the prequalification of a consortium comprising SN Power Invest Netherlands B.V and Electrite De France SA (SN Power and EDF SA) as a preferred strategic investment partner for the project.

Acting CEO for Malawi Public Private Partnership Commission (PPPC) Audrey Mwala says the Commission is currently assessing documents submitted by the consortium to determine their capability to invest in the project.

Mwala says the procurement stage will go on up to early 2021 when the investors and the Commission are expected to kickstart the process to identify a contractor to execute the project.

“This contractor identification process will cost us almost half a year since we will be looking at a number of factors in identifying the construction company,” says Mwala.

She says PPPC is committed to ensure that construction of the plant starts as soon as the contractor is identified.

Malawi is backing on the power plant to increase its electricity generation capacity to do away with the electricity blackouts emanating from the load shedding programme that the Electricity Supply Commission implements to ration power supply.

The Malawi Government is inviting sealed bids from eligible bidders for the construction of irrigation canals in lower Shire Valley area.

The construction of Main Canal 1 and Main Canal 2 is part the Shire Valley Irrigation Scheme under the auspices of the US$563-million Shire Valley Transformation Program, which is financed by the World Bank and the African Development Bank.

 “The works under contract covers the construction of Main Canal 1 (MC1) from Station 6+000 up to 32+788 (Bifurcation point), and part of Main Canal 2 (MC2) from Station 0+000 (Bifurcation point) up to Station 18+024, (Lengwe national park),” says the Ministry of Agriculture in a Press Release.

It says the works will include construction of two inverted siphons on MC1, three inverted siphons on MC2, bridges, box culverts, canal crossing structures, concrete lined canal, and wire fencing around populated areas. The works are located in Chikwawa District.

“Bidding will be conducted through the International Competitive Bidding procedures as specified in the World Bank’s Guidelines: Procurement of Goods, works and non-consulting services,” states the Ministry.

The deadline for submission of bids is September 21, 2020 and interested eligible bidders may obtain further information from the Shire Valley Transformation Program -1.

The project development objective for Shire Valley Development Programme – 1 is to provide access to reliable gravity fed irrigation and drainage services, secure land tenure for smallholder farmers and strengthened management of wetlands and protected areas.

SVTP is a program of three sequential but partially overlapping phases (with different financiers entering at different times and in parallel financing arrangements).

The Electricity Supply Corporation of Malawi (ESCOM) and the Electricidade de Mozambique E.P (EPM) are inviting sealed bids from eligible bidders for the construction of a power interconnector from Matambo Substation in Mozambique to Phalula substation in Balaka, Malawi.

The assignment will be financed by the World Bank administered Norwegian Trust Fund, the World Bank, the European Union, and Germany Technical Cooperation through KFW.

Bidding will be conducted through international competitive procurement using a Request for Bids (RFB) as specified in the World Bank’s Procurement Regulations and is open to all eligible bidders as defined in the Procurement Regulations.

The deadline for submission of bids is September 22, 2020.

The US$127-million project entails the construction of a 218 km power interconnector, thus 142 km in Mozambique side and 76 km in Malawi side.

The project will interconnect Malawi and Mozambique’s transmission systems to enable them to engage in bilateral and regional power trade through the Southern African Power Pool (SAPP).

Mozambique expects electricity exports to Malawi to begin in 2022 and the Tete-Phombeya line will also to be used to supply electricity to towns and villages located along its route in Mozambique.

Malawi’s interest in buying electricity from Mozambique was formalised in 1998 with the signing of a memorandum of understanding in its capital city Lilongwe.

This project will fund Malawi’s first interconnection to the SAPP, which is the first and the most advanced power pool in the continent providing an alternative to domestic electricity generation to improve energy security.

The interconnector will help address Malawi’s sectoral challenges, including chronic electricity supply deficits and ensure security of supply as well as reliability and affordability of electricity through imports from Mozambique and, in the future, other SAPP members.

It also reduces the potential for a power crisis based on droughts affecting the Shire River which produces up to 99% of Malawi’s electricity and addresses the need for back-up in the form of diversified external sources of power.

A local economic expert says operationalization of the Control of Goods Act (COGA) by the Ministry of Trade will enhance local industrial productivity and ensure transparency on trade system.

Ministry of Trade has enacted COGA, a law to regulate Malawi’s importation and exportation of goods through imposition of restrictions, banning or allowing of exports or imports under licences.

According to the Press statement from the Ministry,” the law came into operation on July 10, 2020 following Publication of the Act in Government gazette on July 16,2020.”

“The new Act serves as a departure from old Act in that it brings in predictability, certainty and transparency which will facilitate Investment into doff sectors of the economy without interruptions,” reads part of the statement.

Speaking in an interview, Former Executive Director for Economic Association of Malawi(ECAMA), Edward Chilima hails the Ministry for effecting the law saying it is amongst trade interventions that were supposed to be imposed long time ago.

He says: ” This is a welcome development as it is to bring sanity on imports and exports, having noted that many tend to import goods of which basically we are not supposed to be importing, since these can be locally produced and distributed.”

“This will ensure that we import and export goods in line with national development and economic goals, as some goods are also not supposed to be exported to other countries for strategic reasons.”

Chilima, therefore, urges the Ministry to intensify monitoring measures to press on stakeholders involved in trade including Banks, Malawi Revenue Authority and Immigration department to adhere to the Act.

Meanwhile Malawi’s exports to the East African market are expected to be enhanced during and beyond the Covid-19 pandemic period, following Britain’s offer to support the Trade Mark East Africa (TMEA) project with $50 million.

TMEA was established as a non-profit making institution for aid for trade delivery in East Africa.

Among others, the project is to foster reduction of costs and time of trade and ensuring that Malawian products are competitive on international markets.

The Malawi government is planning to start construction of a modern military hospital at Kamuzu Barracks in Lilongwe.

Spokesperson for the Ministry of Health Joshua Malango confirmed to Mining & Trade Review that the project is currently at the design stage.

“Once the design is out, the Ministry will advertise for the procurement of works so that a contractor is identified and construction begins,” he said.

Finance and Economic Planning Minister Joseph Mwanamveka said in his presentation of the 2020/2021 national budget statement that the government has engaged a consultant to develop the design of the hospital which will be ready end July 2020.

“The government is also in discussions with would be financiers of the project,” he said.

The Malawi government has allocated K195 billion for the health sector in the 2020/20121 financial year, which represents 9.7% of the total budget.

In the new financial year, the Malawi government plans to complete construction of the Domasi Community Hospital, Phalombe District Hospital, the National Cancer Treatment Centre in Lilongwe, and three health centers and Umoyo houses in 29 sites across the country.

The government has also planned to kick start construction of Mponela Community Hospital in the 2020/2021 financial year.