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BANKING
Malawian Banks eye crossborder investments
Hobbs Gama
Published: 21-SEP-04

One of the leading and oldest banks, the National Bank of Malawi (NBM) in which the state has shares, is scouting profitable opportunities in the Southern Africa Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).

The Bank recently unveiled its plans to open operations in Mozambique in the near future as part of its strategy to spread its wings across the region.

NBM chief executive officer Isaac Msamala says his bank is eyeing Nampula on the Nacala Development Corridor and Tete in Mozambique as starting points. Nampula is emerging to be a favorite investment destination- Air Malawi, the national flag carrier also launched flights there.

Currently, the bank is carrying out a feasibility study to determine which regional markets to invest in as part of its cross-border expansion drive.

This scenario comes about with the rehabilitation and improvement of the Nacala Railwayline, which is expected to propel trade the agricultural, tourism and manufacturing sectors.

The banks are taking advantage of these developments. "Its part of our strategic plan to spread our representation outside Malawi and we are looking at starting operations in Mozambique," said Msamala, pointing at recent developments where Mozambique was in full-scale tobacco growing a situation which presents enormous business opportunities.

In 1990 NBM opened an office in South Africa to ease banking needs of Malawians doing business there but it ceased operations.

PCL Investment

NBM's majority shareholder Press Corporation Limited (PCL) Malawi's state conglomerate of companies is also embarking to invest on the Johannesburg and Botswana stock exchange to position itself better for growth and capital financing.

Mathews Chikaonda NBM chairman and chief executive for PCL said the conglomerate was working on a number of procedures and requirements, however he did not indicate the time frame for the Botswana and South Africa investments.

"We want to get recognised first. If we are on the Johannesburg Stock Exchange we will have more access regionally to capital markets," says Chikaonda, a former finance minister.

Commenting on PCL's poor performance on the London Stock Exchange, he attributed the results to foreign exchange depreciation, which has made PCL look unattractive.

Huge profits in the banking sector have raised animated debate. Clearly the banking sector is thriving while a number of other industries are closing and dwindling.

Banks profit from high interest rates, say analysts, although interest rates in Malawi have since been lowered to 25% from 45% by the Reserve Bank (RBM). They also get provision for services, and earnings from commissions- having moved from their core business of lending out money.

Consumers Association of Malawi (Cama) director, John Kapito has accused the banks for their “unfair” profit margins.

"In an environment where everybody is collapsing, it does not make sense for only one sector to stand tall. The private sector is being squeezed by the banks" he said.

During the opening of the new banking hall of Nedbank in the commercial city of Blantyre, Reserve Bank governor Elias Ngalande said the banking sector should benefit all those involved in economy building.

"I have the impression that there is a sense of loss in some quarters. The banks therefore have a duty to pass the gains of recent reductions in the interest rates to other sectors of the economy," observed Ngalande.





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