• Full Screen
  • Wide Screen
  • Narrow Screen
  • Increase font size
  • Default font size
  • Decrease font size

Malawi Foreign Private Capital Survey 2017


This report presents findings of the 2017 survey on Foreign Private Capital (FPC) conducted between November 2017 and June 2018. It was a seventh cycle covering stock data for 2015-17 and transaction data for 2016-17. The survey was jointly conducted by the Reserve Bank of Malawi (RBM), Treasury, Department of Economic Planning and Development (EP&D), Ministry of Industry, Trade and Tourism (MITT), Malawi Investment and Trade Centre (MITC) and National Statistical Office (NSO).

Download Report

Malawi Foreign Private Capital Survey 2017

The survey was administered to 162 enterprises from which 107 responses were received, representing an overall response rate of 66.1 percent. Reduction of the traditional bulky questionnaire by excluding the investors’ perceptions section in this cycle did not improve the response rate.

The survey results showed that private sector foreign liabilities are vital for development financing. The total stock of private foreign liabilities declined by 0.5 percent from US$1,270.2 million in 2016 to US$1,263.5 million in 2017. The maturity of these liabilities was mostly long-term (73.7 percent and 78.4 percent in 2016 and 2017, respectively), signifying investor confidence and stable source of evelopment finance for the economy. The bulk of the stocks constituted Foreign Direct Investment (FDI) liabilities (86.5 percent and 93.7 percent in 2016 and 2017, respectively), followed distantly by Other Investment liabilities (13.4 percent in 2016 and 6.1 percent in 2017). In terms of sectoral distribution, transportation, agriculture and finance were the major recipients of the private sector foreign liability stocks, accounting for 39.3 percent, 27.0 percent and 12.1 percent, respectively, in 2017. While total private sector foreign liabilities registered a net increase of US$133.9 million in 2016, the economy experienced a net reduction of US$2.1 million in 2017 mainly due to more repayments to than disbursements from foreign creditors.

The survey further revealed that FDI was the largest contributor to the total stock of private sector foreign liabilities, amounting to US$1,098.2 million in 2016 and US$1,184.3 million in 2017. The composition of total stocks of FDI was dominated by debt instruments with foreign affiliates (67.2 percent in 2016 and 61.5 percent in 2017) which were predominantly long-term in nature (73.5 percent and 72.2 percent in 2016 and 2017, respectively). This indicates that, overall, companies preferred debt financing as opposed to equity financing for FDI. This poses greater exposure and risk to foreign creditors. Results from the survey also showed that major recipient sectors of FDI liability stocks were transportation and agriculture, which jointly registered a contribution of at least 65.0 percent in both 2016 and 2017. The survey further showed that the economy witnessed a shift from traditional to non-traditional sources of FDI during the period under review. While traditional sources (UK, USA and RSA) of FDI stocks accounted for only 30.8 percent in 2016 and 32.9 percent in 2017 of the total stock of FDI liabilities, non-traditional sources (Mozambique, Switzerland and Mauritius) constituted about 69.2 percent and 67.1 percent of the total stock of FDI liabilities in 2016 and 2017, respectively. FDI transactions, on the other hand, registered increases of US$116.0 million in 2016 and US$90.3 million in 2017, although a decline year on year, reflecting more acquisitions compared to disposals of shares and related instruments.


As regards stocks of Foreign Portfolio Investment (FPI), these were insignificant at US$1.4 million and US$1.6 million in 2016 and 2017, respectively, accounting for less than 0.2 percent of total stocks of private sector foreign liabilities in both years. The bulk of FPI stocks was in form of equity and Investment fund shares as opposed to debt securities.

Meanwhile, the stock of other foreign investment liabilities declined from US$170.5 million in 2016 to US$77.7 million in 2017. These were predominated by foreign loans from unaffiliated parties and trade credits and advances, having a combined contribution of 98.3 percent and 90.7 percent in 2016 and 2017, respectively. The reduced contribution in 2017 was on account of large loan repayments of US$93.7 million during 2017 from a foreign loan stock of US$154.8 million recorded in 2016. While net other foreign investment transactions went up by US$17.8 million in 2016, the economy recorded a decrease of US$92.3 million in net other foreign investment transactions in 2017 predominantly due to more disbursements by and more repayments to foreign creditors, respectively.

The total stock of Private Sector External Debt (PSED) declined by 10.6 percent from US$937.1 million in 2016 to US$837.6 million in 2017. At that level, PSED accounted for 73.8 percent and 66.3 percent, respectively, of the total stock of private sector foreign liabilities. The overall debt-equity ratio was recorded at 254.1 percent in 2016 and 209.3 percent in 2017, thus skewing the economy’s foreign financing towards debt rather than equity. This was more pronounced for the transportation sector probably due to its nature of being highly capital intensive. The rest of the sectors registered debt-to-equity ratios of below 100 percent.

In terms of profitability, the overall unadjusted net profit was recorded at US$65.2 million in 2016, which more than doubled to US$137.7 million in 2017. However, dividends declared and dividends paid remain in the interval of US$33.0 million and US$37.0 million in each of the two years. Reinvested earnings more than tripled from US$27.4 million in 2016 to US$96.3 million in 2017. This implies that foreign parent companies of domestic subsidiary companies recognised the need to plough back the profits made into the invested businesses for growth and expansion. Profitability at sector level indicates that professional services and financial services are the most profitable sectors with Return on Investment (ROI) ratios of 51.6 percent and 29.7 percent in 2017, respectively.

According to the survey findings, Malawi’s private sector holdings of stocks of foreign assets, also called claims on the rest of the world, declined by 3.7 percent from US$117.7 million in 2016 to US$113.4 million in 2017. The stocks of assets largely comprised affiliated short-term debt instruments between parent companies in Malawi and their subsidiaries in the rest of the world, accounting for 87.8 percent and 90.3 percent in 2016 and 2017, respectively. The bulk of these stocks of assets went to agriculture and finance sectors, accounting for 88.6 percent and 5.5 percent, respectively, of all stocks of private sector foreign assets in 2017. In terms of destinations, the major recipient countries included United Kingdom (UK) and Switzerland, jointly accounting for 92.6 percent and 92.1 percent in 2016 and 2017, respectively.

The survey further established that the level of employment in enterprises which responded to the survey stood at 36,575 in 2016 and slightly declined to 36,133 in 2017.  The workforce largely constituted Malawians (99.2 percent in 2016 and 99.1 percent in 2017). In both years, most of the workers were employed in the agriculture and manufacturing sectors which registered contributions of 67.8 percent and 14.1 percent in 2016, and 68.8 percent and 13.6 percent in 2017, respectively.

Featured Publications

2018 MPHC Main Report

Main Report Pic

 

The 2015-16 Malawi DHS

f mdhs2015-16

 

NSS Strategic Plan

f_nss20132017

 

MDG Endline Survey 2014

f mes2014

You are here: Home