"It's shameful that the UDF party wants to take us back to the dark days,"

Mr Gwanda Chakuamba (2003)

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Thursday, April 27, 2006

Malawi’s default rate ranked high
by Frank Phiri, 27 April 2006 - 07:38:52
International credit rating agency Fitch has given Malawi a foreign and local currency Issuer Default Rating (IDR) of ‘CCC’ with positive outlook, an improvement from ‘CCC+’ that it gave the country in December.
The rating, affirmed on April 20 this year, means that the country is slowly moving from the red to solid black in terms of its credit worthiness to foreign and domestic lenders.
A ‘CCC’ rating is in the speculative category under Fitch’s ratings. It entails that default is a real possibility and that capacity for meeting financial commitments is solely dependent on sustained and favourable business or economic conditions.
In a statement issued in Johannesburg, Fitch has attributed the improvement to a track record of sound fiscal discipline that followed satisfactory completion of a six-month Staff Monitored Programme (SMP) with the International Monetary Fund (IMF), leading to reinstatement of a lending programme—the Poverty Reduction and Growth Facility (PRGF)—last August.
“Fiscal performance, the main source of macroeconomic instability in the past, has improved as a result of better expenditure management and the return of donor budgetary support,” said the ratings agency.
It notes that Malawi has achieved the minimum six-month track record for adequate performance under the IMF’s PRGF which is a prerequisite for reaching completion point under the Heavily Indebted Poor Country (HIPC) initiative.
“But [full completion] will require the maintenance of sound macro-economic management, including modifying the exchange rate system to be more flexible, and compliance with the few remaining completion point triggers, mostly in the social area,” said Fitch.
Finance Minister Goodall Gondwe admitted in an interview on Tuesday that more work must be done for the country to improve on the credit ratings ladder.
He said delays to enact the Anti-Money Laundering Bill and to clear domestic arrears were contributing to a poor credit rating for Malawi.
“We’re still lacking in these few areas, but by next year our rating should improve. If we attain full HIPC completion point by June, which I am optimistic of, that should improve our image further,” he said.
The minister said government was doing its “maximum” best to win debt cancellation, get the money laundering law in place and repay domestic arrears.
Gondwe told Nation Business Review earlier this month that government would put aside a further K3.5 billion for domestic arrears under the 2006/07 budget, after paying about K2 billion under the current budget. The domestic arrears bill stood at K10 billion in 2004.
Apart from the arrears, government owes the domestic market about K60 billion in Treasury Bills while its foreign debt stands at US$2.9 billion of which 80 percent is owed to multilateral financial institutions such as IMF, World Bank and the African Development Bank (ADB).
Fitch notes in the statement that rating constraints are significant for Malawi due to high debt ratios in comparison to rated peers in the region, and that the economy remains vulnerable to external shocks.
No comparisons could be made between Malawi and her neighbours since the findings are on individual countries, companies, banks, among others.
Fox 5 TV to broadcast Malawi economy in US
by Frank Phiri, 27 April 2006 - 07:43:17
A US Television crew has arrived in the country to record a 30-minute programme on the Malawi economy to be broadcast on Fox 5 New York Television.
Programme Coordinator Eoin Rooney said the Malawi programme, to be introduced by President Bingu wa Mutharika, would form part of a series of broadcasts profiling African economies.
US Television produces country programmes broadcast on Fox 5 TV, a leading network for economic and financial news in the United States.
“This programme aims to strengthen Africa and Malawi’s key position within the Americas and beyond, highlighting the country’s most current tourism attractions and business investment opportunities,” said Rooney.
He said apart from the President, the programme plans to feature key ministers like Goodall Gondwe for Finance, Uladi Mussa for Agriculture and Martin Kansichi for Trade and Private Sector Development.
“We would like to communicate the success story that is Malawi’s economic recovery,” said Rooney.
He said the programme would also like to feature private sector businesses.
In Africa, the US Television crew has produced documentaries for Egypt, Rwanda, Uganda, Botswana and Tanzania.
The crew is coming from Zambia where it has completed gathering material for the African series, said Rooney.
Company closures drying up—Davies
by Frank Phiri, 27 April 2006 - 06:45:30
A company restructuring expert has said most Malawian firms are now able to service their loans, a development that has reduced the rate of closure resulting from liquidations.
Raymond Davies, outgoing Senior Partner for KPMG Malawi—a member of the global audit and business advisory firm—who handled numerous liquidation cases of local firms, said this in an exclusive interview with Nation Business Review in Blantyre last Friday.
“The liquidations have dried up. When I first came to Malawi eight years ago, most creditors filed for liquidations. But a significant distinction with the present trend is that we now have orderly closures whereby it is the shareholders themselves filing for voluntary liquidations rather than aggrieved creditors,” he said.
In liquidation or winding up, an entity’s assets are converted into cash with the aim of recouping value of a credit and interest and or part thereof depending on the nature and duration of the debt. In some cases, credit is turned into equity as was the case with Candlex Limited a few years back.
Davies, who was also Chairman of the Taxation Committee of the Society of Accountants in Malawi (Socam), said improvements in fiscal management by government and adherence to good corporate governance by the private sector have helped to significantly reduce liquidations.
“The economic fundamentals in Malawi are coming right—there is much better fiscal policy direction than we never had before. With the adoption of a Corporate Governance Code by Socam, we have seen many businesses buying into the concept,” he said.
Davies—who has worked for KPMG for 29 years in Sierra Leone, UK and Malawi—said over the past five years, interest and inflation rates were too high which, he said, pushed many companies to the wall.
He said with the scope of interest rates going down to around 20 percent levels, the future for the corporate world could only get better. Currently, the bank rate—the rate at which commercial banks borrow money from the Reserve Bank of Malawi—is at 25 percent. In turn, commercial banks lend to borrowers at 27 percent and above.
“If Malawi continues in this direction, we should see the economy picking up tremendously. It’s a question of sustaining good fiscal management,” said Davies.
But he warned that political risk remains above expectations and could not inspire much investor confidence. He cited the impeachment case against President Bingu wa Mutharika, the uncertainty of Mutharika’s Democratic Progressive Party (DPP) as a party in government based on its numbers in Parliament.
“When you have an impeachment motion in Parliament, foreign investors cannot come. Even those that are here become sceptical,” said Davies.
The Polytechnic Management Centre, a branch of University of Malawi, revealed in a survey in 2001 that at least 30 companies had closed shop in the country between 1994 and 2001 due to poor management made worse by a tough economic environment.
The report further said many more were sick as a result of the problem.
Some of the companies on the sick-list, according to the Polytechnic Management Centre, were forced to scale down operations rapidly over the years and corporate governance remains a big challenge in most such organisations.
ACB to act on Muluzi in July
BY DEBORAH NYANGULU
10:52:49 - 27 April 2006

The Anti Corruption Bureau (ACB) says it will wait for former president Bakili Muluzi’s six months visa to the UK to expire before it can act on him in connection with the K1.4 billion case.

This essentially means that Muluzi, who left the country in January this year for medical treatment in the UK, only has until June before the graft busting body can pounce on him.

ACB Diretor Gustave Kaliwo, who confirmed that Muluzi had obtained a six-month visiting visa, said there was nothing the bureau could do until the visa expires.

“If we see that Muluzi is not coming back after the visa expiry or that the visa has been extended, that’s when we’ll become worried and make our move. Otherwise, I have no reason to think that he will not come back,” Kaliwo said.

Muluzi is accused of diverting donor funds and money from other sources amounting to K1.4 billion into his personal account.

In October last year, ACB raided Muluzi’s houses in Limbe, Lilongwe, and Machinga where they confiscated documents and computers in relation to the case.

A UK based-computer expert has since analysed the data in the computers and made his recommendations to the graft-busting body.

Saturday, April 08, 2006

Malawi ex-President Muluzi faces arrest

April 8, 2006, 9 hours, 21 minutes and 37 seconds ago.


Former Head of State Bakili Muluzi is expected to be arrested once he comes back from the United Kingdom if the current sitting of the National Assembly passes the Money Laundering and Proceeds of Dangerous Crimes Bill, Weekend Nation can reveal.

Former Head of State Bakili Muluzi is expected to be arrested once he comes back from the United Kingdom if the current sitting of the National Assembly passes the Money Laundering and Proceeds of Dangerous Crimes Bill, Weekend Nation can reveal.
A senior government lawyer said on Wednesday the current law was limiting government agencies to move on Muluzi on some matters they have against him.
“If that bill passes into law it will give these agencies more leverage to move,” said the lawyer.
“His arrest is quite obvious.”
“I am not saying this law is meant for him, or government had him in mind when bringing the piece of legislation to the National Assembly but it will simply catch up with him on some issues,” explained the lawyer. “In fact, this bill has been on the shelve since Muluzi’s time as head of state. It is only now that it will be deliberated on.”
The lawyer cited the case where Muluzi is accused of pocketing about K1.4 billion public funds as one of the issues where the Money Laundering and Proceeds from Dangerous Crimes act is needed.
“Of course, some of the delays in the issues have been caused by the complexity of the investigations but the absence of this law has been quite an impediment to act,” said the lawyer.
Director of Public Prosecutions Ishmael Wadi said he could not comment on the issue because he did not have information relating to the issues in question.“Maybe the ACB would have the information,” said Wadi.
We tried to contact ACB Director Gustav Kaliwo but his phone went answered for a couple of days this week. However, ACB spokesperson Egritta Ndala is on record as having said in January this year the Money Laundering act would really assist the bureau to corner Muluzi on the K1.4 billion issue.
“The bureau will be analysing the totality of the evidence in accordance with the Corrupt Practices Act. However, the Money Laundering Act would be helpful in such cases if it was in place,” said Ndala.
ACB, covered by heavily armed policemen, early this year simultaneously raided Muluzi’s residences—BCA Hill in Limbe, Area 43 in Lilongwe and Kapoloma in Machinga—and confiscated assorted items including computers, bank cheques and bank instructions. Kaliwo said the bureau was looking for information relating to the K1.4 billion from foreign donors and local private firms which Muluzi is suspected to have deposited in a personal account while serving as state president.
Kaliwo said ACB made the move after Muluzi obtained a court injunction stopping his appearance at ACB offices where he was expected to account for transactions he had with the Republic of China, Libya, the Kingdom of Morocco and some foreign organisations.Two weeks ago Kaliwo said a British expert had finished analysing data on the confiscated computers and that ACB was just waiting for Muluzi to explain a few loose ends to the issue.
UDF deputy publicity secretary Mary Kaphwereza Banda, reacting to the development, accused President Bingu wa Mutharika of using ACB to harass and embarrass the former head of state. Kaliwo dismissed Kaphwereza Banda’s sentiments as “senseless”.“Those are senseless statements,” he said. “Searches are routine exercises. Even Muluzi presided over the search of the first head of state, the late Kamuzu Banda, was he harassing him then?”
But the K1.4 billion issue is only one of the cases for which Muluzi may end up in jail. ACB also wants the former president to answer for abuse of office for letting off the hook Shabir Suleman, a business person who was serving a five-year jail term for attempting to bribe Judge Maxon Mkandawire with K1 million. Suleman was convicted in March 2004.
A highly placed source confided in the Weekend Nation, investigations were already concluded and a report was already written which includes letters which Muluzi wrote to facilitate the release of Suleman who is reportedly in Dubai.
“I think what is remaining is for the ACB to arrest Muluzi and charge him with abuse of office,” said the source. “This would have already happened if Muluzi had not left the country for medical attention in the United Kingdom.”
Deputy Commissioner of Prisons McDonald Chaona confirmed that Muluzi pardoned Suleman on May 13, 2004, 11 days before he left office.
“Suleman’s brother wrote a letter to Muluzi on May 13, informing him that Suleman had been sick ever since he went to prison. The former President then directed that Suleman should be released and taken out of the country for treatment,” said Chaona.
He said Muluzi signed the pardon order between May 16 and 17 May, 2004. This was just a day before the general elections which were scheduled to take place on May 18 but were later pushed to May 20.
ACB is also probing Muluzi on how he built the multi-million Keza Office Park in Blantyre which has since been sold to a petroleum products firm, Petroda.Kaliwo was quoted on Monday this week as having said that investigations were at a very advanced stage.
“Maybe the only problem we may have is to repossess the property because it got sold off but let us see how we will cross the bridge once we reach there.”