The suspension of the recapitalisation process of the Malawi Savings Bank (MSB) by government comes at the right time in view of how divisive the issue has been for past few months.
The debate, however, has been made complex due to a crosscutting barrage of ideas most of which were emotional or political rather than pragmatic.
As a way of taking charge of the affairs, the President finds it wise for the recapitalization process to be put on hold to allow even a more extensive debate that will help wipe out ignorance on those commenting without facts.
As eloquently put in the President’s statement, of all the voices that have weighed into the debate, the main players – regulators of financial services and business captains- have had their voices drowned mainly due to editorial choices by media houses to accord more coverage to the loudest noise.
The recapitalization of MSB has never been a political let alone a DPP issue ever since. This process started way back in 2013 when Reserve Bank of Malawi advised government to dispose off its stake in the bank because the institution was making losses and was not fit to stand for long.
Worse still, the bank was fast losing its validity in line with the Basel II agreement that puts a cutting line of liquidity for any financial institution to operate as a bank anywhere on the face of the globe.
This Basel II requirement alone meant that what come may, MSB has to get some things right failing which its future is totally doomed.
Going on with that premise, MSB does not need government to have any stake in it anymore because it is just a matter of days or hours before it collapses due to the nature of global financial order. The only way to save the bank from extinction is recapitalizing it through Public-Private Partnership (PPP) arrangement.
Interesting is the fact that when the issue emerged in 2013 Mutharika was also of the view that it should not be sold. However, after gathering all the facts available he realized that selling it is a better and viable option as it makes financial sense.
Another argument dominating the debate is that of promissory notes that government through the central bank offered to deal with toxic loans owed to the bank.
In relation to this issue, what many fail to appreciate is that even the offering of promissory of notes is not a guarantee for the survival of the bank itself.
President Mutharika has not been shielding anyone from repaying their loans, that is why he has ordered the creation of a “Special Purpose Vehicle” which has been charged with responsibility of recovering the money from debtors.
Government, just as taxpayers, cannot allow to lose billions just like that to people who offered the bank their own personal collateral in case of failure to repay. The bank itself, as a stand alone entity, has also motioned court proceedings in a bid to recover these loans.
These actions should inform everyone that whether the bank closes or not will not delete the huge amounts that debtors owe it. Every tambala shall be recovered and taxpayers will not stand to lose anything.
Malawians might need to be reminded that government is also shedding off its stake in Indebank, another major player on the financial market. As such this MSB saga should not be viewed as an isolated case aimed at shielding anyone whether from the DPP or not.
The recapitalization of MSB is good for the economy and falls in line with global requirements that discourages governments from doing business instead of only creating a conducive environment for such endeavours.
Having commented on the issue whether from an ignorant, emotional, political or informed point of view, everyone now has the responsibility to seek facts on the issue to make informed positions as we forge ahead as a country.
The President should be commended for taking such a stance, the onus now is on everyone to understand the economic sense in the sale of MSB.Follow and Subscribe Nyasa TV :