CSOs response to Ministry of Finance on Malawi Savings Bank

This statement serves as civil society’s response to the Press Statement from the Ministry of Finance, Economic Planning and Development on the issue of Recapitalization of the Malawi Savings Bank.

Petitioners march towards Parliament  and gives 60-day ultimatum on MSB sale
Petitioners march towards Parliament and gives 60-day ultimatum on MSB sale

The following is our rejoinder to the said statement.

In our view, the statement glosses over clear demands from civil society which centre on the need to rescind the decision to sell the bank for flimsy reasons with the aim of masking the abuse of MSB by politicians and businesspersons.

We are disturbed by the Government’s propensity to muzzle the voice of the people in speaking freely on the matter. We are surprised with the haste in which processes to dispose of MSB are being made. This is in clear violation of people’s freedom to exercise their right to contribute to a matter of public concern.

We are indebted to Malawians to clarify misrepresentations of the facts by the Ministry in order to carry weight to its clearly unpopular decision to sell MSB.

  1. Clarification on the purported MSB perpetual financial challenges *The ministry’s that Malawi Savings Bank perpetually faces challenges in complying with statutory obligation on capital and liquidity level on indicates only states of the banks position as at August 2014 being at 15.7% against an expected requirement ratio of 30%.

The Ministry is obligated to provide a year by year August ration from 1995 for a factual basis of his reason for such a divesture step

  1. The rationale of the waivers MSB serves the unbanked most of whom reside in the rural areas where private banks do not operate. MSB has filled in this glaring gap to the benefit of Malawians in remote areas. It exists to serve poor Malawians and a key reason why the majority of citizens are extremely weary about the intended sale of MSB.
  2. MSB obtaining a Loan from RBM in April, 2012 and alleged capital injection This is a practice that is not uncommon. Banks all over the globe including those in Malawi, borrow from Central banks whenever their liquidity positions are stressed.

This period the Minister refers to (2012) was a very difficult year for most banks and Malawi Savings Bank should not be singled out as an exception. The Central Bank is supposed to assist in times of need as lender of the last resort.

How MSB’s case is exceptional to the Ministry of Finance is extremely surprising. Clause 2.5 suggests that the bank has enjoyed several capital injection efforts from government. we would like to inform the Ministry that this trend has been the order of operations ever since the bank has been under current management which has failed to draw a roadmap for the success of the bank. When such failure is evident, remedial action is required that does not necessitate recapitalisation.

  1. Political Interference Any suggested failure of MSB is primarily due to political interference. It is an open secret that MSB was used as a clearing house for politicians to tap into the profits and clandestinely fund political party activities as well as reward businesspersons with plumb sums of money for nepotistic reasons. there was and continues to be clear abuse of power of both MSB including profit making parastatals.

As civil society, we have been monitoring this disturbing trend and speaking against the pressure being put against institutions such as MSB as well as the former Malawi Rural Finance Company which was run into the ground for similar reasons.

The continued demand for transparency and accountability by civil society will not cease until there is evidence of adherence to the rule of law. The Government is not above the law and must be subjected to the scrutiny of its citizens. These are the democratic values and principles we fought hard for in 1992 and we expect them to drive our case against the sale of MSB.

As civil society, we refuse to close our eyes to the danger of having politicians who abuse power in order to enrich themselves. There are more than thirty parastatals in Malawi and part of the reason there are not performing to the expected standards has been the curse of political interference. Cases in point include the sale of Malawi Housing Corporation houses at a pittance to politicians, the usage of parastatal vehicles to ferry party loyalists to party functions, making payments to politicians.

If this argument is anything to go by, how many institutions will be sold with this type of reasoning? The problem is not with the institutions in this regard, it is with politicians who meddle and are not held to account We maintain our demand that Parliament approves the recapitalization of MSB to the tune of MK 5 billion and create a trust to oversee the operations of the Bank until such time when it can belisted on the stock exchange.

The Board of Directors and Senior Management must be recruited and appointed by the trust.

  1. The history of Privatisation To date, privatisation has brought more harm than good to the Malawian people, despite it being hailed as the panacea for government owned businesses. We remember with nostalgia how our beloved Brown & Clapperton , Wood Industries Company, David Whitehead and Sons, Malawi Railways were run into the ground after privatization. the likelihood of another looming dismal privatisation process is almost certain. The people of Malawi must have a say into what happens to ventures that run on their hard earned tax. The time for being lulled into accepting every promise of Government without question are over.
  2. Bidding Process We are concerned that the bidding process was shrouded in mystery. There was a complete lack of transparency and accountability on how the bidding process was handled. There has been no explaination as to how out of 42 Companies that brought bidding documents, only one showed interest to purchase the Bank. This is compared to Indebank which was simultaneously being privatized with MSB and attracted atotal of 5 bidders.

We cannot help but wonder whether such a move was made to ensure that the Bank goes to some politically connected individuals The price that the Bank is negotiated on is another drawback. MSB is currently valued in excess of K53bn and it will be ludicrous to have it sold at anything less than K35bn.

The proposed price of K4.9bn is simply ridiculous for lack of a better word. K4.9billion is the current offer for both MSB and its subsidiary company, MSB Forex Bureau whose profit alone has always been above MK200million. The sale price of MSB offered by FDH Bank is K4.9bn covering 75% of the shareholding.

A proposed sale of INDE Bank to National Bank as announced by PPPCis K6.4 billion covering 61% of shareholding and yet in terms of size MSB is comparatively huge and has always been more profitable than INDE Bank. The fact that PPPC wants to negotiate the INDE Bank price upwards speaks volumes of why MSB should not be sold at K4.9 billion. We are of the opinion that this has been stage managed to make FDH Bank the sole bidder for MSB. The motive of this sale is aimed at clandestinely repay political tainted loans as well as safeguard future strategic funding of a party while satisfying the need to obtain personal shares in MSB by a group of greedy and selfish individuals.

  1. Loan Recovery committee

The bank has a structure for collection of loans and it is conflict of interest for government to put in place another special committee to recover loans. For the record, out of the 6 billion toxic loans, 4.9billion belongs to Mulli Brothers. MSB had an agreement with government and Mulli to have all payments in favour of Mulli to be channeled through MSB to facilitate the settlement of the loan but to for reasons still not known to Malawians, government has continued to pay Mulli directly.

Government has deliberately stifled efforts by the Bank to collect the loans so that they could weaken the Bank’s position thereby justifying the need to have it sold. The names in the committee also raise concerns about conflict of interest.

To begin with, Mr.Nkondola Uka is the transaction advisor for the same MSB sale and judging from theposition of the sale presently, he supports having the bank sold. Besides this, as a Partner in an audit company that audited MSB prior to 2007 as a Partner, it is the view of civil society that he is not be the right person to take on this huge responsibility. Mr. Chadwick Mphande is a board member for NBS Bank which happens to be a competitor of MSB and other Banks.

Having MSB sold would mean reduced competition and chances are that some of the ex-MSB customers will go to other banks among which NBS is one. We believe that there is serious conflict of interest which creates a picture that the whole transaction is calculated to deceive Malawians.

  1. The Injunction the injunction was obtained by 80% of employees at MSB Bank and not a ‘selection of employees’ as is being erroneously portrayed by government. Employees do not support the idea of having the Bank sold for obvious existential reasons.

Additionally they have the interest of Malawians at heart. It is therefore erroneous to claim that the injunction is to blame for the loss of 11 billion kwacha worth of money withdrawn by disappointed customers. If anything, it is the negative publicity of the Ministry of Finance in the press. The Ministry of Finance is on record to have claimed that the bank was to close by 31st March, 2015. What could be more threatening? The injunction gave hope to customers that the bank was not closing anytime soon and logically, customers supported the stay order as this meant continued operations of the Bank vis-à-vis closure.


In view of the foregoing, we remain steadfast in our demands as follows:

  1. Government should stop the Sale of the Bank in accordance with the wishes of the people of Malawi
  2. Government should recapitalize the Bank to the tune of 5 billion which is the current shortfall.
  3. Government enforce the transfer of the current CEO of MSB
  4. There should be a public probe into the bidding process
  5. Parliament must summon the Reserve Bank Governor, Minister of Finance and Secretary to the Treasury to answer questions pertaining to the sale
  6. Government should dissolve the entire board of MSB and in its place a Trust must be formed to run MSB and other parastatals. The trust must appoint own Board members,Executive and Senior Management, to ensure the Bank operates professionally and without undue pressure from Politicians.

7.At the expiration of two years after the recapitalization, sale the Bank through the IPO and listing on The Malawi Stock Exchange where the majority of Malawians can participate in share ownership of the Bank as opposed to ‘donating’ it to one person who is a tribesman for the ruling elite.

  1. Government should honor all the demands contained in the civil society petition delivered to it through Parliament with a copy to Secretary to Treasury on 15th May, 2015

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Chilungamo Chimawawa
Chilungamo Chimawawa
6 years ago

Lomwes are idiots, fools bibi yachabe chabe mbuli ndithu

mnyamata oyikonda nyasatimes

I hate Goodall n his actions. by yhe way where were u before? kungobwera ndi a lomwe akowo kumadzatibera ife amalawi. u guys mumaonek ngati anzeru but u r fools. dare sale our msb! God shud punish as he did with Bingu. amalawi timayamba chonchi kulira kenako yehova amatiranda from the jaws of clockdiles

7 years ago

Csos Pliz Just Form A Political Party To Compete In 2019. Apm Is Totaly Diferent From Bingu. He Will Not Respond To Your Calls And Mark My Words The Bank Is Going. U Were Very Quite When Jb Was Bizy Stealing Our Money. Had It Been Apm Was Not President U Could Keep Quite. U Are Wasting Ur Tym.

7 years ago

There is a lot of sense in the article.

Yesaya Dziko
Yesaya Dziko
7 years ago

APM bola Bingu cant you see, what is happening?

7 years ago


Romeo Hastings Bandawe
Romeo Hastings Bandawe
7 years ago

I have read with kin interest. GOOD JOB CSOs. Please Government, OBEY THIS.

7 years ago

Excellent CSO’s. Save Us we are still crying how they gave each other Chipiku chomwe chimapanga chuma nkuthandiza a Malawi ife otsati idzi za a mwenye nkumazembanazo msonkho. We are ready to go with you.

half man half biscuit
half man half biscuit
7 years ago

Great work civil society. Politicians are herw to milk us. Let us develop this country brick by brick. Let the recapitalization of msb be as clearly transparent.

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