The Reserve Bank of Malawi (RBM) says it recognizes the capital markets sector with a strong legal framework as an infrastructural pillar of a vibrant economic growth and development of a country.
Since the RBM started the implementation process of the new Securities Act which became effective in 2010, the Central Bank as a regulator to capital markets sector has been experiencing some challenges which required it to provide explanations to the market over some areas of the Act and the Directives which currently remain unclear to the financial market.
To this effect, a one-day workshop on Securities Law was organized at Sunbird Ku Chawe in Zomba on Monday where RBM met with the industry players in order to appreciate the successes and challenges of the sector in Malawi.
It therefore transpired that when many people start buying shares and invest in companies, there will be an increase of the same that will be listed on Malawi Stock Exchange (MSE) which could lead to a robust market which can foster economic growth of the country.
In his keynote address, RBM general counsel and bank secretary Samuel Malitoni said without appropriate legal and regulatory reforms, it becomes difficult for an economy to deepen and widen its financial market to efficiently allocate the scarce resources.
“A well-functioning, developed and transparent financial market increases incentives for investor participation thereby promoting the savings and investment culture which ultimately translate into sustainable economic growth and development of an economy. There is need to create an enabling environment that will channel resources,
particularly pension funds towards infrastructural development in this country,” said Malitoni.
He added that the role of the regulator in the capital market sector is to ensure the viability, integrity and stability of the financial system as well as that of public confidence in the institutional financial structure of the economy as a whole is maintained.
Adds Malitoni: “The legal and regulatory reforms project started way back in 2002 under the auspices of World Bank and the Malawi Government. The assessment of the financial system in Malawi was made during the period 2004 to 2005, through the Financial Sector Regulatory Reforms Programme where a number of challenges and weaknesses were identified.”
The RBM general counsel and bank secretary further said this led to the introduction of comprehensive regulatory reforms for the financial sector which involved the modernization of existing legal frameworks, such as Banking Act, Insurance Act, Securities Act and development of new laws for those sectors which were hitherto not regulated by the RBM, such as Pensions, Microfinance and Financial Cooperatives.
With this, he concluded that due to the heterogenic and increasingly complex nature of the capital markets sector, its regulation and supervision are obviously complicated; hence requiring a more robust legal framework.
Other notable participants to the workshop were Stockbrokers Association of Malawi president Armstrong Kamphoni, interim chairperson for Fund Managers Association of Malawi Mark Mikwamba and the chief operations officer for Malawi Stockbrokers Exchange (MSE) John Kamanga, and others.Follow and Subscribe Nyasa TV :