Mid-Year Economic Report 2018

Transcription

1 NICO Asset Managers Invest Today for Tomorrow Mid-Year Economic Report 2018 Investment Management Corporate Finance Investor Services

2 LIST OF ACRONYMS ADF: ADMARC: AfDB: AMIS: BOE: BHL: CPI: DSI: ECB: ECF: EIU: ESCOM: EUR: FEWS NET: FISP: FMBCH: FOB: FSI: GBP: GDP: ICT: IDA: IFAD: IFMIS: IHS4: IMF: MASI: MASL: MERA: MK: MPC: MPICO: MSE: MT: MRA: mvam: MW: NBM: NBS: NGOs: NICO: NITL: African Development Fund Agricultural Development Marketing Corporation African Development Bank Agriculture Market Information System Bank of England Blantyre Hotels Plc Consumer Price Index Domestic Share Index European Central Bank Extended Credit Facility Economist Intelligence Unit Electricity Supply Corporation of Malawi Euro Famine Early Warning Systems Network Farm Input Subsidy Program First Merchant Bank Capital Holdings Plc Free on Board Foreign Share Index British Pound Sterling Gross Domestic Product Information and Communication Technology International Development Association International Fund for Agricultural Development Integrated Financial Management Information Systems Fourth Integrated Household Survey International Monetary Fund Malawi All Share Index Meters Above Sea Level Malawi Energy Regulatory Authority Malawi Kwacha Monetary Policy Committee Malawi Property Investment Company Plc Malawi Stock Exchange Metric Tonnes Malawi Revenue Authority mobile Vulnerability Analysis and Mapping Mega Watts National Bank of Malawi Plc NBS Bank Plc Non-Governmental Organisations NICO Holdings Plc National Investment Trust Plc

3 LIST OF ACRONYMS NSO: OECD: OML: OMO: OPEC: PCL: RBM: Rmb: SDF: Sunbird: TB: TCC: The Fed TNM: WFP: TSH: UGX: UK: USA: US$: ZAR: ZMK: National Statistical Office Organisation for Economic Cooperation and Development Old Mutual Plc Open Market Operations Organization of the Petroleum Exporting Countries Press Corporation Plc Reserve Bank of Malawi Chinese Renminbi Southern Dark Fired Tobacco Sunbird Tourism Plc Treasury Bills Tobacco Control Commission The Federal Reserve Bank Of America Telekom Networks Malawi Plc World Food Programme Tanzania Shillings Ugandan Shillings United Kingdom United States of America United States Dollar South African Rand Zambian Kwacha

4 TABLE OF CONTENTS Executive Summary Economic Overview Other Market Developments... Regional Developments Global Developments Outlook for July 2018 and Beyond Malawi Economic Risks Appendices: 1. Selected Economic Indicators (Malawi) Selected Economic Indicators (Tanzania, Uganda, Zambia, Mozambique) Budget Framework 4. Central Government Budgetary Operations Trend of Debt in Malawi Malawi Selected Economic Indicators GDP Economic Projections /19 Budget Brief Fews Net Seasonal Calendar for a Typical year... 42

5 EXECUTIVE SUMMARY Economic Outlook Malawi The Kwacha is expected to remain stable against the US Dollar in the short-term as a result of continued inflow of foreign currency. In the medium term, the Kwacha is expected to depreciate on account of significant current account deficits and weak investment inflows. Food security outcomes are expected to deteriorate during the lean season from October 2018 to January 2019 when food prices are at their highest and local cereal supplies are at their lowest (Source: Fewsnet), thereby leading to build up in food inflationary pressures. However, significant carry-over stocks from the previous agricultural season are expected to play an important role in keeping significant food inflationary pressures in check. The EIU expects RBM to opt for a modest increase in its policy rate in the second half of 2018 since risks to inflation outlook remain on the upside (Source: EIU). Interbank rates are expected to remain susceptible to change due to the volatility of liquidity levels in the market but are expected to remain within a band of +2%/-4% around the Policy Rate. Treasury bill yields are expected to remain below the level of monetary policy rate. Exports performance may be hindered in 2018 on the back of variability in weather conditions, among others. Overall, the current-account deficit has been forecasted to rise from an estimated 12.3% of GDP in 2017 to 14.1% in 2018, and to narrow to 12% of GDP in 2020 as agricultural exports recover and food imports decline. These projections are contingent on normal rainfall patterns. The government will continue to seek external support from non-traditional partners. The bulk of aid will, however, continue to be disbursed as project-based grants and off-budget support to non-government agencies. In 2018, real economic growth is projected to range between 3.60% to 4.50% based on EIU, World Bank, IMF, Ministry of Finance and RBM forecasts. Key Economic Risks Malawi Insufficient power supply will lead to lower productivity and dampen economic growth. High government debt levels create a future obligation for the government to repay the debt plus interest. Global oil price increases will lead to high import costs which may widen the country s trade deficit. Persistently weak export base affects the Kwacha s stability against the major currencies as import values exceed export values. High population growth rates over-crowding on public resources and may reduce per capita income. P A G E 5

6 EXECUTIVE SUMMARY (Continued...) Economic Highlights For Half Year 2018 Malawi Headline inflation for the 5 months ended 31 May 2018 averaged 8.9%, a decline from an average of 15.4% recorded in the first half year of This was due to decreases in both food inflation and non-food inflation (Source: NSO). The all type Treasury bill yield decreased to 14.5% in June 2018 from 15.2% in December 2017 (Source: RBM). Liquidity levels averaged K5.71 billion per day in June 2018, decreasing from K6.43 billion per day in December Access on the Lombard Facility averaged K5.10 billion per day at an average rate of 18.00%, decreasing from K5.51 billion per day recorded in December 2017 at an average rate of 19.58%. Overnight borrowing between banks decreased to an average of K7.62 billion per day in June 2018 at an average rate of 15.02% from K9.83 billion per day in December 2017 at an average rate of 15.02% (Source: RBM). During the first half of 2018, the Malawi Kwacha was relatively steady against the US Dollar while it appreciated against the British Pound, the South African Rand and the Euro (Source: RBM). Total forex reserves in June 2018 decreased to US$1, million (5.33 months worth of import cover) from US$1,176 million (5.63 months worth of import cover) recorded in December (Source: RBM). The stock market was bullish in the first half of 2018, with the Malawi All Share Index (MASI) increasing by 42.31% to settle at 30, points in June 2018 from 21, points in December 2017 (June 2017: 18.41% increase) (Source: MSE). Although the improved rainfall performance in February and March 2018 led to revitalization in some crops, below average production is still expected for the 2018 agricultural season due to lack of adequate rainfall during the critical crop growing periods (Source: FEWS.NET). During the 2018 tobacco marketing season, it was estimated that a total of million kg of all tobacco would be sold against the demand of 171 million kg of all tobacco, representing 14% below demand requirement (Source: TCC). The Malawi Energy Regulatory Authority (MERA) maintained fuel pump prices at K824.70, K and K for Petrol, Diesel and Paraffin respectively, during the two reviews that took place in the first half of 2018, amidst rising global oil prices (Source: MERA). The MPC decided to maintain the Policy Rate at 16% during the two MPC meetings conducted in the first half of 2018 (Source: 2018). On 5 February 2018, the Ministry of Finance, Economic Planning and Development released the 2018/19 budget statement in which the budget was set at K1.5 trillion, and was later revised downwards by K50 billion in June 2018 (Source: Ministry of Finance, Economic Planning and Development) P A G E 6

7 EXECUTIVE SUMMARY (Continued...) Economic Highlights For Half Year 2018 Malawi (Continued) The President of Malawi delivered a State of the Nation Address on 4 May 2018 during the opening of the third meeting of the 47th session of parliament and 2018/19 budget meeting in Lilongwe. The IMF team visited Malawi on 14 January 2018 to conduct the 2018 Article IV Consultation and hold discussions with Malawian authorities on the program supported by the IMF s Extended Credit Facility. On 30 April 2018, the Executive Board of the International Monetary Fund (IMF) approved a new three-year arrangement for Malawi under the Extended Credit Facility (ECF). The Ministry of Finance, Economic Planning and Development launched the MGDS III ( ), whose overarching theme is Building a Productive, Competitive and Resilient Nation. This is the fourth and the final medium-term national development strategy which is formulated to contribute to the attainment of the country s long term development goals enshrined in the Vision In April 2018, the Ministry of Finance, Economic Planning and Development published its Economic and Fiscal Policy Statement (EFPS) for 2018 which among other things, the ministry explained how the five key priority areas in MGDS III would be financed. P A G E 7

8 1. ECONOMIC OVERVIEW Inflation (Source: NSO) Inflation (%) (Source: NSO) Headline inflation for the 5 months ended 31 May 2018 averaged 20.0 National 8.9%, a decline from an average of 15.4% recorded in the first 5 months of This was due to decreases in both food inflation 15.0 Food Non food and non-food inflation. Food inflation declined to an average of % from an average of 16.3% recorded in the first 5 months of 2017, while non-food inflation averaged 9.2%, a decline from an 5.0 average of 14.4% recorded in the first 5 months of Change Change May-18 Dec-17 May-17 5 Months 12 Months Headline inflation 8.9% 7.1% 12.3% 1.80% -3.40% Fo o d 9.5% 4.3% 11.2% 5.20% -1.70% No n-fo o d 8.4% 10.0% 13.5% -1.60% -5.10% Government Securities (Source: RBM) Treasury bill yields decreased on all tenors during the first half of The all type Treasury bill yield decreased to 14.5% in June 2018 from 15.2% in December 2017 (June 2017: 22.09%) Treasury Bill Yields (%) (Source: RBM) 91-day 182-day 364-day Total Treasury bill applications for the month of June 2018 stood at K33.28 billion and K31.61 billion was allotted representing a 5.02% rejection rate. In December 2017, total treasury bill applications stood at K14.80 billion and K13.94 billion was allotted representing 5.83% rejection rate. The 364 days paper accounted for the highest subscription rate for the month of June 2018 at 46.84%, followed by the 182 days paper at 38.82% and the 91 days paper at 14.35% (December 2017: 364 days at 75.35% followed by 91 days at 14.74%, and 182 days at 9.92%). Treasury bills Jun-18 Dec-17 Jun-17 Change 6 Mo nths Change 12 months 91-day 14.00% 14.73% 21.42% -0.73% -7.42% 182-day 14.50% 15.10% 21.94% -0.60% -7.44% 364-day 15.00% 15.77% 22.92% -0.77% -7.92% All type yield 14.50% 15.20% 22.09% -0.70% -7.59% Subscriptions per TB Tenor for June day TB 46.84% 91-day TB 14.35% There were Open Market Operations (OMO) conducted in June 2018 totaling to K56.29 billion (December 2017: K billion) at an average rate of 15.01% (December 2017: 15.78%) against maturities of K billion (December 2017: K94.56 billion). 182-day TB 38.82% P A G E 8

9 1. ECONOMIC OVERVIEW (Continued...) Foreign Currency Market (Source: RBM) During the first half of 2018, the Malawi Kwacha was relatively steady against the US Dollar while it appreciated against the British Pound, the South African Rand and the Euro. The Kwacha closed the period at K against the US Dollar from K in December 2017, a marginal appreciation of 0.18% USD/MWK Exchange Rate (Source: RBM) % Mo vement % Mo vement CURRENCY Jun-18 Dec-17 Jun-17 6 mo nths 12 months MK/US Dollar % -0.30% MK/GBP % -0.94% MK/ZAR % 4.94% MK/EUR % -1.38% As at end of June 2018, gross official reserves totaled US$ million (3.48 months of import cover), decreasing from US$ million (3.65 months of import cover) registered at the end of December 2017 (June 2017: US$ million worth of 3.25 months of import cover). Private sector reserves amounted to US$ million (1.85 months of import cover) as at end of June 2018, decreasing from US$ million (1.98 months of import cover) recorded in December 2017 (June 2017: US$ million worth 1.71 months of import cover). 690 Forex Reserves (US$ million) (Source: RBM) 1, Jun-17 Aug-17 Oct-17 Dec-17 Feb-18 Apr-18 Jun-18 Official Reserves Private Sec. Reserves Total forex reserves in June 2018 decreased to US$1, million (5.33 months worth of import cover) from US$1,176 million (5.63 months worth of import cover) recorded in December Total forex reserves of US$1, million (4.96 months of import cover) were recorded in June The total import cover requirement per month is US$209 million. Jun-18 Dec-17 Jun-17 (US$ million) Import Cover (Months) (US$ million) Import Cover (Months) (US$ million) Import Cover (Months) Gross Official Private Sector Total 1, , , P A G E 9

10 1. ECONOMIC OVERVIEW (Continued...) Interbank Markets and Interest Rates (Source: RBM) Liquidity levels decreased in June 2018, averaging K5.71 billion per day from K6.43 billion per day in December Access on the Lombard Facility (discount window borrowing) averaged K5.10 billion per day at an average rate of 18.00%, decreasing from K5.51 billion per day recorded in December 2017 at an average rate of 19.58%. Overnight borrowing between banks decreased to an average of K7.62 billion per day in June 2018 at an average rate of 15.02% from K9.83 billion per day in December 2017 at an average rate of 15.02%. Kwacha Billions (3) Liquidity (Source:RBM) Monetary Policy and Average Interbank Rates (%) (Source: RBM) Stock Market (Source: MSE) The stock market was bullish in the first half of 2018, with the Malawi All Share Index (MASI) increasing by 42.31% to settle at 30, points in June 2018 from 21, points in December 2017 (June 2017: 18.41% increase). The year to date return for the MASI stood at 42.31% as at end of June 2018 compared to 18.41% recorded in the first of The Domestic Share Index (DSI) increased by 23.11% to 20, points in June 2018 from 16, points recorded in December 2017 (June 2017: 18.46% increase). The Foreign Share Index (FSI) increased by % to 8, points from 3, points in December 2017 (June 2017: 14.76% change). All counters registered share price gains for the first half of 2018 except Illovo which remained steady at K The following are the percentage share price gains: MPICO (24.86%), National Bank (11.08%), NBS (1.88%), NICO (35.29%), NITL (21.55%), PCL (28.67%), Standard Bank (9.84%), Sunbird (51.04%), TNM (65.52%), FMBCH (138.81%) and Old Mutual (52.04%) Interbank rates Monetary Policy rate Change Change Jun-18 Dec-17 Jun-17 (6 Months) (12 months) MK/Share MK/Share MK/Share % % BHL FMB N/A N/A N/A ILLOVO % 11.03% MPICO % % NBM % 14.50% NBS % 44.33% NICO % % NITL % % PCL % 35.44% STANDARD % 17.54% SUNBIRD % % TNM % % FMBCH N/A % N/A OML 2, , , % 61.08% In May 2018, BHL listed bonus shares on the MSE and announced a share split which saw each BHL share being split into five. This led to an increase in the firm s total number of shares from 129,192,416 to 839,750,705, trading at K5.40 each share. As at end of June 2018, BHL was trading at K7.00 per share. In March 2016, Old Mutual plc announced the separation of its underlying businesses into independently-listed, standalone entities. On 25 June 2018, Old Mutual plc Shares were delisted from the Johannesburg Stock Exchange, the Namibian Stock Exchange, the Zimbabwe Stock Exchange and the Malawi Stock Exchange. This saw listing of Old Mutual Limited on the Malawi Stock Exchange. MASI 30, , , % % DSI 20, , , % 75.15% FSI 8, , , % % Points 32,000 28,000 24,000 20,000 16,000 12,000 Malawi Stock Exchange Performance (Source: MSE) Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 MASI Mar-18 Apr-18 May-18 Jun-18 P A G E 1 0

11 2. OTHER MARKET DEVELOPMENTS Food Security Update (Source: FEWS.NET) Below average rainfall was mostly experienced across the country during the 2017/18 farming season. In addition to the dry spell, the infestation of crops by fall army worms (FAW) also threatened this year s agricultural output. According to Agriculture Extension and Technical Services of the Ministry of Agriculture, approximately 270,000 hectares of maize, sorghum and millet had been infested by fall army worms during the main cropping season as of 12 January However, just few months from the harvesting period, national food stocks were above average and national stocks in ADMARC and Strategic Grain Reserves were over 200,000MT. Maize prices in the local markets were low and averaging about MK105/kg with a range of MK70 to MK140/kg in January Maize prices in ADMARC markets remained at a higher fixed price of MK250/kg, but prices in local markets were still less than half of ADMARC prices. However, maize prices in local markets increased during the last week of January 2018 after remaining stable since June The increase was attributed to a supply decrease as some farmers and traders started hoarding their stocks because of the poor 2017/18 agricultural season. Although the improved rainfall performance in February and March 2018 led to revitalization in some crops, below average production was estimated for the 2018 agricultural season due to lack of adequate rainfall during the critical crop growing periods. With the arrival of new harvests following the commencement of the harvesting season in April 2018, prices for staple maize followed typical trends and decreased 5 to 20 percent between April and May 2018 in most markets across the country and maize prices were 8 to 33 percent below the five-year average. As the post-harvest period continues, Fewsnet expects poor households in districts in southern and central regions to be faced with stressed food security outcomes from June to September The food security outcomes in these areas is expected to deteriorate further during the lean season from October 2018 to January 2019 when food prices are at their highest and local cereal supplies are at their lowest. Drivers of the projected area outcome include below-average access to income from casual labour opportunities and crop sales because of the dryness and erratic rains during the 2017/18 cropping season, and projected above-average maize prices from November 2018 to January Agriculture Production Estimates (Sources: Ministry of Agriculture, Irrigation and Water Development, Fewsnet) On 5 February 2018, the Ministry of Agriculture, Irrigation and Water Development stated that maize production for the 2017/18 growing season would reduce by 283,941 metric tons which is about 8% of the estimated 3.5 million tons produced in Furthermore, about 1.9 million families were estimated to face food shortage. About 210,740 metric tons of maize production was estimated to be lost to the dry spell and 73,201 metric tons to fall army worms. In an attempt to address these risks, the Ministry of Agriculture, Irrigation and Water Development outlined a number of initiatives to ensure the country remains food secure, some of which were intensifying armyworm control measures, and implementation of maize export ban, which was also implemented in early 2017 and lifted in October National fall army worms monitoring, surveillance and control was also implemented continuing through FAW management and control, as well as pesticide handling trainings. The second round production estimates showed that overall cereal production for the 2017/18 season was below average. Production of maize was 15% below the five-year average and other crops that registered a decrease include groundnuts, pulses, and cotton. Despite these reductions, maize grain is readily available in markets and carryover stocks from the previous season will fill some of the national requirement gap. P A G E 11

12 2. OTHER MARKET DEVELOPMENTS Tobacco Market Update (Source: TCC) The 2018 tobacco marketing season for Malawi commenced on 9 April 2018 with the official opening at the main market of Lilongwe Auction Floors presided over by President Arthur Peter Mutharika. Chinkhoma Auction floors and Limbe Auction Floors opened on 16 and 23 April respectively. Even though the average tobacco prices for this year s marketing season are generally lower than those recorded in the previous season, higher tobacco volumes have been registered this season, thereby entailing higher sales value than those recorded in the previous marketing season. Overall, it was estimated that a total of million kg of all tobacco would be sold against the demand of 171 million kg of all tobacco, representing 14% below demand requirement. The cumulative tobacco sales results for thirteenth week of the tobacco marketing season have shown that the tobacco average price declined by 11.55% to US$1.73/kg from US$1.96/kg recorded in the corresponding period during the 2017 tobacco marketing season. Despite this price decline, the value of tobacco traded was 27.55% higher than that registered in the previous corresponding period. The following are the cumulative sales results for the thirteenth week of the tobacco marketing season compared to the same period in 2017: The trend of average prices and average sales value are depicted below: 2018 Tobacco Sales: Week Ten Cumulative Sales Versus Same Period in 2017 National % Change Volume (Kg Million) % Value (US$ Million) % Average Price (US$/Kg) % Average Tobacco Prices (USCents/Kg) Sales Value (US$) ,000, ,000, ,000, ,000,000 50,000, P A G E 12

13 2. OTHER MARKET DEVELOPMENTS Review of Fuel Prices and Electricity Tariffs Update (Source: MERA) The Malawi Energy Regulatory Authority (MERA) maintained fuel pump prices at K824.70, K and K for Petrol, Diesel and Paraffin respectively, during the two reviews that took place in the first half of 2018, amidst rising global oil prices, opting to apply the Price Stabilization Fund. During the first fuel prices review conducted in April 2018, MERA observed that the landed costs of Petrol, Diesel and Paraffin increased by 6.29%, 12.76% and 15.45% respectively. During the second review conducted in May 2018, the landed costs of Petrol, Diesel and Paraffin were noted to have increased by 17.45%, 21.25% and 28.91% respectively. These increases qualified all the three petroleum products for an upward pump price adjustment since they were beyond the +/-5% trigger limit. However, MERA resolved to maintain the pump prices for all the three products as implemented on 4 November 2016 and apply the Price Stabilisation Fund (PSF) to cover the increased landed costs of the three products. On electricity, in April 2014, MERA approved a second base tariff for ESCOM for a four year period from 2014 to 2018 which expired on 30 June Consequently, ESCOM has submitted an application to MERA for a new base tariff that will be implemented over a four year period from July 2018 to June First and Second Statement of the Monetary Policy Committee (MPC) Meeting for 2018 (Source: RBM) At its first meeting held on March 2018, the MPC decided to maintain the Policy Rate at 16%. In coming up with this decision, the committee observed that despite sustained decelerations in inflation in 2017, upside risks to inflation outlook still persisted. These included the possible further increase in utility tariffs and the potentially unchanged fiscal policy stance. The committee also decided to maintain the Liquidity Reserve Requirement (LRR) at 7.5% and the Lombard Rate at 200 basis points above the Policy Rate. The MPC stated that maintaining the monetary stance was appropriate to consolidate the gains made especially the achievement of a single digit inflation. On 4 July 2018, the Monetary Policy Committee released a second statement on the monetary policy stance following the MPC meeting held from 3rd and 4th July The Committee observed that inflation during the first half of 2018 remained somewhat elevated due to rebasing effects of the Consumer Price Index (CPI), electricity tariff adjustment in May 2018, a jump in maize prices in January and February 2018 on account of speculation, and fiscal pressures. Going forward, these risks coupled with rising global oil market prices are expected to per-sist in the near-term. The Committee therefore suggested that maintaining the current monetary policy stance will help in containing the risks and directing inflation towards the medium-term objective of 5%. This policy stance will be complemented by consistent mop-up operations to maintain tight liquidity conditions in the market. Consequently, the Committee resolved to maintain the monetary policy rate at 16% and keep the Liquidity Reserve Requirement (LRR) ratio at 7.5%. P A G E 13

14 2. OTHER MARKET DEVELOPMENTS (Continued ) Month-on-Month Fiscal Deficit Narrows Significantly as at April 2018 (Source: RBM) The Reserve Bank of Malawi, on 11 June 2018, released its April 2018 Monthly Economic Review, which among other developments, showed that month-on-month fiscal deficit narrowed significantly to K3.7 billion from a deficit of K26.3 billion recorded at the end of March During the corresponding month of April 2017, fiscal deficit was at 20.4 billion. Total government revenues in April 2018 rose by 15.7% to K95.4 billion following another increase in revenues of 12% to K82.5 billion in March Year on year, revenues recorded a growth of 3.8% from K92 billion in April The revenue increase in the month was driven by growth in domestic revenues which rose by K14 billion to K91.9 billion due to both tax and non-tax components. However, foreign inflows declined during the month by 23.3% to K3.6 billion (US$4.9 million) from K4.7 billion (US$6.4 million) recorded in March Total government expenditures in April 2018 declined by K9.7 billion to K99.1 billion, following another decrease of K4.5 billion recorded in March This decline was on account of a decline in recurrent expenditure by 4.9% to K82.7 billion. However, development expenditure increased by 2.6% to K146.4 billion. On a related note, the public sector owed the banking system a total of K567.3 billion as at end of April 2018, a decrease from K576.9 billion in the preceding month. Net credit to the central government from the monetary authorities went down by K66.7 billion to K362.9 billion compared to a drop of K2.9 billion to K279.6 billion in April 2017 as government repaid its outstanding Ways and Means advances and RBM off-loaded Treasury Notes and Bills on the secondary market. On the other hand, net credit to central government from the commercial banks increased by K51 billion to K193.8 billion largely due to RBM offloading of securities to the market and the commercial banks increasing their holding of these securities. The Reserve Bank Of Malawi Reports a Stable and Sound Financial Sector in 2017 (Source: RBM) The Reserve Bank of Malawi, on 4 July 2018, released its Financial Institutions Supervision annual report for 2017 which has generally described the financial sector s performance in 2017 as sound and stable, owing to a relatively stable macroeconomic outturn. The Malawi s banking sector s satisfactory performance was generally supported by favourable macroeconomic outcomes. Its assets grew by 26.8% to K1,572.3 billion. The Malawi Stock Exchange also performed satisfactorily in 2017, with the Malawi All Share Index (MASI) registering a positive return in 2017 of 62.1% from a negative return of 8.5% in 2016, following improved performance in all listed companies. The sector, however, continued to rely heavily on income from money market operations. The pension sector has been steadily growing over the recent years, and during 2017, both contributions and assets significantly grew on account of growing membership to the pension scheme. Investment income also increased largely on account of the positive performance of the stock market. The sector s assets grew by 39.8% to K532.2 billion. The general insurance sector registered significant growth in both premiums and total assets, although at a slightly slower pace compared to Total assets grew by 12.9% to K43.0 billion in However, the sector experienced solvency and liquidity challenges largely due to high level of insurance receivables. The life insurance sector also registered growth in gross premiums written and improvement in profitability. This growth is attributable to an increase in annuity products as well as increased adoption of annual inflation-linked premium on most individual life products. Its assets grew by 42.2% to K473.2 billion. Lastly, the microfinance industry performed well during the year 2017, as aggregate assets for the whole industry increased to K37.5 billion in 2017 from K35.4 billion in Individually, the performance was mixed as while depositing taking microfinance institutions, credit agencies improved, non-deposit taking microfinance agencies did not perform well. P A G E 14

15 2. OTHER MARKET DEVELOPMENTS (Continued ) 2018/19 National Budget Brief (Source: The Ministry of Finance, Economic Planning and Development) On 5 February 2018, the Ministry of Finance, Economic Planning and Development released the 2018/19 budget statement. The budget focuses on robust economic growth as the main goal of economic management alongside the maintenance of macroeconomic stability for robust, inclusive and sustainable growth. Below is the summary of the budget: The budget was set at K1.5 trillion which is 28.2% of GDP, compared to K1.3 trillion 2017/18 budget, representing a 15.4% increase. The development budget has been increased by 25.6% over the 2017/18 budget to K391.7 billion, representing 7.3% of GDP. The recurrent expenditure is estimated at K1.10 trillion (20.7% of GDP) compared to K948.9 million in the 2017/18 budget. Revenue and Grants are projected at K1.26 trillion (23.6% of GDP) which is a 13.8% increase from K1.11 trillion in the 2017/18 budget. Domestic revenue has been set at K1.05 trillion, representing 19% of GDP and Grants are programmed to reach K209 billion (3.9% of GDP). The fiscal deficit is expected to amount to K242 billion (4.5% of GDP) from a deficit of K193 billion in the preceding budget (3.9% of GDP). In view of diminished net foreign borrowing, domestic borrowing is expected to rise to K176 billion which is 3.2% of GDP. The allocations to key sectors include: K156 billion to agriculture sector, K87 billion to the health sector, K149 billion to the education sector, K115 billion to the transport sector, and K 22 billion to the energy sector as illustrated below: Key Sectoral Allocation (MK'Billion) Energy, Health, Agriculture, Transport, Education, Revision of the 2018/19 National Budget (Source: The Ministry of Finance, Economic Planning and Development) In June 2018, The Ministry of Finance, Economic Planning and Development announced the reduction of the 2018/19 national budget from the initial proposed budget of K1.504 trillion to K1.403 trillion. This translates into a reduction of the deficit inclusive grants or the overall balance by about K50.0 billion from an earlier projected 4.5% of GDP inclusive grants to 3.8% of GDP. The Ministry cited concerns over large budgetary deficit which could consequently lead to heavy domestic debt burden as the reason for the downward revision. P A G E 15

16 2. OTHER MARKET DEVELOPMENTS (Continued ) State of the Nation Address by President of Malawi The President of Malawi delivered a State of the Nation Address on 4 May 2018 during the opening of the third meeting of the 47th session of parliament and 2018/19 budget meeting in Lilongwe. Below is the summary of the some of the highlights made during the presentation: Economic Growth Following macroeconomic stability, real GDP growth rate is expected at 4.0% in 2018 and 6% in Agriculture The government intends to transform agriculture by moving from subsistence to commercial farming. In order to achieve this goal, government is implementing the Malawi Agricultural Commercialisation Project to select and focus on crops for value chains. Agricultural Sector-Wide Approach Programme will be implemented to enable small-holder farmers to have access to investment capital and markets. Mining Development Some of the initiatives in mining development include capacity building in mining contract negotiation and in development of modern mining agreements. A regionally competitive Mining Fiscal Regime has also been adopt-ed to ensure that investors will have confidence in the sector. The Mines and Minerals Act of 1981 and the Petro-leum Act of 1983 are being reviewed to improve the legal environment of the mining industry to enhance devel-opment of the sector and increase its benefits to the people. Private Sector development, Industry and Trade The government is promoting Foreign Direct Investment to help the country move from aid to trade. Private sec-tor investment is needed for job creation and an expanded revenue base. Public Health The government intends to improve access to health services by expanding some of the existing health facilities and constructing new ones. Construction of Malawi s first-ever national Cancer Centre is expected to be complet-ed before the end of this year. Government has procured medical equipment worth US$5.9 million for 49 health facilities. Each of the 49 facilities will get standard minimum package of the equipment required to provide es-sential health care. Government is also recruiting 858 health workers for the different levels of the health care system using the current Global Fund grant. Cabinet has also approved the Pharmacy and Medicines Regulation Bill, 2018, which provides stiffer penalties for offenders in drug supplies. Energy The President expects the current power supply of 360MW to double to 720MW by 2020 and 1,000MW by Measures to this goal include diversification into coal energy, wind power, solar power, gas power and expand the current hydro system by building dams. The government is also working on inter-connections with neigh-bouring countries to tap power. Land, Housing and Urban Development In the 2017/18 financial year, government continued to implement measures aimed at improving land tenure and security. This year, government will develop subsidiary legislation for land related laws that were enacted in Currently, only the subsidiary legislation for the Customary Land Act has been finalized and is currently in force. Government will also develop and implement a rollout road map for the improved land administration and governance programme in line with the new Land Laws. P A G E 16

17 2. OTHER MARKET DEVELOPMENTS (Continued ) Published Half Year Financial and Trading Statements (Sources: BHL Plc, NBS Plc, NITL Plc, NICO Holdings Plc, TNM Plc, Standard Bank Plc) The following companies have released their financial and trading statements for the half year ended 30 June 2018 as follows: PUBLISHED HALF YEAR FINANCIALS HY 2017 HY 2018 % Change BHL % TRADING STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2018 COUNTER DESCRIPTION NBS Plc NITL Plc Expects profit after tax to be approximately 140% higher than the loss recorded during the previous corresponding period. Expects profit after tax to be more than 35% higher than the previous corresponding period. Press Corporation Plc Expects profit after tax to be more than 50% higher than the previous corresponding period. NICO Holdings Plc Expects profit after tax to be more than 24% higher than the previous corresponding period. TNM Plc Standard Bank plc Expects profit after tax to be more than 40% higher than the previous corresponding period. Expects profit after tax to be less than 40% from the previous corresponding period. Blantyre Hotels Plc Half Year Financial Performance (Source: BHL Plc) Blantyre Hotels Plc registered a drop in revenue for the half year ended 30 June 2018 by 0.22% to K1,966 million from K1,970 million recorded in the same period last year. The company attributes this drop to lower occupancy on account of a slowdown in corporate level travel against the same time last year. This impacted both rooms and incidental revenues. Direct expenses grew by 4% to K888 million from K854 million due to inflation adjusted costs which averaged 8.1%in the period. Persistent power cuts, which forced the company to rely on more expensive power generation alternatives also contributed to this rise. Hence, profits after tax declined by 27% to K million from K million over the review period. P A G E 17

18 2. OTHER MARKET DEVELOPMENTS (Continued ) The IMF Executive Board Approved US$112.3 Million under the Extended Credit Facility (ECF) Arrangement for Malawi (Sources: IMF) The IMF team visited Malawi on 14 January 2018 to conduct the 2018 Article IV Consultation and hold discussions with Malawian authorities on the program supported by the IMF s Extended Credit Facility. The two teams reached staff-level agreement on a three-year program that could be supported by the ECF pending IMF s Board approval in April On 30 April 2018, the Executive Board of the International Monetary Fund (IMF) approved a new three-year arrange -ment for Malawi under the Extended Credit Facility (ECF) for Special Drawing Rights (SDR) worth million (about US$112.3 million), equivalent of 56.25% of Malawi s quota in the IMF, to support the country s economic and financial reforms. This decision enabled an immediate disbursement of SDR11.15 million (about US$16 million) with the remaining amount phased over the duration of the program, subject to semi-annual reviews. The authorities ECF-supported program aims to entrench macroeconomic stability and to foster higher, more inclusive, and resilient growth. According to the IMF, this will be achieved through fiscal consolidation to ensure long -term debt and external sustainability; containing inflation; focusing policies on poverty-reducing and resilient growth by raising the amount and quality of spending on critical infrastructure and social sectors; tackling governance challenges through improved public financial management and procurement; improving financial intermediation and strengthening access to finance; and advancing critical growth-supporting structural reforms. The following is the summary of the statement made during the meeting: Malawi has shown progress in achieving macroeconomic stabilisation following two years of drought, with a rebound in growth and inflation reduced to single digits. However, the fiscal position has deteriorated and the public debt to GDP ratio has risen. Increased debt service pressures have reduced space for needed infrastructure and social spending. The authorities are making efforts to entrench macroeconomic stability, raise growth and reduce poverty. Fiscal consolidation will ensure long-term debt and external sustainability. This, combined with continued strengthening of the monetary policy framework, will contain inflation and reduce fiscal dominance. The amount and quality of spending on critical infrastructure and social sectors will be raised. Governance will be improved through reforms in public financial management and procurement. Improved financial intermediation, access to finance, and other critical growth-supporting structural reforms will be advanced. The medium-term economic outlook is favourable, with private sector activity expected to benefit from better infrastructure and an improved business climate. Progress will depend on the authorities strong ownership to support successful implementation of their program. The Malawi Growth and Development Strategy (MGDS) III (Source: Ministry of Finance, Economic Planning and Development) The MGDS III, whose overarching theme is Building a Productive, Competitive and Resilient Nation, is the fourth and the final medium-term national development strategy which is formulated to contribute to the attainment of the country s long term development goals enshrined in the Vision The strategy will be implemented from 2017 to 2022, replacing MGDS II which was phased out in June The successor strategy has departed from the formulation of multiple thematic areas by going straight into the choice of five key priority areas, which are said to P A G E 18

19 2. OTHER MARKET DEVELOPMENTS (Continued ) The Malawi Growth and Development Strategy (MGDS) III (Source: Ministry of Finance, Economic Planning and Development) (Continued) be carefully selected in order to spur growth and address the bottlenecks to growth and development. The idea is to maximize social and economic benefits of all the investments that will be done in the period. The effective implementation of the five key priority areas is expected to translate into integrated impacts which will positively affect other sectors through positively reinforcing multiple loops. Below is the summary of the identified five key priority areas: 1. Agriculture, water development and climate change and management The goal is to achieve sustainable agricultural transformation and water development that is adaptive to climate change and enhance ecosystem services. A number of strategies will be put in place to address the adverse effects that climate change has on the agricultural sector through adaptation and mitigation. Adaptation will enhance preparation for and negate the effects of climate change, thereby reducing vulnerability of communities and ecosystems. On the other hand, mitigation avoids escalating the risk of climate change by reducing further release of Green House Gases (GHGs) and by sequestration of GHGs from the atmosphere. 2. Education and Skills Development The goal is to improve quality and relevant education and skills for all. To achieve this, Malawi needs to improve the transition rate from primary to secondary to tertiary level. The education system needs to be reformed to include entrepreneurship, skills development in order to improve employability of young Malawians and reduce youth unemployment. 3. Energy, Industry and Tourism Development The goal is to provide sufficient sustainable energy for industrial and socio-economic development. Industrialization and structural transformation of the economy are essential to maintain the rapid long-term economic growth of a country. Industrialization also benefits other sectors such as Tourism, Health and Education, all of which relay on energy development. Attention will also be put on mining exploration, extraction and regulation to unleash the sector potential and empower the rural masses who live around mining sites. 4. Transport and ICT Infrastructure The goal is to develop a safe, affordable, reliable, equitable and sustainable transport and ICT infrastructure. High costs and poor access to reliable transport and ICT infrastructure in the country remain an important threat to faster economic growth. Population growth on the other hand has continued to undermine the progress that has been made towards infrastructure development. In this regard, a conducive environment will be provided for continued investments in maintenance, expansion and modernization of infrastructure. 5. Health and Population The goal is to improve health and quality of the population for sustainable socio-economic development. Improving health outcomes is essential and also a prerequisite for increased national productivity, accelerated economic growth and poverty reduction. However, the health care system faces challenges which include shortage of essential medical products and technologies, among others. In the next five years, there is need to ensure that all people in Malawi access the greatest possible quality of healthcare. There is also need to increase investment in population related programmes such as modern family planning. P A G E 19

20 2. OTHER MARKET DEVELOPMENTS (Continued ) Economic and Fiscal Policy Statement 2018 (Source: Ministry of Finance, Economic Planning Development) In April 2018, the Ministry of Finance, Economic Planning and Development published its Economic and Fiscal Policy Statement (EFPS) for 2018 which sought to inform and share with various stakeholders the economic and fiscal policies that will anchor the economy over the short to medium term. The EFPS also specified the broad strategic priorities which would guide government in preparing the budget estimates for the 2018/19 fiscal year. Among other things, the ministry explained how the five key priority areas in MGDS III would be financed. Government intends to finance MGDS III through revenue generated from domestic sources as well as through concessional borrowing. Government will also encourage private sector involvement through Public-Private Partnership arrangements. Government further intends to undertake a Development Finance Assessment (DFA) that is aimed at mapping both domestic and external sources of development finance. This assessment will recommend policies, institutional arrangements, capacity needs to mobilise, manage and determine existing and future flows of resources. On public debt management, the statement pointed out that in the medium term, Government intends to restructure the domestic debt to ensure that there is more long term debt than short term debt. This will ease the burden of debt service on budget execution that is currently being experienced. On foreign borrowing, Government strategy will involve contracting more concessional loans from multilateral sources and will continue to monitor debt trends along with emerging domestic and external vulnerabilities and systemic risks. Government will also continue to implement principles of Development Cooperation Strategy (DCS) to enhance aid management. DCS is a country level framework to guide development cooperation for achievement of national development objectives. The ministry expects real GDP growth to moderate to 4.5% in 2018 driven by the non-agricultural economy, tobacco production, exports, and investment in infrastructure. Agricultural growth is anticipated to be slower than last year due to the low crop yield, especially for maize following the effects of fall armyworm infestation and dry spells during the early part of the growing season. Growth prospects are also constrained by delayed recovery of power generation. Further declines in lending rates as inflation continue to decline are expected to support recovery of private sector investment. This, combined with the present stabilization and reform programs will solidify business confidence, support inclusive growth, and spur economic diversification. In light of these, real GDP growth is expected to gradually increase to around 6% in the medium term. Inflation at the end of 2018 is expected to level off in the region of 7% to 8% before gradually converging to 5% by In the short to medium term, inflation is projected to remain within the single digit band. Meanwhile, risks to the disinflation path may emanate from the rise in global oil prices and the impact of the current power outages First Quarter Public Debt Update (Source: RBM) According to RBM s Financial and Economic Review for the first quarter of 2018, total public debt stock during the first quarter of 2018 stood at K2,900.3 billion, representing a 4.1% increase from a 2017 fourth quarter position of K2,786.6 billion. On an annual basis, public debt rose by 18.7% from a debt stock of K2,443.1 billion recorded as at end of the first quarter in As a percentage of GDP, total public debt stock dropped to 56.2% of GDP in the quarter under review from 60.2% of the fourth quarter of Public external debt accounted for 52.7% of the public debt stock, from 53.4% recorded in the previous quarter and 51.5% recorded in the corresponding quarter of Outstanding domestic debt stock stood at K1.37 trillion, representing a 5.7% increase from K1.30 trillion as was recorded by the end of the preceding quarter. On annual basis, domestic debt rose by 15.7% from its 2017 first quarter position. P A G E 20

21 3. REGIONAL MARKET DEVELOPMENTS Sub-Saharan Africa According to the IMF s April 2018 World Economic Outlook, real economic growth in sub-saharan Africa is projected to rise gradually during the period to 3.4% and 3.7% respectively, as the challenging outlook in commodity exporters gradually improves. South Africa s real economic growth is expected to strengthen from 1.3% in 2017 to 1.5% and 1.7% in 2018 and 2019 respectively. Business confidence is likely to gradually firm up with the change in leadership, but growth prospects remain weighed down by structural bottleneck. The medium term outlook is subdued, with growth expected to stabilise at 1.8% over (Source: IMF). World Bank has projected sub-saharan Africa regional real economic growth at 3.1% in 2018, and to an average of 3.7% in by Sub-Saharan African economies were hit hard by a crash in commodity prices which slowed growth, reduced government revenues and weakened several of the region s currencies. While Nigeria, South Africa, and Angola are expected to see a gradual pick-up in growth, economic expansion will continue at a solid pace in the West African Economic and Monetary Union (WAEMU), and strengthen in most of East Africa. These forecasts are based on the expectations that oil and metals prices will remain stable, expansion in global trade will stay robust, and external financial market conditions will continue to be supportive (Source: World Bank). Zambia Zambia has shortlisted 10 regional and international companies to build a total of 100 Megawatts of solar electricity projects by The country is heavily dependent on hydropower and following a drought in 2016, it has been hit by electricity shortages, forcing it to ration power supply to mines. The country has since embarked on a policy to diversify to renewable forms of energy to ensure security of electricity supply (Source: Reuters). The Central Statistical Office monthly report for June 2018 has shown that year-on-year inflation for June 2018 decreased to 7.4% from 7.8% recorded in May 2018 owing to the base effect arising from the adjustment in electricity tariffs in June The year-on-year food inflation rate rose to 7.5% in June 2018 from 6.9% the previous month. Non-food inflation rate slowed to 7.3% from 8.9% recorded in May 2018 (Source: Central Statistical Office ). Zambia s finance minister has urged South African firms to invest in roads and power plants in the country after it suspended borrowing indefinitely, slowing down the accumulation of new debt amid worries about the risk of distress. The South African government and banks have drafted a plan to support infrastructure projects in Zambia with an initial pledge of US$1.2 billion. The IMF rejected Zambia s borrowing plans in February 2018, saying its debt load was harder to sustain. (Source: Reuters). Zimbabwe China s unlisted Tsingshan Holding Group has signed a US$1 billion agreement with Zimbabwe to build a steelmaking plant in the country through its local subsidiary Afrochime, which produces chrome ore. The plant is expected to produce 2 million tonnes of steel a year for 25 years. The country s only integrated steel plant, ZISCO, shut down in 2008 at the height of an economic crisis. Zimbabwe s current administration is trying to woo foreign investors especially in mining as part of efforts to revive the economy (Source: Reuters). Zimbabwe s year-on-year inflation rate for May 2018 remained steady at 2.7% for three consecutive months. The month-on-month inflation stood at 0.0%, decreasing from 0.1% in April 2018 (Source: Reserve Bank of Zimbabwe). Zimbabwe has released a trio of climate change policies designed to make the country more resistant to climate pressures and help it meet its international carbon-cutting pledges. The Child Friendly Climate Policy is designed to educate school children about climate change and promote climate-friendly practices, a new Climate Smart Agriculture Policy And the country s first overall National Climate Policy (Source: Reuters) P A G E 21

22 3. REGIONAL MARKET DEVELOPMENTS (Continued...) Tanzania Tanzania aims to amend its tax bill to grant amnesty on interest and penalties for the next six months effective 1 July 2018 in order to improve compliance and ultimately boost revenues. Revenue collection for the 2017/18 fiscal year that ends this month, June 2018, is at 21.9 trillion Tanzanian Shillings (US$9.65 billion), just below 70% of the target (Source: Reuters). The Bank of Tanzania has released its monetary policy statement for the financial year 2018/19 which reviews the macroeconomic developments and monetary policy implementation during 2017/18 and outlines the monetary policy stance and measures that the Bank intends to pursue in 2018/19. Government aims at attaining the following macroeconomic objectives: Real GDP growth of 7.2% in 2018, maintaining single digit annual inflation rate by end June 2019 and budget deficit of 3.2% of GDP in 2018/19. The Bank intends to adopt an interest rate based monetary policy framework in 2018/19 to safeguard effectiveness and credibility of monetary policy in achieving price stability and sustaining high economic growth (Source: Bank of Tanzania). Tanzania s inflation for the month of May 2018 decreased to 3.6% from 3.8% recorded in April Food and non-alcoholic beverages inflation rate, which constitutes 38.5% of the country s consumer basket, decreased to 2.6% from 3.6% recorded in April 2018 (Source: Tanzania National Bureau of Statistics). Uganda French oil major producer, Total, says it expects to start producing oil in Uganda in 2021 at the earliest, the second firm to suggest it will be unable to meet the 2020 target set by the country, alongside China s National Offshore Oil Corporation. Uganda discovered 6.5 billion barrels worth of hydrocarbon deposits 12 years ago in the Albertine rift basin near its border with the Democratic Republic of Congo. But production has been repeatedly delayed by disagreements with oil firms over field development strategy, tax disputes and a lack of infrastructure such as a refinery or export pipeline (Source: Reuters). Uganda expects economic growth of at least 6% in 2018/19 (July-June) from 5.8% in 2017/18,partly helped by public infrastructure investments. Government spending is expected to rise by 13% to trillion Shillings (US$8.5) in the year starting July 2018,while domestic borrowing would rise to 1.78 trillion shillings from 1.7 trillion Shillings in 2017/18 (Source: Reuters). The annual headline inflation for June 2018 has been recorded at 2.2% from 1.7% registered in May The rise is largely attributed to the Annual Energy, Fuels and Utilities (EFU) Inflation that rose to 15.1% for the year ending June 2018 compared to 10.3% recorded for the year ended May (Source: Uganda Bureau of Statistics). Mozambique U.S oil and gas producer Anadarko Petroleum Corporation said it expects to make a final decision in the first half of 2019 on whether to build the first liquified natural gas export terminal in Mozambique. The Mozambique project, which is located between both the Asia-Pacific and European markets, will consist of two liquefaction trains with the capacity to produce million tonnes per annum. The company has said it expects to complete the facility in the timeframe. (Source: Reuters). P A G E 22

23 3. REGIONAL MARKET DEVELOPMENTS (Continued) South Africa South African retail sales rose 0.5% year-on-year in April 2018 after increasing by a revised 4.6% in March On a month-on-month basis, sales fell 1.2%. Sales rose 3.1% in the three months to the end of April 2018 compared with the same period last year (Source: Reuters). South Africa s trade surplus widened to 3.52 billion Rand (US$ million) in May 2018 from a revised 1.17 billion Rand surplus in April Exports rose by 16% on a month-on-month basis to billion Rand in May, while imports rose 13.5% to billion Rand (Source: Reuters). Growth in private-sector credit demand in South Africa slowed to 4.56% in May 2018 from 5.07% in April Expansion in the broadly defined M3 measure of money supply also slowed, to 5.73% from 6.39% (Source: Reuters). Other Countries The executive board of the IMF will examine Congo Republic s request for a bailout on 6 July Like other Central African oil producers, Congo has been hit by low crude prices and is struggling with a debt of over US$9 billion, which is 110% of GDP (Source: Reuters). The IMF has projected that Benin s economy is expected to grow by 6% in 2018, up from 5.6% in 2017, as cotton production reached its record highs and the economy of neighbouring Nigeria strengthens. The country s cotton output for the 2017/18 season is projected to increase by 28% from the previous season, to 578,000 tons (Source: Reuters). Gabon s economic growth is expected to rise to 2% in 2018 from 0.5% the preceding year on account of robust growth in agriculture, mining and lodging, which enabled it to avoid a recession. The country was forced to turn to the IMF for a bailout after oil prices slumped during 2014 to 2016 period, promising to carry out tough reforms including deep spending cuts. The IMF board approved about US$642 million facility in June 2017 to help Gabon s economic recovery (Source: Reuters). Algeria expects the amendments to its energy laws to be finalised by early next year. The country has been preparing changes to its hydrocarbon law in a bid to attract foreign investors that have stayed away in recent years, citing bureaucracy and tough terms (Source: Reuters). Kenya s year-on-year inflation rose to 4.28% in June from 3.95% the previous month. The economy expanded by 5.7% in the first quarter of this year compared with 4.8% in the same period of last year. The significant acceleration in growth was mainly attributable to improved weather conditions and a boost in business and consumer confidence after the conclusion of general elections in 2017 (Source: Reuters). Egyptian cotton production is on course to rebound with help from a devalued currency and bigger cultivation area, recovering from a slide in exports of the crop since 2011 that was caused by a drop in quality. Cotton exports are expected to reach about 52,000 tons in the 2017/2018 season that ends in August, up nearly 37% from the previous year (Source: Reuters). Botswana has cancelled its plans to sell a power station plagued by technical problems to a state-owned Chinese company China Machinery Engineering Corporation (CMEC linked to the plant s builder, China National Electric Equipment Corporation (CNEEC). The 600-megawatt coal-fired Morupule B plant, which was commissioned in 2012 and built by CNEEC at a cost of $970 million, has often broken down, leading to a reliance on diesel generators and imports from South Africa (Source: Reuters). * Refer to Appendix 2 for more details on historical inflation and currencies for selected countries. P A G E 23

24 4. GLOBAL DEVELOPMENTS Economic growth Per Capital Real GDP Growth (%) (Source: IMF) The EIU projects a healthy global real growth rate for although the global economy is more vulnerable to shocks such as economic risks posed by deepening tensions in the Middle East and protectionist trade policies advanced by the US on its major trading partners. Growth accelerated markedly in 2017 to 3%, its fastest rate since 2011, and the EIU expects the same rate for Furthermore, the EIU notes that the global economy will continue to follow the trends in the world's two largest economies, China and the US. The Chinese economy is expected to start to slow at a steady rate. The government has a long-held target of doubling real GDP between 2010 and 2020 which requires annual average GDP growth of 6.3% in After that, the country will move away from GDP targeting and will be allowed to slow more quickly in the second half of the forecast period, with growth standing at 5.3% in As for the US economy, the EIU continues to expect a businesscycle downturn in the US in Capacity constraints will emerge in the economy in the second half of 2019, pushing up inflation and forcing the Fed to signal a faster pace of interestrate increases which will trigger a decline in private consumption and investment in early These movements in the world's two largest economies mean that global growth will moderate to 2.3% in that year. As the US recovers, the global economy will receive some support in , enabling an acceleration to annual average growth of 2.8%. The April 2018 IMF s World Economic Outlook (WEO) projected that global growth will strengthen from 3.8% in 2017 to 3.9% in both 2018 and 2019, driven by a projected pick up in growth in emerging markets and developing economies and resilient growth in advanced economies. Beyond 2019, global growth is projected to gradually decline to 3.7% by the end of the forecast horizon. The slowdown is entirely because of advanced economies, where growth is projected to moderate in line with their modest potential growth of 2.5% in 2018 and 2.2% in Growth across emerging market and developing economies is expected to stabilize close to the current level at 4.9% in 2019 from 4.8% in 2018, (Sources: EIU, IMF). P A G E 2 4

25 4. GLOBAL DEVELOPMENTS (Continued...) Global Oil Developments Crude Oil Price Movements Oil prices in the first half of 2018 have been supported by continuing efforts by OPEC and non-opec producers to balance the market and improve oil demand, as well as the rising political uncertainty in the Middle East. The price of dated Brent Blend, the international benchmark, rose to nearly US$80/barrel in late May 2018, up by nearly 20% from the start of 2018, to the highest level since November In June 2018, the price of Brent Blend stood at US$74.41/barrel. The EIU states that global oil prices are expected to be constrained within a tight range in as OPEC s efforts are partially offset by rising production from non-opec producers. The EIU expects oil prices to remain elevated at an average of US$75 per barrel in the second and third quarters of 2018 from an average of US$67.5 per barrel previously. Heightened geopolitical risk in the Middle East increases the likelihood of volatility in global energy markets. Oil prices are expected to become more volatile over the next two years as geopolitical tensions rise (Source: EIU). Currency movements Since April 2018, the US Dollar has been strong against most of the other currencies, as financial markets have become more confident that the Federal Reserve Bank (the Fed) will accelerate the pace of monetary tightening, and more concerned that an increase in global energy prices, rising US interest rates and US-led protectionism policies could dampen growth elsewhere. However, its swings since 2017 highlight the degree to which it is now subject to countervailing influences. Greater volatility is expected especially due to the effects of retaliatory measures to US trade policies. An eventual depreciation in the Dollar will provide little relief to those emerging economies that have experienced sharp currency depreciations since April Euro to US Dollar (August 2017-July 2018) Source: Bloomberg The Euro made the biggest gains in 2017, appreciating by 14% over the year due to strong economic data and as some of the biggest political risks receded. Amid a strengthening US Dollar, the Euro fell to US$1.17: 1 in mid June In , the Euro could come under further pressure from political risk in Italy, and from monetary tightening in the US. The EIU expects the Euro to strengthen, averaging US$1.21: 1 in reflecting expectations about the region's recovery. The currency will also receive support from the large current-account surplus (Source: EIU). P A G E 2 5

26 4. GLOBAL DEVELOPMENTS (Continued...) Global trade The World Trade Organisation (WTO) press release in April 2018 shows that world merchandise trade growth is expected to remain strong in 2018 and 2019 after posting its largest increase in six years in 2017, but continued expansion depends on robust global economic growth and governments pursuing appropriate monetary, fiscal and especially trade policies. The WTO anticipates merchandise trade volume growth of 4.4% in 2018 to moderate to 4.0% in However, escalating trade tensions may already be affecting business confidence and investment decisions, which could compromise the current trade outlook. Volume of World Merchandise Trade, 2015Q1-2018Q4 The EIU expects global trade to be overshadowed by the ongoing dispute between China and the US in In March 2018, the US announced broad tariffs on imports of steel and aluminum from China which made China to retaliate by a list of tariffs on some of the imports from the US. On 15 June 2018, the US trade representative confirmed that US$34 billion worth of Chinese imports would be subject to additional tariff increases of 25%. On June 18th, the US threatened to impose additional tariffs on another US$200bnworth of China's. The expected rise in these protectionism policies is projected to slow global trade in to an average of 3.5% a year. As at 12 July 2018, Bloomberg indicated that the US and China signaled they were open to negotiations after days of exchanging retaliatory threats (Source: WTO, EIU, Bloomberg). and a risk of another rise in December The US Libor for 3 months increased to 2.34% in June 2018 from 1.69% in December 2017 and the US Libor for 6 months increased to 2.50% from 1.84% over the review period. The US Treasury yield (10 years) also rose to 2.86% from 2.43% in December The Bank of England and the European Central Bank maintained their policy rates over the review period (Source: Wall Street Journal, Bloomberg, EIU). Note: In recognition of the high degree of uncertainty associated with any forecast under the circumstances, the above chart uses shaded bands to illustrate a range of possible trade outcomes in the forecast period. Further escalation in trade restrictive policies or other shocks that negatively affect global economic activity could result in trade growth outside of this range. Interest Rate Movements Dec-17 Jun-18 % Change The US Libor rates rose during the first half of 2018 partly US Fed Rate 1.500% 2.000% 0.500% supported by interest rate hike by the US Federal Reserve. US Libor (3 months) 1.693% 2.337% 0.644% The Federal Reserve raised interest rates at its meeting on US Libor (6 months) 1.844% 2.501% 0.658% 12th-13th June 2018 to a range of %, citing strong economic fundamentals, robust business investment and con- US Treasury yield (10 years) 2.430% 2.860% 0.430% BOE Rate 0.500% 0.500% 0.000% tinued job creation. The EIU expects a total of three rate rises in 2018, with the final increase coming in September ECB Rate 0.000% 0.000% 0.000% 2018 P A G E 2 6

27 5. OUTLOOK FOR JULY 2018 AND BEYOND - MALAWI Exchange Rates The Kwacha has been relatively stable against the US Dollar during the first half of 2018, maintaining the trend that has lasted since The stability of the Kwacha was supported by continued inflow of foreign exchange reserves and subdued demand for foreign exchange in the market. The Kwacha is expected to remain stable in the short-term due to continued availability of foreign exchange reserves, which are adequate to guard against the Kwacha volatility. The ongoing 2018 tobacco marketing season is expected to continue supporting the Kwacha through boosting the build up of foreign exchange reserves. However, in the medium to long term the Kwacha is expected to depreciate on account of the significant current account deficit and weak foreign direct investment. POSSIBLE IMPACT: A stable exchange rate may enhance predictability of import costs. However the depreciation of the Kwacha in the medium to long term could lead to higher import costs and relatively cheap domestic exports on the international market. Consequently, this development is expected to improve the country s trade balance. Inflation Inflationary pressures have been minimal in the first half of 2018 except in March when the consumer basket used for inflation computation was rebased for December 2012 and headline inflation reached 9.9%, the highest rate during the 5 months period ended 31 May Improved food availability is expected to be maintained during the post-harvest season, hence less pressure on food inflation is expected during this period. However, food security outcomes are expected to deteriorate during the lean season from October 2018 to January 2019 when food prices are at their highest and local cereal supplies are at their lowest (Source: Fewsnet), thereby leading to build up in food inflationary pressures. However, significant carry-over stocks from the previous agricultural season are expected to play an important role in keeping significant food inflationary pressures in check. Non-food inflation may increase due to the expected rise in local fuel prices as a result of rising global oil prices driven by the global reduction in oil production and the rising tensions in the Middle East. Other factors that may put pressure on non-food inflation include the demand for wage increases, electricity tariff increase, housing cost increases and potentially unchanged fiscal policy stance. POSSIBLE IMPACT: Low inflation rates foster improved private sector activity since they lead to reduced lending rates, and thereby the cost of investment. High inflation rates raise the cost of investment thereby hampering private sector growth. The Ministry of Finance, Economic Planning and Development expects average inflation in 2018 to decline to 7.9% (2017: 11.5%) with the end of period inflation rate at 10.1%. In 2019, the annual average inflation is projected at 8.2% with the end of period rate of 9.0% contingent on good rains. The Reserve Bank of Malawi expects single digit inflation in 2018, and has a medium-term inflation objective of 5%. (Sources: RBM, EIU, FEWS NET, Ministry of Finance, Economic Planning P A G E 2 7

28 5. OUTLOOK FOR JULY 2018 AND BEYOND - MALAWI (Continued ) External Sector Exports performance may be hindered in 2018 on the back of variability in weather conditions, infrastructure challenges, a lack of finance for farmers and low technology agricultural techniques. These continue to expose the external sector to sudden terms of trade shocks. In order to cushion the country against these shocks, and to improve competitiveness, there is need to accelerate the diversification of exports and implement structural reforms aimed at developing capacity to export. POSSIBLE IMPACT: Lower export values may decrease the inflow of forex which could widen the trade balance if inflows are unsustainable. The decrease in foreign exchange inflow may also affect the exchange rate. The EIU has revised its import growth forecast to 3.1% from 2.7% a year in , driven by rising domestic demand, some demand for capital goods for infrastructure projects and local maize shortage. Furthermore, the services balance will remain in deficit, owing to high cost of transporting goods into and out of a landlocked country. Primary income debits are expected to increase in US Dollar terms as the cost of debt-servicing increased and primary income deficit will increase as steadily as a proportion of GDP. Overall, the current-account deficit has been forecasted to rise from an estimated 12.3% of GDP in 2017 to 14.1% in This is expected to narrow to 12% of GDP in 2020 as agricultural exports recover and food imports decline. These projections are contingent on normal rainfall patterns and any significant disruption would prompt a revision of the current account deficit. These deficits will be financed by project-related grants, concessional borrowing and inward investments in infrastructure, services and manufacturing sectors (Sources: EIU, Ministry of Economic Planning and Development). Monetary Policy The RBM s monetary policy stance aims at cementing low inflation expectations. As such, monetary policy will focus on restoring price stability. The central bank aims at advancing a cautious monetary policy stance due to upside risks to inflation outlook. According to EIU, RBM may opt for a modest increase in its policy rate in the second half of 2018 since risks to inflation outlook remain on the upside. Interest rates on the interbank market are dependent on the volatility of liquidity but are expected to remain within a band of +2%/-4% around the Policy Rate (Source: RBM). Treasury bill yields are expected to be below the Monetary Policy Rate level. POSSIBLE IMPACT: Upside risks to inflation outlook hinders the Reserve Bank from advancing an expansionary monetary policy stance through reduction of the Policy Rate. High cost of borrowing from the Reserve Bank translates into high base lending rates. This increases the cost of borrowing which may hinder private sector activity, resulting to slow economic growth. It may also lead to low property values as demand is reduced by rising mortgage rates. P A G E 2 8

29 5. OUTLOOK FOR JULY 2018 AND BEYOND MALAWI (Continued...) International Relations The Government will continue to seek external support from nontraditional partners, including China and India, and their economic increase the availability of forex, leading to POSSIBLE IMPACT: External support may presence in Malawi is expected to grow. The bulk of aid will, however, the stability in Kwacha and forex reserves maintained of the required three months import cover threshold. continue to be disbursed as project-based grants and off-budget support to non-government agencies. Furthermore, although aid will increase, a legacy of persistent institutional weaknesses mean that it will not reach historical levels, reflecting loss of donor confidence (Source: EIU). Fiscal Policy The 2018 Annual Report for the Ministry of Finance, Economic Planning and Development has highlighted that government will continue to implement measures to create fiscal space for inclusive and sustainable economic growth. In the medium term, the government, through automation of tax administration and widening of the tax base, anticipates that revenue performance will improve and thus create additional fiscal space. POSSIBLE IMPACT: Higher government expenditures may lead to wider fiscal deficit which may perpetuate increased government domestic borrowing. Increased government borrowing could raise interest rates and crowds out private investment. However, this expected revenue increase will be accompanied by increased expenditure of K1.4 trillion from the K1.3 trillion in the preceding fiscal year as indicated in the 2018/19 budget statement. Hence, government intends to finance its expenditure overruns through foreign and domestic borrowing, with the latter estimated at K176 billion (3.2% of GDP) in the 2018/19 budget. The RBM Financial and Economic Review for the first quarter of 2018 indicated rising public debt, with 18.7% increase on annual basis, due to increased foreign and domestic debt. Increased public debt could increase the interest rate burden on debt repayments and exert more pressure on the country s fiscal position. The EIU expects fiscal deficit to widen from an estimated 3.7% of GDP in 2016/17 to 4.4% of GDP in 2017/18 owing to high government expenditure and revenue underperformance. The Ministry of Finance, Economic Planning and Development expects fiscal deficit to stand at 3.8% of GDP in 2018/19 fiscal year. Furthermore election-related expenditures in the forthcoming 2019 elections are expected to exert more pressure on fiscal policy stance. (Source: Ministry of Finance, Economic Planning and Development, EIU) P A G E 2 9

30 5. OUTLOOK FOR JULY 2018 AND BEYOND MALAWI (Continued...) Economic Growth In 2018, real economic growth is projected to range between 3.60% to 4.50% based on EIU, World Bank, IMF, Ministry of Finance and RBM forecasts. The EIU has projected a 3.6% growth, with this forecast partly dependent on a sufficient agricultural output and power supply, a reduction in government borrowing and prudent macroeconomic management to avoid further instability. The EIU already expected market distortions in 2017 to have a carry-over effect on the size of the maize harvest in 2018, owing to both a loss of confidence and undercapitalization of farmers. The armyworm outbreak stands to aggravate this trend and, as agriculture accounts for one third of GDP, the EIU expects a negative impact on the overall economic growth. This projection is also partly attributed to expected slow growth in tobacco production and the industrial sector, which is unlikely to re-emerge as the key driver of growth as it will struggle to compete on the international market. POSSIBLE IMPACT: Economic slowdown will lessen donor and investor confidence and decrease private sector activity. Decreased private sector activity will also have a negative impact on economic growth. GDP Projections Real GDP Growth Projections EIU 4.40% 3.60% 4.80% 4.80% IMF 4.50% 4.00% WORLD BANK 4.00% 3.70% GOVERNMENT 5.00% 4.50% 6.00% 6.00% RBM 5.10% 4.00% Average Real GDP 4.60% 3.96% 5.40% 5.40% The Ministry of Finance, Economic Planning and Development has projected a 4.5% economic growth in According to the ministry, growth will be driven by the non-agricultural economy, tobacco production, exports, and investment in infrastructure. Agricultural growth is anticipated to be slower than last year due to the low crop yield, especially for maize following the effects of fall armyworm infestation and dry spells during the early part of the growing season. Growth prospects are also constrained by delayed improvement in power generation. The World Bank on the other hand, has projected real economic growth to moderate to 3.7% for 2018 from an estimated 4.0% in 2017 due to an expected decline in agricultural production. Furthermore, the performance of industry and services is forecasted to remain weak as structural challenges related to the intermittent supply of power and water remain a significant constraint on production. The poor prospects are further compounded by the projected low agricultural output, which is likely to reduce raw materials for agro-processing. All in all, some of the risks to economic growth in 2018 include insufficient power supply which remains a key drag on industrial performance, high lending rates, increase in government debt, weak export base, high population growth rates and weather pattern volatility. (Sources: RBM, EIU, IMF, World Bank, Ministry of Finance, Economic Planning and Development ) P A G E 3 0

31 6. ECONOMIC RISKS ECONOMIC RISKS IMPACT ON ECONOMY MITIGATION MEASURES Insufficient power supply 1. Commercial productivity remains small scale as large scale enterprises are difficult to implement with limited power supply 2. Low industrial productivity in the manufacturing sector resulting in low economic productivity and dampening economic growth. 3. Decline in tourism levels as it dampens tourists appetite to visit the country which results in lower income and growth in the industry. 4. Deferment of development by investors. 1. Encourage use of energy saver bulbs. 2. Rehabilitate and develop new power plants. 3. Public-Private Partnerships to enhance energy production through alternative power sources. 4. The entrance of Independence Power Producers (IPPs) may help boost power generation High population growth rates 1. Reduced per capita income. 2. Over-crowding on public resources. 3. Resources which could have been allocated to more productive activities are used to take care of the growing population. 1. Civic education to raise aware ness on the need to have less children. Increase in government debt 1. Creates a future obligation for government which may keep the budget deficit large. 2. Crowds out the private sector hence reducing the expansion of the private sector as funds are not available. 1. Reduce government expenditure by tightening fiscal policy. 2. Increase government revenue base to finance debt. High Interest Rates 1. High lending rates will lead to slower private sector growth and a decrease in capital investments. 1. Reduction of the Monetary Policy Rate. 2. High interest rates will also lead to higher loan impairments for banks which will reduce funds that may be used to lend other private investors. It also puts customer deposits at risk if the bank were to fail. P A G E 3 1

32 6. ECONOMIC RISKS (Continued...) ECONOMIC RISKS IMPACT ON ECONOMY MITIGATION MEASURES Global tobacco lobby (anti-smoking) Incidents of alleged theft and corruption within the public sector Uncertainty in the external environment Dispute with Tanzania resulting in cancellation of oil explorations activities 1. Decline in demand for Malawi tobacco and services from supporting industries resulting in lower commodity prices. 2. Reduction in export earnings (tobacco accounts for 60% of Malawi s export earnings). 3. Reduced employment opportunities in the tobacco and supporting industry. 4. Lower income for farmers- small holder and commercial. 1. It will lead to a misuse of resources as areas of great need do not receive the right resources and thereby hampering growth. 2. Loss of aid funding as donors become unwilling to send aid, which could affect government spending and forex availability. 3. Negatively affect the ability for external borrowing even for the private sector due to the negative image of the country. 4. Negatively impacts the country s sovereign credit risk ratings. 1. Dampening export demand for major export commodities i.e. tobacco, tea, cotton and sugar. 2. Declining investor interest in Malawi resulting in fewer investments and less foreign currency coming into the country. 3. Declining remittances from abroad, hence contributing to lower forex levels. 4. Reduced access to foreign capital, hence financing not available or difficulties in accessing letters of credit. 5. Impaired growth and Balance of Payments (BOP) due to declining exports and low foreign investments. 6. Decline in tourism levels leading to lower forex revenues. 1. Loss in possible source of revenue for government. 2. Loss in possible source of forex for Malawi. 3. Loss in possible employment opportunities for Malawians. 1. Diversify into other sectors such as mining and cotton e.t.c. 2. Engage in aggressive tourism marketing. 1.Tighter controls and measures with better implementation of the policies. 2. More transparency in the public sector and government. 1. Diversification of export base of products. P A G E 3 2

33 7.APPENDIX Appendix 1: Selected Economic Indicators for Malawi Appendix 2 : Selected Economic Indicators for Tanzania, Uganda, Zambia and Mozambique Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 TANZANIA Exchange rate US$ 2, , , , , , , , , , , , , GBP 2, , , , , , , , , , , , , ZAR EUR 2, , , , , , , , , , , , , Inflation % N/A Bank rate % Exchange rate US$ UGANDA 3, , , , , , , , , , , , , GBP 4, , , , , , , , , , , , , EUR 4, , , , , , , , , , , , , Inflation % Central Bank Rate % ZAMBIA Exchange rate US$ GBP ZAR Inflation % Bank rate % MOZAMBIQUE US$ ZAR EUR Inflation% N/A N/A P A G E 3 3

34 Appendix 3: Budget Framework (Source: Ministry of Finance) 2015/ / / / / /19 (Propose K Billion (Approved) (Approved) (Revised) (Proposed) (Approved) d) Total Revenues ,108 1,108 1,261 Domestic revenue ,052 Grants Budgetary support Earmarked grants 90 Total Expenditures 930 1,149 1,129 1,299 1,300 1,504 Recurrent expenditure ,104 Wage & salaries Interest on debt Investment Expendi- Deficit/Surplus (166) (174) (130) (191) (192) (243) Deficit as a % of Revenue -22% -17% -13% -17% -17% -19% Kwacha Billions 1,600 1,400 1,200 1, / / /16 (approved) National Budget 2016/17 (proposed) 2016/17 (Approved) 2016/17 (revised) 2017/18 (proposed) 2017/18 (Approved) 2018/2019 (Proposed) Total Revenues ,108 1,108 1,261 Total Expenditures ,136 1,149 1,129 1,299 1,300 1,504 P A G E 3 4

35 Appendix 4: Central Government Budgetary Operations in Millions of Kwacha (Source: Reserve Bank of Malawi) Appendix 5: Trend of Public Debt in Malawi (Source: Ministry of Finance) 3,000 2,500 In Kwacha Billions 2,000 1,500 1, Jun 2010 Jun 2011 Jun 2012 Jun 2013 Jun 2014 Jun 2015 Dec 2015 Jun 2016 Dec 2016 Jun 2017 Dec 2017 Domestic External ,057 1,241 1,095 1,350 1,486 Total Public Debt ,045 1,254 1,585 1,987 1,819 2,196 2,471 P A G E 3 5

36 Appendix 6: Malawi Selected Economic Indicators in Billions of Malawi Kwacha (Source: RBM) P A G E 3 6

37 Appendix 7: GDP Malawi (Source: EIU) Restaurants and Hotels, 1.3 Education, 4.5 Recreation & Culture, Base Year Misc-ellaneous, 3.0 Recreation & Culture, 0.9 Education, 2.1 Communication, 3.7 December 2017 Base Year Restaurants and Hotels, 2.0 Miscellaneous, 1.6 Communication, 5.8 Transportation, 8.4 Transportation, 6.6 Health, 2.9 Health, 1.4 Furnishing & Household, 4.2 Housing, Water & Electricity, 14.7 Food, 50.2 Furnishing & Household, 4.6 Housing, Water & Electricity, 23.1 Food, 45.2 Clothing & footwear, 3.2 Alcoholic drinks & Tobacco, 2.5 Clothing & footwear, 2.9 Alcoholic drinks & Tobacco, 2.5 P A G E 3 7

38 Appendix 8: Contribution to GDP by Sector Appendix 9: Malawi Economic Growth (Source: EIU) P A G E 3 8

39 Appendix 10: Malawi Projections per Sector (Source: Ministry of Finance) Global Projections (Source: EIU) P A G E 3 9

40 Appendix 11: PROJECTIONS Global Projections (Source: IMF) P A G E 4 0

41 Appendix 12: 2018/19 Budget Brief (MK Million) (Source: Ministry of Finance) P A G E 4 1

42 Appendix 13: Seasonal Calendar for a Typical Year APPENDIX 14: MALAWI S MAIN EXPORT COMMODITIES IN US DOLLAR MILLIONS (Source: Ministry of Finance) Disclaimer This report has been prepared for indicative purposes only. Whilst every effort has been made to ensure the accuracy of information contained herein no responsibility or liability whatsoever resulting from the use of information contained in this report is accepted by NICO Asset Managers Limited. Recipients of this report shall be solely responsible for making their own independent appraisal and investigation into all matters contemplated in this report. P A G E 4 2

43 NICO ASSET MANAGERS LIMITED NICO Asset Managers Limited is a specialist investment management and advisory firm, providing a premier range of investment management, corporate finance and investor services to institutional and individual investors. We are registered with the Reserve Bank of Malawi as a Portfolio/Investment Manager, Investment Advisor and Transfer Secretary. We are a wholly owned subsidiary of NICO Holdings Plc. To be the preferred provider of investment and financial solutions through a culture of excellence and innovation To provide innovative investment and financial solutions that grow our client's wealth Our services Registered by the Registrar of Financial Institutions (Reserve Bank of Malawi) RBM Portfolio/Investment Manager Licence No: PM001/16 RBM Transfer Secretarial License No: TS001/18 Contact Us Head Office Lilongwe Branch NICO Asset Managers Limited NICO Asset Managers Limited 19 Glyn Jones Road Corner Kenyatta Drive Chibisa House NICO Centre P.O Box 3173 P.O Box Blantyre Lilongwe 3 Tel no: /086 Tel no: /086 Fax no: Fax no: invest@nicoassetmanagers.com Website: