Reserve Bank of Malawi. Monthly Economic Review

Transcription

1 Reserve Bank of Malawi Monthly Economic Review November 2018

2 Table of Contents 1.0 INTRODUCTION Gross Official Reserves Exchange Rates Money Supply Interest Rates Inflation EXTERNAL SECTOR BANKING AND FINANCE CENTRAL GOVERNMENT BUDGETARY OPERATIONS PRODUCTION AND PRICES MONEY AND SECURITIES MARKET CAPITAL MARKETS APPENDIX... 19

3 LIST OF TABLES Table 1: Money Supply and its Sources... 4 Table 2: Central Government Budgetary Operations... 8 Table 3: Financial Market Operations Table 4: Treasury Bills Issuance and Maturity Table 5: Banking System Liquidity Table 6: Interest Rate Structure Table 7: Selected Economic Indicators Table 8: Year on Year Inflation Table 9: National Consumer Price Indices Table 10: Selected Exchange Rates Table 11: Malawi All Share Indices... 23

4 GENERAL NOTES This Economic Review is produced by the Reserve Bank of Malawi (RBM) with the aim of providing current economic information to stakeholders. The Review is published within six weeks after the end of the reviewed month. This particular issue outlines domestic financial and macroeconomic developments during the month of October Owing to the rounding up of figures, separate items may not always sum to corresponding totals. In the tables, the following symbols should be noted:.. Means not available - Means nil or less than one half the significant digit * Means projection + Means revised figure ^ Means preliminary figure All queries relating to this publication should be forwarded to the Director, Economic Policy Research Department, Reserve Bank of Malawi, P.O. Box 30063, Capital City, Lilongwe 3. Tel: ; or Fax ; or research@rbm.mw.

5 1.0 INTRODUCTION This Economic Review highlights economic developments during the month of November The analysis covers developments in the exchange rates, money, credit and interest rates, inflation and real sector. The report also highlights developments in government operations and the stock exchange market. 1.1 Gross Official Reserves Gross official reserves stood at US$606.8 million in November 2018 compared to US$619.9 million recorded in October Exchange Rates The Malawi kwacha was stable against the United States dollar, although it depreciated slightly against other currencies. 1.3 Money Supply Broad money supply (M2) growth accelerated to 12.8 percent (year-on-year) in November 2018 from 11.1 percent in October 2018, but was below 19.1 percent recorded in November The increase in annual growth of M2 was driven by Net Domestic Assets (NDA) of the banking system. Month-on-month, M2 increased by K38.3 billion to K1.1 trillion as at end-november Interest Rates The Policy rate remained at 16.0 percent in November Consequently, interest rate structure of commeercila banks remained unchanged, with the average base lending and the average savings rates at previous month s positions of percent and 8.39 percent, respectively. 1.5 Inflation The upward trend in inflation witnessed since July 2018 continued in November. Driven by rising food and non-food prices, headline inflation rose by 0.4 percentage points to 10.1 percent in November 2018, from 9.7 percent registered in October Food inflation stood at 10.8 percent from 10.4 percent in October 2018, while non-food inflation stood at 9.5 percent from 9.2 percent in October However, a slowdown in overall Month-on-Month (M-o-M) inflation was observed, registering a 1.5 percent rate, from 1.9 percent in the preceding month and 4.3 percent in November

6 2.0 EXTERNAL SECTOR 2.1 Foreign Exchange Reserves Foreign exchange reserves were recorded at US$606.8 million in November This was slightly lower than US$619.9 million recorded in October Foreign exchange inflows increased to US$141.7 million in November 2018 from US$100.6 million recorded in October The increase in inflows was explained by the IMF Balance of Payments support amounting to US$15.4 million and relatively higher volume of foreign exchange purchases in the month under review than in the previous month. Outlays of foreign exchange stood at US$179.6 million in November The expenses largely comprised sales of foreign exchange amounting to US$137.2 million. 2.2 The Malawi Kwacha Exchange Rates The Malawi kwacha remained broadly stable as it appreciated marginally by 0.4 percent in the month under review to trade at K per dollar. In November 2017, the kwacha traded at K per US dollar. However, the kwacha depreciated slightly against the pound and euro by 3.2 percent and 1.6 percent, respectively, to trade at K per pound and K per euro. The weakening of the kwacha was partly driven by the strengthening of the pound and euro as Britain is due to leave the eurozone in the first quarter of Similarly, the kwacha depreciated slightly against currencies of the Asian trading partners in the month under review. The depreciation of the kwacha was explained by strengthening of the Asian currencies following increased investor confidence as US and China agreed to a 90-day pause in new tariffs as the two countries tried to settle their trade dispute. Against the Chinese yuan and the Japanese yen, the kwacha marginally slid by 0.5 percent and 1.0 percent, respectively, to trade at K per Chinese yuan and K6.50 per yen. Meanwhile, the local currency was stable against Indian ruppee and traded at K9.85 per ruppee. Within the SADC region, the kwacha depreciated by 1.1 percent against the South African rand and traded at K50.98 per rand. The weakening of the kwacha was explained by strengthening of the rand in the reviewed month due to a rise in consumer confidence. However, the local currency strengthened by 4.3 percent against Zambian kwacha and traded at K59.60 per ZMK. The appreciation of the local currency was due to a depreciation of the Zambian kwacha as a result of 2

7 loss of investor confidence following withholding of IMF assistance coupled with dwindling foreign reserves in Zambia. 3.0 BANKING AND FINANCE 3.1 Broad Money and its Components Broad money supply (M2) growth (year-on-year) increased to 12.8 percent in November 2018 from 11.1 percent in October This follows a decline from 15.1 percent in September At 12.8 percent, broad money growth was lower than 19.1 percent recorded in November The upturn was on account of the banking system s creation of NDA amounting to K56.7 billion in the month of November In a similar period in 2017, annual growth rate of M2 stood at 19.1 percent. On a month-on-month basis, M2 increased by K38.3 billion (3.4 percent) to K1,168.4 billion compared to a contraction of K10.5 billlioh (0.9 percent) in the preceeding month. The growth was on account of both narrow money (M1) and quasi money (QM) which increased by K26.3 billion and K12.0 billion to K563.9 billion and K604.5 billion in the month, respectively. In terms of components of M1, demand deposits grew strongly by 22.4 billion to K378.0 billion whereas currency in circulation increased by K3.8 billion to K185.9 billion. The growth in demand deposits partly reflected economic agents placement of their money balances into the more liquid form to facilitate purchase of farm inputs as the economy approached the agricultural season. Further, the increase in QM was driven solely by term (time and savings) deposits which grew by K29.5 billion to K423.9 billion in the month. Meanwhile, foreign currency denominated deposits fell by K17.4 billion to K180.6 billion, reflecting the economic agents drawdown of their Foreign Currency Denominated Accounts (FCDA) balances on the back of reduced foreign exchange inflows as the economy is in the lean period. (Table 1). 3

8 Table 1: Money Supply and its Sources (in MK billion, unless otherwise stated) Dec Mar May Jun Jul Aug Sep Oct Nov Money Supply (M2) 1, , , , , , , , ,168.4 Narrow money (M1) Quasi-money Net Foreign Assets Net Domestic Assets Domestic Credit , , , ,151.3 Government (Net) Private Sector Other Pub. Sector Other Items (Net) Annual M2 growth (%) Monthly M2 growth (%) Reserve Money Money Multiplier Source: Reserve Bank of Malawi Consequent to the above developments, the contribution of M1 to the annual growth rate of M2 increased to 9.7 percent from 7.0 percent recorded in the preceding month whereas the share of QM decreased to 3.1 percent from 4.1 percent in the previous month. 3.2 Counterparts to Broad Money On the assets side, the monthly increase in M2 was solely supported by NDA of the banking system which increased to K916.7 billion from K860.0 billion and K578.6 billion in October 2018 and November 2017, respectively. Meanwhile, Net Foreign Assets (NFA) declined by K18.4 billion (US$23.3 million) to K251.6 billion (US$343.6 million) in the month Net Domestic Assets The banking system created NDA amounting to K56.7 billion in the month, hence the outstanding stock of NDA stood at K916.7 billion as at end November The outturn was entirely on account of domestic credit which rose by K73.4 billion to K1,151.3 billion in the month. In contrast, Other items net (OIN) contracted by K16.7 billion to minus K234.6 billion as at end- November Domestic Credit Credit to the public sector grew by K71.9 billion to K685.1 billion as at end-november Similarly, credit to the private sector increased by K1.5 billion to K466.2 billion. 4

9 i. Credit to the Private Sector Credit to private sector recorded an annual growth of 13.2 percent in November 2018, compared to 10.8 percent in October 2018, and 0.5 percent in November On a monthly basis, credit to private sector increased marginally by 0.3 percent (K1.5 billion) to K466.2 billion compared to a growth of 3.9 percent (K17.5 billion) in the preceding month and a contraction of 1.8 percent (K7.5 billion) in the corresponding period in In the review month, foreign currency denominated loans, commercial and industrial loans and mortgages grew by K4.4 billion, K1.3 billion and K1.1 billion to K133.6 billion, K204.8 billion and K41.5 billion, respectively. Meanwhile, household and individual loans slowed down by K732.5 million to K120.8 billion. Further, commercial banks made provisions for loan losses of K4.4 billion during the month, hence total loan loss provisions stood at K34.6 billion as at end-november In terms of economic sectors, credit expansions amounting to K13.3 billion, K2.5 billion, and K2.5 billion were recorded in Manufacturing; Wholesale and retail trade; and Transport, storage and communications sectors, respectively. Meanwhile, credit to Community, personal and social services; Electricity, gas, water, and energy; Financial services; and Agriculture sectors contracted by K9.5 billion, K3.7 billion, K2.9 billion and K2.6 billion, respectively. In terms of proportions in the outstanding stock of private sector credit, Wholesale and retail trade sector, at 27.9 percent, continued to represent the largest share of private sector credit. Manufacturing; Agriculture; and Community, social and personal services sectors constituted 20.5 percent, 19.6 percent and 10.3 percent of the total outstanding credit stock, respectively. Distribution of credit to the rest of the sectors is as shown in Chart 1 below. 5

10 Chart 1: Sectoral Composition of Private Sector Credit Source: Reserve Bank of Malawi ii. Credit to the Public Sector The banking system s net credit to the public sector (government and statutory bodies) totaled K685.1 billion as at end November 2018 from K613.2 billion and K489.8 billion in October 2018 and November 2017, respectively. Net credit to government from the Reserve Bank of Malawi increased by K55.4 billion to K381.0 billion in the month. The central bank s advances to government grew by K24.4 billion to K65.9 billion. Furthermore, Treasury note and Treasury bill holdings by RBM rose by K23.5 billion and K10.0 billion to K365.1 billion and K103.3 billion, respectively. Meanwhile, government deposits with the central bank increased by K2.4 billion to K153.3 billion, partly reducing net credit to government from the RBM. Similarly, net credit to government from the commercial banks recorded a monthly upturn of K17.3 billion to K271.6 billion. Commercial banks holding of Treasury bills and Treasury notes increased by K9.3 billion and K2.9 billion to K163.7 billion and K170.1 billion, respectively. Furthermore, government deposits declined by K5.1 billion to K62.2 billion, thereby reinforcing the upturn in net credit to government. Meanwhile, commercial banks outstanding credit to the statutory corporations declined by K814.6 million to K32.5 billion in the month. 6

11 3.2.2 Net Foreign Assets NFA of the banking system continued on a declining trend and in the month of November 2018 they contracted by US$23.3 million to US$343.6 million. Both NFA of the RBM and commercial banks fell in the month. Specifically, NFA of the RBM declined to US$300.0 million as at end- November 2018 from US$316 million in the preceding month. In the month, RBM utilised a total of US$179.6 million of foreign exchange against total inflows of US$141.7 million. Consequently, gross official reserves declined to US$606.8 million from US$619.9 million. Similar to developments in NFA of the RBM, commercial banks NFA went down by US$7.1 million to US$43.6 million as at end November This development was explained by a drop in domestic banks balances in banks abroad. In total, the banking system foreign exchange reserves stood at US$724.1 million. 4.0 CENTRAL GOVERNMENT BUDGETARY OPERATIONS Central government budgetary operations for the month of November 2018 closed with a deficit of K54.5 billion, from a deficit of K27.6 billion recorded in October 2018 and a surplus of K3.8 billion in September In November 2017, budgetary operations registered a deficit of K40.3 billion. Total government revenues amounted to K92.7 billion against total expenditures of K147.2 billion. 4.1 Revenues 1 During the month of November 2018, total government revenues increased by 3.5 percent to K92.7 billion, after it declined by 22.2 percent in the previous month. In November 2017, total government revenues declined by 1.9 percent to K80.1 billion. Domestic revenues amounted to K85.6 billion whilst foreign receipts totalled K7.1 billion (US$9.6 million). The major grants received in the month under review were funds from International Development Association (IDA), a total of K4.5 billion (US$6.1 million) split into K2.7 billion (US$3.7 million) for the Ministry of Finance, and K1.8 billion (US$2.4 million) funds towards the Malawi drought Recovery programme. The remaining K2.6 billion (US$3.5 million) were grants towards various government projects. Total foreign inflows therefore rose marginally by a K1.8 million and remained at the October 2018 total of K7.1 billion. 1 Revenue figures may slightly differ with those reported by the Malawi Revenue Authority as RBM records represent data actually remitted into the consolidated account on a particular transfer date. 7

12 All component of domestic revenues increased during the reviewed period. Tax collections increased by K683.1 million to K80.4 billion, departmental receipts increased by K2.1 billion to K4.1 billion and other uncategorised government receipts increased by K248.7 million to K1.1 billion. Table 2: Central Government Budgetary Operations (in MK billion) Nov Dec Feb Mar April May Jun July Aug Sep Oct Nov Total Revenues Domestic Revenues Tax Revenue Non Tax revenue Departmental receipts 1.9 Other Receipts Grants Total Expenditures Recurrent Expenditure Interest Payments Domestic Foreign Development Deficit/Surplus Financing (net) Foreign Domestic Banking System 27.2 Non-Bank Sector Errors and Omissions Source: Reserve Bank of Malawi 4.2 Expenditures Total government expenditures in the month of November 2018 incresaed by 25.6 percent to K147.2 billion. This followed another increase in expenditures of 5.6 percent recorded in October The increase in total expenditures recorded in the reviewed month was mainly attributed to the increase in recurrent expenditures by K29.3 billion to K129.5 billion. Development expenditures recorded a marginal increase of K0.8 billion to K17.8 billion in the month under review. In November 2017, total government expenditure increased by 18.2 percent to K120.4 billion. 8

13 5.0 PRODUCTION AND PRICES 5.1 Domestic Production Tea Auction Sales At 1.4 million kilograms, tea production in November 2018 was lower than the October 2018 and November 2017 production of 2.2 million kilograms and 2.1 million kilograms, respectively. Meanwhile, Limbe auction market registered volume sales of 0.5 million kilograms. Average tea price for November 2018 was US$1.78 per kilogram compared to US$1.39 per kilogram in the preceding month and US$1.94 per kilogram fetched in a similar period of Domestic Prices According to statistics released by the National Statistical Office (NSO), inflationary pressures observed since July 2018 continued to mount in November 2018 as headline inflation stood at 10.1 percent, 0.4 percentage points higher than 9.7 percent registered in October 2018, and higher than 7.7 percent registered in November These pressures were observed in both the food and nonfood prices, which stood at 10.8 percent from 10.4 percent and 9.5 from 9.2 percent, respectively. However, a slowdown in overall Month-on-Month (M-o-M) inflation was observed, registering 1.5 percent, from 1.9 percent in the preceding month and 4.3 percent in November Reflecting comparatively lower agricultural production for the 2017/18 season, inflationary pressures intensified, threby driving up food inflation by 0.4 percentage points to 10.8 percent in November 2018 from 10.4 percent in October 2018 and 4.7 percent in November This was largely explained by a rise in maize prices. According to the World Food Programme (WFP), maize prices in November 2018 averaged K per kilogram, representing a 7.3 percent increase from an average of K per kilogram sold in October These developments were also reflected in M-o-M food inflation which increased by 3.1 percent in November 2018, from 2.4 percent registered during the preceding month. Nonetheless, the maize distribution programme by Government to food insecure households will continue to stabilize maize prices. Likewise, non-food inflation picked up in November 2018 to 9.5 percent from 9.2 percent in October 2018 and compared to 11.0 percent in November The rise in non-food inflation was attributed to second round effects of the upward adjustments in utility tariffs and domestic pump fuel prices effected in the preceding months. The Malawi Energy Regulatory Authority (MERA) recently increased prices of petroleum products by an average of 5 percent in October 2018 and an 9

14 average of 5.3 percent in November Similarly, MERA granted ESCOM effected a 20 percent upward adjustment in electricity base tariff, effective October MONEY AND SECURITIES MARKET 6.1 Open Market Operations In November 2018, net Government operations resulted in a net injection of K32.04 billion compared with a net injection of K25.5 billion in the previous month and a net injection of K45.5 billion in November This was a net result of Government net expenditure position of K33.13 billion and a withdraw of K1.09 billion through net issuances of Government domestic debt securities. In addition, K11.25 billion was injected into the financial market through open market operations. On the other hand, K8.80 billion was withdrawn through net foreign exchange operations in November Overall, a net of K34.49 billion was injected into the financial market, compared with an injection of K21.9 billion in the previous month and an injection of K58.0 billion in November Table 3: Financial Market Operations (in billions of Malawi Kwacha) (K bn) July Aug Sep Oct Nov (Net operations supplying liquidity +) Net Government Operations (+=injection) Net Government Position excluding grants Revenue MRA Non-tax Expenditure Net Government Domestic Borrowing TB/TN/PN issues TB/TN/PN maturity Net Forex Operations Sales Purchases Net OMO Injections RBM bill maturities Maturity of 3-YR RBM bond Purchase of securities Maturity of OMO T-bills Maturing Deposits on Deposit Facility Access on the Lombard Facility Repo maturities Withdrawals RBM bill issues Issue of Monetary Policy TBs Issue of RBM bond

15 Deposits on Deposit Facility Sale of securities Maturing Access on the Lombard Facility Repos Net Operations Reserve Money Estimate: Currency in Circulation Bankers Deposits Reserve Money Target Reserve Money Over (+)/Under (-) Performance Source: Reserve Bank of Malawi 6.2 Government Securities Market Treasury Bills Primary Market The primary market of Treasury Bills in November 2018 saw a total subscription of K68.4 billion, up from K26.6 billion in the previous month and higher than total subscription of K21.2 billion recorded in November The 182-day tenor was the most preferred tenor compared to the other tenors as it received 49.1 percent of the total subscriptions. This was followed by the 364-day tenor which was subscribed with 33.9 percent of the total subscription while the 91-day tenor received 17.0 percent of the total subscription. Of the total subscription recorded in the month under review, K21.8 billion was allotted, reflecting a 31.9 percent allotment. The highest allotment was made on the long dated end of the market to the tune of K12.4 billion, being 57.1 percent of the total allotment. This was followed by the 182-day tenor which was allotted with K8.2 billion, representing 37.8 percent of the total allotment in the reviewed month. The short end of the market was allotted with K1.1 billion, which was 5.1 percent of the total allotment. In addition to the Treasury bills allotted in the primary market, a total amount of K10.7 billion worth of Treasury bills was converted from ways and means advances. Consequently, total issuance of Treasury bills in the review month amounted to K32.5 billion. On the other hand, total maturities of Treasury bills in the review month stood at K28.1 billion, all of which were normal Treasury bills as there were no maturities from ways and means conversions. In view of the aforementioned, transactions on the Treasury bills market culminated into a net issuance of K4.3 billion. As such, the stock of Treasury bills closed the month of November 2018 at K565.8 billion compared to its opening balance of K561.5 billion. 11

16 Table 4: Treasury Bills Issuance and Maturity Total Subscription Issues Normal TB from Conversion Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov Maturities Normal TB from Conversion Net Issues (+)/ maturities(-) T-Bill stock at Face Value Memorandum Items: Conversions T-Bill stock at Cost Value Source: Reserve Bank of Malawi Treasury Bills Yields Average yields across all tenors decreased during the reviewed month. The average yield for the 91- day tenor registered the largest decrease of 1.62 percentage points to percent from percent in the previous month. The average yield for the 182-day tenor declined to percent from percent in October On the other hand, the average yield for the 364-day tenor declined to percent from percent in the preceding month. Consequently, the All Type Treasury Bill yield declined to percent from percent. Chart 2: Treasury Bills Yields Source: Reserve Bank of Malawi 12

17 6.2.3 Treasury Notes Market Total issues for Treasury Notes in the primary market amounted to K11.0 billion. In addition, a total of K20.0 billion ways and means advances, were converted into Treasury Notes in the reviewed month. On the other hand, there were no Treasury Note maturities in the month under review. Consequently, the stock of Treasury Notes closed the month of November 2018 at K955.3 billion compared to the stock of K924.3 billion recorded at the end of the previous month. 6.3 Inter-bank Money Market Banking system liquidity increased in November 2018 compared to October The daily average excess reserves for November 2018 closed at K10.48 billion compared to K5.18 billion that was recorded during the preceding month and K6.71 billion in November However, both access on the Lombard Facility and interbank market trading volume decreased significantly, to daily averages of K2.73 billion and K7.72 billion in November 2018 from K7.04 billion and K8.22 billion in October 2018, respectively. Due to the loose liquidity condition alluded above, the interbank market rate (IBR) marginally decreased to percent at the end of November 2018 compared to percent that was recorded at the end of October Table 5: Banking System Liquidity (K bn) June July Aug Sep Oct Nov Daily Average Total Reserves Daily Average Required Reserves Daily Average Excess Reserves Daily Average Un-borrowed Excess Reserves Daily Average Inter-bank Market Trading Daily Average Lombard Facility Access Inter-bank Market Rate (End Period, Percentage) Source: Reserve Bank of Malawi 6.4 Interest Rates The Policy rate remained at 16.0 percent in the month. Similarly, commercial banks left their interest rate structure unchanged, with the average base lending rate and the average savings rate at previous month s positions of percent and 8.39 percent, respectively. 13

18 Table 6: Interest Rate Structure 2018 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Policy Rate Base Rate mon Fixed Rate Savings Rate Interbank Rate Minimum Maximum All Type Treasury bill Yield Days Days Days Mortgage (min) Source: Reserve Bank of Malawi 7.0 CAPITAL MARKETS 7.1 Stock Market Primay Market The primary market remained dormant as there was no listing during the reviewed period. The number of listed companies therefore remained at Secondary Stock Market The secondary stock market recorded an increase in both value of shares traded and number of shares traded during the month under review. A total of million shares earning K8, million traded compared to million shares earning K5, million in the previous month, and 14.4 million shares earning K763.6 million in November This development represented a percent increase in volume of share trades and a percent increase in turnover. The increase in activity and turnover during the reviewed period was largely due to large volume transactions on Telekom Networks plc counter. The share volume and value increased compared to the corresponding month of the previous year in which million shares changed hands at a total consideration of K million. The Malawi All Share Index (MASI) lost 3, points and closed off the month at 26, points resulting in a monthly return on index of percent. The decline in MASI resulted from a decline in both the Domestic Share Index (DSI) and the Foreign Share Index (FSI). The DSI closed lower at 20, points in November 2018 from 20, points in October 2018 while the FSI closed lower at 3, points from 7, points. The decline in DSI was on account of 14

19 share price losses on MPICO plc (MPICO), Illovo Sugar Malawi plc (ILLOVO), NICO Holdings plc (NICO) and Telekom Networks Malawi plc (TNM) counters despite share price gains on Blantyre Hotels plc (BHL), National Bank of Malawi plc (NBM), NBS Bank plc (NBS) National Investment Trust plc (NITL) and Press Corportaion plc (PCL) counters. The decline in FSI was on account of a share price loss on FMB Capital Holdings plc (FMBCH) counter. Chart 3: Trends in DSI, FSI and MASI Source: Malawi Stock Exchange Total market capitalisation closed lower at K1.2 trillion in November 2018 from K1.4 trillion recorded in the previous month, and compared with K10.5 trillion recorded in November 2017 The decline was due to the share price losses on four domestic counters and one foreign counter despite share price gains on five domestic counters. Domestic market capitalisation closed lower at K1, billion during the reviewed period from K1, billion in the previous period. The decline was on account of the share price losses on the domestic counters. On the other hand, foreign market capitalisation declined to K billion from K billion on account of the share price loss on one foreign counter. In dollar terms, total market capitalisation stood at US$1.63 billion during the period under review compared to US$1.86 billion in the previous review period and US$10.5 billion in November In the corresponding period of 2017, total market capitalisation stood at US$14.37 billion. The decline in total market capitalisation between the two periods was due to delisting of Old Mutual plc (OML) on 29th June 2018, which had a market capitalisation of US$9.51 billion in November

20 Chart 4: Total Market Capitalization Source: Malawi Stock Exchange 7.2 Debt Market There was no secondary market trade during the review period. The total number of debt instruments on the market remained at four, one corporate instrument and three treasury notes. 16

21 APPENDIX Real Sector Table 7: Selected Economic Indicators (in billions of Malawi kwacha unless otherwise stated) Nov 2018 Nov Population (million) GDP at current market prices 1, , , , , , , ,270.0 Real GDP growth (percent) GDP per capita (K 000) GDP per capita (US$) Consumer Price Index (CPI) Average annual inflation rate (percent) Fiscal Sector Total Revenue Domestic Revenues Grants Total expenditure , Recurrent Development Deficit/GDP ratio (after grants) Monetary Sector Net Foreign Assets Net Domestic Credit ,151.3 Government Statutory bodies Private (gross) Money Supply (M2) , , ,168.4 M2 Growth Rate (annual percent) Reserve Money Banks Deposits External Sector Overall Balance Current Account Exports (fob ) Imports (fob) Trade balance Capital account balance Gross foreign exchange reserves Official Commercial banks Import cover (Official reserves in months) Current account balance/gdp (percent) Debt/GDP (percent) Debt Service/Exports (percent) MK/US Dollar (eop) MK/US Dollar (pd avg) Source: Reserve Bank of Malawi =100 for the years and 2012; 2010= 100 for the years 2010, 2011 and

22 Table 8: Year on year Inflation (2012=100, 2017=100) All items Food & Non-alcoholic Non-food inflation Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Source: National Statistical Office 3 From Jan 2018 base year is 2017 (i.e. 2017=100) 18

23 Table 9: National Consumer Price Indices (2012=100, 2017=100) All items Food & Nonalcoholic Alcoholic drinks & Tobacco Clothing & Footwear Housing, water & electricit y Furnishing & Household Health Transp ortation Commu nication Recreation & Culture Education Restauran ts & Hotels Miscellan eous Weight Jan Feb Mar Apr May June Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Source: National Statistical Office 4 From Jan 2018 base year is 2017 (i.e. 2017=100) 19

24 Table 10: Selected Exchange Rates US dollar Euro British pound Japanese yen SA rand ZMK Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell Jan Feb Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar April May June July Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Source: Reserve Bank of Malawi 1 Averages of daily rates quoted by the Reserve Bank for dealing with commercial banks in Malawi 20

25 Table 11: Malawi All Share Indices (1999=100) Period INDICES RETURN SHARE TURNOVER CAPITALISATION Domestic Share Index Foreign Share Index All share Index Dividend Yield Earnings per Share (Kwacha) Volume of shares traded Value (Malawi Kwacha) Value of shares issued (Malawi Kwacha) , , , ,355,317,369 48,592,086, ,522, , , , ,895,390 6,196,059, ,516, , , , ,894,283 13,516,146, ,609, Jan 11, , , ,253, ,518, ,510, Feb 11, , , ,495, ,872, ,512, Mar 12, , , ,690, ,078, ,528, Apr 12, , , ,606,464,275 31,210,863, ,557, May 12, , , ,174, ,650, ,589, Jun 12, , , ,582, ,322, ,584, Jul 12, , , ,086, ,182, ,585, Aug 12, , , ,070,611 1,704,768, ,577, Sept 12, , , ,121,402 5,166,414, ,576, Oct 12, , , ,725, ,215, Nov 11, , , ,731, ,400, Dec 11, , , ,920,293 7,932,801, ,555, ,535, ,522, Jan 11, , , ,795,087 99,852, ,516, Feb 11, , , ,830, ,507, ,509, Mar 10, , , ,067,001 89,521, ,473, Apr , , ,962, ,512, ,448, May 10, , , ,578, ,536, ,446, Jun 10, , , ,499, ,580, ,460, Jul 10, , , ,822,509 79,415, ,471, Aug 10, , , ,384, ,792, ,462, Sept 10, , , ,146, ,695, ,525, Oct 10, , , ,601, ,416, ,527, Nov 10, , , ,318,065 1,385,112, ,497, Dec 10, , , ,888,673 1,606,116, ,516, Jan 10, , , ,462, ,523, ,508, Feb 10, , , ,896, ,654, ,530, Mar 11, , , ,057, ,460, ,679, April 11, , , ,160, ,100, ,706, May 12, , , ,859,658 1,343,060, ,786, June 12, , , ,562,635 1,065,495, ,794, July 13, , , ,820,088 1,759,096, ,856, Aug 15, , , ,516,315 1,587,733, ,390, Sept 15, , , ,482,149 1,325,916, ,488, Oct 15, , , ,346,580 2,108,221, ,494, Nov 15, , , ,395, ,567, ,547, Dec 16, , , ,335,455 2,047,314, ,609, Jan 16, , , ,519,356 1,318,037, ,661, Feb 17, , , ,801,275 7,696,394, ,827, Mar 18, , , ,059,770 1,133,690, ,435, Apr 18, , , ,903,126 3,676,838, ,654, May Jun Jul Aug Sep Oct Nov 19, , , , , , , , , , , , , , Source: Malawi Stock Exchange 30, , , , , , , ,730,032 6,468,082 13,787,978 43,722,958 27,090,165 46,485, ,803,770 10,613,139, ,441, ,259, ,009,473, ,758,351, ,845,797, ,429,682, ,006, ,370, ,385, ,416, ,434, ,357, ,188,