The Reserve Bank of Malawi (RBM) has extended its five-year capital markets development plan by one more year after falling short of several major targets due to tough economic conditions and implementation delays. The strategy, which began five years ago, was aimed at deepening the country’s capital markets and making them a strong source of long-term financing for investments.
When the plan was launched, RBM set ambitious goals. These included increasing the number of companies listed on the Malawi Stock Exchange (MSE) from the then 14 to 24, raising the share of corporate bonds to 1.25 percent of the country’s Gross Domestic Product (GDP), boosting equity market capitalization to 55 percent of GDP, and increasing government financing through the capital markets to 60 percent.
The vision was that capital markets, backed by a strong legal and regulatory framework, would play a leading role in mobilising national savings and channelling them into industrial and infrastructure projects that require long-term funding. However, as the original timeline of the strategy draws to a close, the results have been underwhelming.
For example, not a single corporate bond has been registered in the last five years, while the number of listed companies remains stuck at 16 — far from the target of 24. This means the goal of expanding the market for both equity and debt instruments has not been met.
Both the RBM and the MSE have admitted that the strategy has faced difficulties. Responding to questions from journalists, RBM spokesperson Boston Maliketi Banda said the plan will now expire next year instead of this year because it encountered multiple challenges that slowed implementation.
Banda explained that beyond the disruptions caused by the Covid-19 pandemic, Malawi’s broader macroeconomic environment has made progress difficult. He noted that low GDP growth reduced the appetite and ability of companies to list on the stock exchange. At the same time, high inflation and high interest rates discouraged the issuance of corporate bonds, as businesses faced expensive borrowing costs and uncertain market conditions.
Despite the setbacks, Banda pointed out that private placements — financial instruments similar to corporate bonds but sold privately to select investors — have recorded notable growth in recent years. He also highlighted a change in the government’s debt structure, with Treasury notes now making up about 70 percent of government securities issued, compared to Treasury bills. This shift, he said, indicates some positive developments in Malawi’s debt market.
MSE Chief Operating Officer, Kelline Kondowe, also acknowledged that the plan has not achieved all its objectives but stressed that some progress has been made. She said the growth of the bond market has been supported by the listing of government bonds, which now trade on a secondary platform, giving investors more flexibility to buy and sell.
Kondowe revealed that the MSE is working to prepare small and medium-sized enterprises (SMEs) for eventual listing on the stock exchange. Some SMEs, she said, have already gone through training and are being “grilled” to meet the listing requirements, which will help expand the pool of listed companies in the future.
Economist Lesley Mkandawire, commenting on the situation, said Malawi must improve market regulations and provide more reliable economic data to attract both local and foreign investors. He argued that while infrastructure for the capital markets exists, investor confidence will only grow if there is transparency, stability, and stronger enforcement of market rules.
With the one-year extension, RBM and MSE now have the opportunity to address these gaps, but analysts warn that without major reforms, Malawi’s capital markets may continue to lag behind regional peers. The expectation from stakeholders is that the extra time will be used to fix regulatory weaknesses, strengthen investor education, and create incentives for more companies to raise funds through the markets rather than relying solely on bank loans.
For now, while the central bank insists it has laid a foundation for future growth, the reality is that most of the original targets remain unmet, and the plan’s real test will be whether the extended period brings measurable results.
