Ministry of Finance, Economic Planning and Decentralisation says cash flow pressures are tightening around State-owned enterprises (SOEs) with rising trade debtors choking their ability to remit dividends to the government. Data contained in the December 2025 Consolidated Report for State-Owned Enterprises in Malawi published on Friday, show that while the aggregate profit for profit-making SOEs improved to about K34 billion in 2025 from a loss of K47 billion in 2024, actual remittances remained below the statutory requirement at K4.4 billion in 2025 from K20.5 billion in 2024. As a result of this, the dividend pay-out ratio moved from 27 percent in 2024 to four percent in 2025, according to the report.
Reads the report in part: “In 2025, dividend remittances from trade SOEs remained minimal, reflecting continued financial distress within these entities. “However, the performance of regulatory and service provider SOEs presented a more mixed picture.” The report further shows that by the end of 2025, the performance of regulatory SOEs had worsened because their ability to generate sufficient cash flow and meet dividend obligations was increasingly hampered by rising operational costs, trade receivables and non-cost reflective tariffs in energy and water sectors. During the year under review, total debt stood at 12 percent of the gross domestic product with the stock of on-lent at K98.4 billion while guaranteed debt stood at K38 billion.
On the other hand, government arrears to SOEs reduced from K41.2 billion in 2024 to K9.5 billion in 2025, according to the report. In an interview yesterday, Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha said government is implementing a comprehensive SOEs reform agenda to improve the liquidity management, debt monitoring and revenue collection efficiency. He said this will enable SOEs implementing performance-based contracts for boards and management to enhance corporate governance while all non-performing chief executive officers will have their contracts and benefits reviewed.
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“Most of our SOEs that are providing services in water, electricity and fuel are making huge losses thereby exerting pressure on the national budget,” said Mwanamvekha. Corporate governance expert Jimmy Lipunga said in an interview yesterday that developing strategies is often not a difficult task, but what is often lacking is appropriating sufficient authority to boards and management to deal with the constraints and risks in a timely manner. “SOEs are often hamstrung by lack of leadership agility and resilience, ineffective boards, endemic political interference, resource constraints, weak capacities and lack of courage to restructure and reengineer tired business models,” he said. The Dividend and Surplus Policy for Statutory Bodies (2019) underscores that commercially-oriented SOEs must operate efficiently and effectively, following private-sector principles to strengthen their long-term financial sustainability.
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