There is something reassuring about a positive headline in difficult times. After years of losses, bailouts and fiscal anxiety, the announcement that State-Owned Enterprises (SOEs) recorded profits of K34.1 billion in the 2024/25 financial year sounds like progress. In an economy under pressure, any surplus feels like a turning point.
But numbers, like stories, deserve a second reading. A closer look shows that about 86 percent of that K34.1 billion—roughly K29.3 billion—came from just eight regulatory authorities. These are institutions that do not sell electricity, pump water or build houses.
Their revenues come largely from mandatory fees and levies charged to firms operating in the economy. The single largest contributor was the Technical, Entrepreneurial and Vocational Education and Training Authority (Teveta), which posted a surplus of K16.8 billion—nearly half of all SOEs’ profits. The other regulators—Malawi Gaming and Lotteries Authority, Malawi Bureau of Standards (MBS), Tobacco Commission, National Construction Industry Council, Malawi Energy Regulatory Authority, and Malawi Accountants Board—also posted profits.
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Strip out the regulators and the story changes sharply. The remaining trading and service-delivery SOEs together produced just K4.8 billion in profit, or about 14 percent of the reported total. Without the regulatory windfall, the SOE portfolio would still be struggling with structural weakness: utilities bleeding billions, housing insolvent and energy firms surviving on price increases rather than operational recovery.
This matters because regulators are not meant to be profit centres. Their mandate is oversight, compliance, and enforcement. When bodies such as the Teveta and MBS consistently generate surpluses far above their operating needs, the question is whether fees reflect the cost of regulation—or whether businesses are being charged far more than necessary.
Consider the training authority’s position. Its K16.8 billion surplus was built on a one-percent levy on formal sector payrolls. Yet its accounts show receivable days stretching beyond 400, a sign that firms are struggling to pay on time.
Its cost-recovery ratio exceeds three, meaning it is collecting more than three times its operating costs. The Malawi Bureau of Standards, with a cost-recovery ratio above two, is also collecting far more than it spends on certification and inspections. The Malawi Gaming and Lotteries Authority’s experience is equally telling.
Its revenues grew by about 86 percent in a single year following the rollout of an electronic monitoring system that tightened compliance and extraction from gaming and betting operators, many of them small businesses operating on thin margins. When fees exceed operational needs by this margin, they begin to resemble a hidden tax. For businesses, the impact is cumulative and immediate.
A mid-sized construction firm pays multiple levies to regulators, including the NCIC and Teveta. These costs apply whether profits are rising or falling, and they are difficult to pass on in a price-sensitive market. Over time, this pressure shapes behaviour.
Firms delay expansion, postpone hiring or retreat into informality. Productivity suffers. Employment growth slows. The irony is that while regulators accumulate surpluses, the productive base of the economy is being squeezed.
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