ADL, MACRA, TEVETA Shine While BWB, CMST, and MBC Struggle in State Enterprise Profitability Rankings

Malawi’s state-owned enterprises (SOEs) have delivered mixed financial performances in the 2023/24 financial year, with some institutions making record profits while others suffered major losses. Airport Development Limited (ADL), Malawi Communications Regulatory Authority (MACRA), and Technical, Entrepreneurial, and Vocational Education and Training Authority (TEVETA) emerged as the most profitable SOEs, each recording billions in earnings. In contrast, Blantyre Water Board (BWB), Central Medical Stores Trust (CMST), and Malawi Broadcasting Corporation (MBC) posted significant losses, raising concerns over financial sustainability and operational inefficiencies.

Ranking of SOEs by Profitability (2023/24 Financial Year)

Rank	SOE	Profit (2023/24)	Projected Profit (2024/25)
1	Airport Development Limited (ADL)	MK13.3 billion	MK13.28 billion
2	Technical, Entrepreneurial, and Vocational Education and Training Authority (TEVETA)	MK12.9 billion	MK417 million
3	Malawi Communications Regulatory Authority (MACRA)	MK12.7 billion	MK13.3 billion
4	Malawi Bureau of Standards (MBS)	MK4.5 billion	MK1.3 billion
5	Energy Generation Company of Malawi (EGENCO)	MK2.2 billion	MK6.8 billion
6	Malawi Energy Regulatory Authority (MERA)	MK2.1 billion	MK2.6 billion
7	Umodzi Holdings Limited (UHL)	MK1.9 billion	MK3.1 billion
8	National Construction Industry Council (NCIC)	MK1.75 billion	MK1.49 billion
9	Central Region Water Board (CRWB)	MK1.56 billion	MK127.8 million
10	Tobacco Commission (TC)	MK1.03 billion	MK1.6 billion
11	Pharmacy and Medicines Regulatory Authority (PMRA)	MK1.1 billion	MK471 million deficit
12	National Economic Empowerment Fund Limited (NEEF)	MK814 million	MK9.3 billion
13	Lilongwe Handling Company Limited (LIHACO)	MK634.7 million	MK348.8 million
14	Malawi Accountants Board (MAB)	MK133 million	MK23 million
15	Copyright Society of Malawi (COSOMA)	MK45.3 million	MK2.7 million
16	Malawi Broadcasting Corporation (MBC)	-MK1.3 billion	MK47.3 million
17	Central Medical Stores Trust (CMST)	-MK8.6 billion	-MK2.6 billion
18	Blantyre Water Board (BWB)	-MK33.6 billion	-MK2.2 billion

Big Winners and Struggling Entities

The Best Performers: ADL, MACRA, and TEVETA

ADL’s success stems from strong revenues generated through investment properties and airport services, solidifying its position as the most profitable SOE. MACRA continues to benefit from increased telecom spectrum usage and improved levy collections, while TEVETA capitalized on training programs and apprenticeship initiatives. However, projections show a steep decline in TEVETA’s profitability in the coming financial year.

The Worst Performers: BWB, CMST, and MBC

At the other end of the spectrum, BWB posted a staggering loss of MK33.6 billion, largely due to high operational costs, non-cost-reflective tariffs, and heavy debt burdens. CMST’s losses of MK8.6 billion were driven by stock write-offs and financial mismanagement, while MBC’s MK1.3 billion deficit highlights the ongoing struggles of the state broadcaster, which continues to rely heavily on government bailouts.

Profitability Trend Analysis

An analysis of SOEs’ financial performance trends over the years indicates:

• Steady Growth: ADL, MACRA, and EGENCO maintain profitability and growth momentum.
• Declining Profitability: TEVETA, CRWB, and PMRA face declining financial performance, requiring urgent interventions.
• Potential Turnaround: NEEF is expected to improve significantly in 2024/25, projecting a jump from MK814 million to MK9.3 billion in profits.
• Persistent Losses: CMST and BWB remain the biggest financial liabilities for the government, though projected losses for 2024/25 are slightly lower.

Key Success Drivers and Challenges

Success Factors for Top-Performing SOEs

• ADL: Increased revenue from airport services and investments.
• MACRA: Effective spectrum pricing and enforcement of telecom levies.
• TEVETA: High demand for vocational training programs.
• EGENCO: Operational improvements and debt restructuring.

Challenges Faced by Struggling SOEs

• BWB & CMST: Debt, inefficiencies, and weak revenue collection systems.
• MBC: Operational inefficiencies and over-reliance on government funding.
• PMRA: Compliance issues affecting licensing revenues.

Recommendations for SOEs

To improve the financial sustainability of state enterprises, the following measures are necessary:

1. Financial Discipline: Stricter budget controls and efficient debt management are crucial.
2. Revenue Diversification: Loss-making SOEs should explore alternative revenue models.
3. Operational Efficiency: Investing in technology and modern management practices can reduce costs and increase revenue.
4. Governance Reforms: Strengthening financial oversight mechanisms is vital to ensure accountability and transparency.

Conclusion

The 2023/24 financial year showcased a stark contrast in the performance of Malawi’s SOEs. ADL, MACRA, and TEVETA excelled in profitability, whereas BWB, CMST, and MBC continued to struggle with financial losses. While some SOEs show promise for recovery, others remain in dire need of reform. As the government seeks to strengthen these enterprises, a focus on efficiency, revenue diversification, and governance reforms will be essential in shaping their future sustainability.

 

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