Malawi Stock Exchange pleads for incentives

Post was last updated: January 23, 2019

By Taonga Sabola:

KAMANGA—Value integrity

The Malawi Stock Exchange (MSE) has asked Capital Hill to consider introducing incentives that would attract issuers and investors to debt and equity markets.

MSE Chief Executive Officer, John Kamanga, was speaking in Blantyre on Monday during the listing of Icon Properties Limited.

Kamanga pleaded with Finance Minister, Goodall Gondwe, to consider removing the 20 percent withholding tax on infrastructure bond interest.

He said, much as the move could affect tax revenue at the initial phase, it could have a positive impact in the long run.

“What we are saying is that once investors invest in the infrastructure bond, instead of charging them 20 percent withholding tax, the authorities should remove that.

“Once you remove that, you attract more subscribers and, if you attract more subscribers, it means even the cost of borrowing to the issuers becomes lower and, if the issuer borrows at a lower cost, it means they are going to increase their capacity of production,” Kamanga said.

He noted that increasing the productive capacities of the firms would help them recruit more people who would pay more taxes through Pay As You Earn (Paye).

Kamanga added that, by creating more jobs, more Malawians would participate in consumption activities such as going into Peoples, Shoprite and other buying aspects.

“In so doing, they will be in a position to pay Value Added Tax through electronic fiscal devices. In so doing, you will find that the government will be collecting more in terms of taxes through VAT and Paye or even the company itself because they have borrowed at a low cost and they will be making more profits which means they will be declaring more taxes to government.

“Therefore, this will create a win-win situation in the sense that investors will be given access but the government will also collect taxes through other means other than the withholding tax,” Kamanga said.

In his response, Gondwe said he would discuss with colleagues at Treasury on the practicality of the proposal.

Gondwe, however, said the government is committed to building a vibrant capital market in the country.

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