Malawi’s State Owned Enterprises Post K34 Billion Profit: A New Era of Economic Growth and Investment Opportunities

Key Business Points

• State-owned enterprises (SOEs) in Malawi have turned around their performance, moving from a combined loss of K66.5 billion in 2024 to a profit of K34.1 billion this year, driven by strong performances in the aviation, transport, and energy sectors.
• Cost-recovery challenges persist in the water sector, with non-cost-reflective tariffs, rising input costs, and operational inefficiencies undermining financial sustainability, making it the weakest performer despite its dominance in assets.
• Debt dynamics have improved modestly, with total liabilities declining from K1.71 trillion in 2024 to K1.53 trillion in 2025, but liquidity constraints have worsened, with the debt service ratio for service-provision entities falling to -0.3 percent.

The performance of state-owned enterprises (SOEs) in Malawi has shown significant improvement, with a combined profit of K34.1 billion this year, up from a loss of K66.5 billion in 2024. This turnaround is largely attributed to high performances in the aviation, transport, and energy sectors. However, the water sector remains a concern, with recurrent deficits and cost-recovery challenges, including non-cost-reflective tariffs and operational inefficiencies.

According to a recent report, debt dynamics have improved modestly, with total liabilities declining from K1.71 trillion in 2024 to K1.53 trillion in 2025. This reduction is largely due to decreases in on-lent and guaranteed debt. Nevertheless, liquidity constraints have worsened, with the debt service ratio for service-provision entities falling to -0.3 percent, indicating insufficient cash flow to meet interest obligations.

The report also highlights structural imbalances in fiscal flows, with government grants increasing sharply, particularly in the agriculture sector, while dividend remittances dropped significantly due to severe cash flow constraints and rising trade receivables. Furthermore, government arrears to SOEs have declined, but significant intra-SOEs arrears persist, particularly among utilities, reinforcing liquidity pressures.

Economics Professor Winford Masanjala has criticized the Central Government for interfering with SOE performance through controls on pricing and governance. He argues that indirect subsidies have not only affected SOEs’ performances but also caused poor service delivery, saying "the government is so loving that it even kills its own people." The World Bank has also noted that SOEs face serious governance and efficiency issues, including political interference and lack of autonomy, which create unsustainable conditions.

Malawi has approximately 70 SOEs across various sectors, including agriculture, finance, transport, energy, water, and aviation. The performance of these SOEs is crucial to the country’s economic growth and development. As ndalama zikukwana (money is circulating), it is essential for the government to address the challenges facing SOEs, including cost-recovery, governance, and efficiency issues, to ensure their tsogolo lathu (our future) is secure. By doing so, Malawi can unlock opportunities for growth and investment, driving economic development and improving the lives of its citizens.

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