The Malawi Stock Exchange (MSE) is pondering on introducing some tax incentives for listed firms in a bid to promote the country’s economic growth.

The tax incentives, according to the local shares market, will, among others, include a reduction in corporate tax, removal of withholding tax on infrastructure bonds currently at 20 percent, dividend tax currently at 10 percent and preferential corporate tax for real estate investment trusts which will still be at 30 percent.

Investors on the stock market stand to benefit from tax reducitions

MSE operations manager Kelline Kondowe said this in an interview yesterday on the prospects for the shares market in 2023. She said the move is motivated by the MSE’s urge to support business growth.

She said: “We realise that we do not have deliberate policies or incentives put in place to encourage listings on the exchange and this has derailed much of our efforts when compared to our counterparts within the region.

“It is for this reason that we are pondering on these incentives such as reduced corporate tax rates for listed companies once they list. We believe this has the potential of attracting many companies to the bourse as experience has shown in other markets.”

Kondowe said the MSE is discussing with the authorities on the terms pointing out that the incentives and other projects within the local shares market will help grow the private sector.

She added: “There are a number of projects that we are working towards in line with the Malawi Capital Market Development Plan and we believe these will bring excitement in the market.

“Hopefully, with these initiatives, some of the challenges that have been there for so long will get to be resolved.”

Malawi Confederation of Chambers of Commerce and Industry director of business environment and policy advocacy Madalitso Kazembe observed in a recent interview that access to finance has remained a major obstacle to the growth of domestic investment in Malawi. She called for incentives on the local shares market.

She said despite MSE establishment, few companies are accessing long-term capital through public listing, which has hampered private sector growth.

Kazembe said: “Capital markets remain largely under-developed and under-utilised relative, for instance, to growth of pension funds.

“This is despite the fact that alternatives to finance are arguably the most vital service the financial sector can deliver for private businesses in Malawi.”

The chamber has also proposed a withholding tax exemption on interest income earned on infrastructure bonds.

MSE has been in operation since 1994, but started equity trading in November 1996 when it first listed National Insurance Company Limited now Nico Holdings plc.

Prior to the listing of the first company, the major activities undertaken were the provision of a facility for secondary market trading in government securities, namely treasury bills and local registered stocks.

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