Our Comment on Airtel Shares Offer

The big financial news during the last days of 2019 has been the announcement by Airtel that it is offering  2.2 billion shares primarily to Malawians pegged MK12.69 per share. This will be listed on Malawi Stock Exchange (MSE) for individuals.

There are at least three arguments for attracting foreign investment. The first is that it brings in new capital. The second is that it will bring technology and the third is that will help open up foreign markets for the host country.  The Airtel deal fails in at least two of these. It does not bring in new capital. Instead, it is borrowing locally. Its services are necessarily not tradable so it will not be contributing to Malawi’s export and forex earnings. As for technological, the technologies it used are quite standard.

Unless a foreign company is bringing in new technology and expanding the country’s export there is really no reason for allowing the company to raise funds locally.  Allowing Airtel to borrow locally without insisting on the reciprocal augmentation of Malawi’s technological capacity or export simply leads to the crowding out of domestic enterprises.

Domestic entrepreneurs complain about the lack of credit. Airtel’s offer suggests that there are large sums of funds looking for outlets. We know that pension funds are sitting on more than two billion dollars.  The offer also confirms the indigenous capitalist's complaint that the stock market does not serve them.

What all this point towards is the need for the revival of national development institutions like MDC to lend to national capitalists or, through joint ventures, to acquire new technology and open up export markets. The Airtel deal is bad one. It is short-sighted and indicative of a complete lack of development strategy by the government.