Consumers Association of Malawi (Cama) executive director John Kapito faulted the 2020/21 Budget being debated in Parliament, saying it has ignored the basic policies and promises likely to generate resources for supporting livelihoods. Our News Analyst MERCY MALIKWA caught up with Kapito to discuss what he describes as an unkind budget for Malawians.
What are the sticky issues the budget has failed to capture?
A budget that does not take into account the economic realities affecting its own growth and challenges is just a political statement. A budget that doesn’t explain how it will generate the resources to meet the numerous expenditures in it is just a mere political wish. This budget has failed to meet the minimum test and is empty in the many activities it contains. A budget must be realistic and at least achievable. This budget doesn’t give you that road map.
But many Malawians are excited with the introduction of a new threshold on pay as you earn [Paye] to K100 000…
Increasing the threshold on Paye is a welcome strategy to help employees to have enough disposable incomes. Unfortunately, in Malawi, unlike most developed countries, the majority is unemployed and Covid-19 has led to retrenchments. Of what use then will that be when the majority are not employed and chances of getting another job are impossible? Again, of what use will these disposable incomes be when taxes for basic goods are increased? This is the time when the government needs every tambala to get the economy performing again. Everyone is aware that the economy is in bad shape and the government can’t balance its books. Why would one think of introducing such reliefs that have serious knock-off effects on the economy? That is being unrealistic. I think the big question that needs to be answered on the new threshold is how many people will benefit from this and what are the repercussions of this tax relief.
You have also criticised the government for not promptly implementing its promise to give Malawians free electricity and water connections as well as reduced fees for passport and driving licenses. Is it realistic to expect such things under the current economic slowdown?
I never made these crazy promises. When these promises were being made, was the economy any better than now? These are the promises that the new government made only four months ago before they came into power. The time these promises were being made, the economy was already bad and not different from what it is today. Are you suggesting that such promises were realistic four months ago? Have they become unrealistic now, after those who made the promises have spent three months in government? The economy is as bad as it was during the campaign and I find it stupid for one to use the current economic situation as an excuse for not implementing promises made during campaign time. These promises mobilised people and they voted hoping these would be implemented immediately. .
Is there any way the government can cushion consumers from the harsh impacts of the Covid-19 pandemic without sinking the economy?
This is a people’s budget and the responsibility to cushion consumers from the effects of this Covid-19 pandemic rests with the government. Consumers just need serious leadership that can provide the necessary policies. Unfortunately, this budget has failed to understand and appreciate that important aspect. This budget should have been Covid-centred, focusing on how the government can implement programmes and activities that can resuscitate the almost-dead economy. Sadly, the government has decided to come up with activities that will further destroy the economy. This is a year when Malawians should have forgone all luxuries that we see in the budget. We expected to see a budget that is pro-private sector growth, especially the tourism and manufacturing sectors that have been hit hard and bringing life to a halt and collapsing small and medium-scale entrepreneurs
Apart from the government, are there any other initiatives the private sector can do to shield consumers?
The private sector and consumers all are looking up to the government as the lead and the budget has missed that opportunity to create that expectation and confidence. Positive leadership and good policies from the government are good enablers for both the private sector and consumers to start delivering. Unfortunately, to revive this economy, the State has the biggest role to provide the stimulus that the economy needs—not continuously making political statements which are of no benefit to the growth of this economy and prosperity of its people.