Honourable folks, Malawians across the world have started feeling the effects of novel coronavirus pandemic. Commuters were the first to bear the brunt of the economic fallout after minibus operators raised their fares by about 100 percent across the country.
The operators raised their fares following a directive from the Ministry of Transport and Public Infrastructure to restrict the number of passengers to two per seat in a bid to contain the spread of coronavirus.
The minibus operators defended the price hike, saying it is to ensure that their business remains profitable. All things equal, they would generate less revenue per trip while the price of fuel, and consequently, the cost of production remains the same.
However, as a corollary to the rise in fares, commuters will now have to cough up more for transport. A transport budget that would have taken them through to the month will only last about two to three weeks.
Unfortunately, their salaries remain the same so they would have to find another way to make up for the deficit.
Noting the plight of commuters and the other consumers across the country, the Employers Consultative Association of Malawi (Ecam) last weekend asked government to suspend some taxes such as pay-as-you-earn (Paye) and VAT to enable people to have more disposable income.
Ecam argued that higher disposable incomes will improve Malawians’ capacity to prevent and contain coronavirus by letting them have enough cash to buy hand sanitisers and stock up on food and other essential supplies.
Honestly, no one in their right mind would argue against Ecam’s line of thinking. Consumers and families would benefit from having more cash on hand. The hikes in transport fares and hand sanitisers have already shown that people will struggle if nothing changes in the short to medium term.
Nevertheless, there is a problem with Ecam’s request. The taxes they proposed for exemption, VAT and Paye, happen to be the country’s main source of revenue. And government needs that revenue to run the hospitals and pay policemen to maintain law and order as we try to navigate through this crisis.
If and when coronavirus makes a landfall in Malawi, government will need all the funds it can get to prepare and support health systems across the country to cope with increased pressure from dealing with screening exercises, testing and curing possible infections.
Forgoing taxes and giving up its main source of revenue at a time it would need it most does not seem like a viable option for the folks at Capitol Hill. Still, something needs to be done to ensure that people continue to live normal lives.
People out there are panicking amid uncertainty over what could happen next. There is also a fair amount of tension over the increased cost of living induced by the rises in some essential services such as transport.
The economic fallout international financial institutions such as the World Bank and International Monetary Fund (IMF) have been warning us about is finally here and everyone is likely to feel the pinch in one way or another. Tensions are rising.
Already, Minister of Information Mark Botomani drew the wrath of Malawians on social media when he suggested commuters should walk to offset the rising costs of transport fares.
That is exactly the kind of speech that a Cabinet minister should refrain from. In these times of uncertainty, Malawi cannot afford such lack of foresight from the very people who are supposed to provide executive oversight over other government agencies.
As minister of information, Botomani should have realised that everyone—consumers, producers, and even government agencies—will have to forgo some comforts as the nation wades through this unprecedented crisis.
Producers have a reasonable right to raise prices to meet the bottom-line. Likewise, consumers have an equally legitimate right to get services at a fair price in the same way government agencies have a legal mandate to collect taxes.
The folks at Capitol Hill, need to come together and formulate a solid and cross-cutting policy to enable Malawians to navigate this unpredictable crisis. As it stands, there are concerns that Malawi might not have sufficient fiscal space to handle a full-blown health crisis.
Instead of engaging irate Malawians on social media, Botomani could have told Malawians how Capitol Hill intends to use its available resources to ensure that the adverse effects induced by Covid-19 will be mitigated in a way that secures everyone’s economic interests.