Institute of Chartered Accountants in Malawi (Icam) says it is yet to quantify the exact loss of business and damage to property as a result of post-elections demonstrations.
In its letter dated August 1 2019 addressed to Malawi Law Society (MLS), the accountants’ body said demonstrations have resulted in destruction of property, loss of business, erosion of the country’s investors’ confidence and compounded people’s uncertainty on economic gains.
MLS sought the view of Icam to make it part of a statement it addressed to Human Rights Defenders Coalition (HRDC), organisers of demonstrations to force Malawi Electoral Commission (MEC) chairperson Jane Ansah to resign, and Malawi Police Service.
In the letter, Icam said the cost of renovations will be a big drain on the country’s economy which is already overburdened by a huge deficit and increased domestic and external borrowing, which have surpassed their threshold.
Figures show that the country’s public debt is at $4.3 billion (K3.2 trillion) or 68 percent of gross domestic product (GDP), with domestic debt at $2.2 billion (K1.6 trillion) or 34.9 percent of GDP and external debt at
$2.1 billion (K1.5 trillion) or 33 percent of GDP.
“Businesses have been at a standstill yet operational costs remain static. In general sense, businesses have not been generating resources that may sustain their survival,” reads part of the letter signed by Icam president Francis Chinjoka Gondwe.
Icam, which was asked by MLS to examine the state of business affairs, said this may result in staff lay-offs, thereby reducing the financial survival of the retrenched workforce as well as the disposable income.
It said demonstrations have also dented the attractiveness of the country to both domestic and foreign investors.
“Countries that have been riddled with violence are at a risk to conduct business in. At the end of the day, the peace mantra of the country which was its highly competitive edge has gotten lost and may not be easy to recover,” Icam said.
The accountants’ body said demonstrations have also crippled the tourism sector that stands to be Malawi’s economic hope in the light of the declining demand of tobacco on the international market.
Tourism contributes about seven percent to GDP while tobacco’s contribution is at around 13 percent, .
“A big knock-on effect will be seen on the current account deficit. Loss of revenue will have been encountered as Malawi Revenue Authority will not be collecting enough taxes, Escom and water boards will have to commit more resources in renovating demolished infrastructure,” Icam said. MLS honorary secretary Martha Kaukonde said in an interview that other professional bodies would also keep on providing insights into the matter which is good for the nation.