Economics Association of Malawi (Ecama) has described Treasury’s spending in the energy sector as “too little and insignificant”, a situation that is perpetuating energy supply challenges.
Ecama’s analysis presented at the first pre-budget consultation meeting for the 2019/20 National Budget in Lilongwe on Tuesday shows that Treasury’s budget allocation as a percentage of gross domestic product (GDP) has remained below one percent between 2016/17 and 2018/19 fiscal years.
Worse still, Ecama projects that such a trajectory is bound to continue as government spending in the energy sector is projected to average around one percent of GDP by 2030.
It also finds that energy sector spending as a percentage of total government expenditure has remained at between one and two percent for a sector that still remains a major constraint to economic growth.
But Ministry of Natural Resources, Energy and Mines spokesperson Saidi Banda has questioned the analysis.
He said that of late, the country has had huge investments in the energy sector, owing to funding from various development partners including the World Bank, African Development Bank (AfDB), United Nations Development Programme (UNDP), United Nations Environmental Programme (Enep), the International Atomic Energy Agency (IAEA), the Global Environmental Facility (GEF), Japanese International Cooperation Agency (Jica) and United States Millennium Challenge Corporation (MCC).
Said Banda: “These development partners have given us huge resources as part of development budget and among the projects financed by the donors are diverse interventions from generation, transmission to distribution and interconnection.
“Some investments are to do with electricity access and for rural and peri-urban. We have the Marep [Malawi Rural Electrification Programme] which has been scaling up over the past two years,” he said.
Substantiating their analysis, Ecama executive director Maleka Thula noted that the bulk of the allocation to the energy sector, especially to development budget, has been courtesy of donor support.
“The government budget allocation to the energy sector has been insignificant,” he said.
Based on Ecama’s analysis, it means in the last fiscal plan, pegged at K1.4 trillion, Capital Hill only spent around K14 billion in the energy sector, earmarked as one of the key priority sectors in the Malawi Growth and Development Strategy (MGDSIII).