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Home Business Business News

Energy, corruption threaten budget

by Christopher Jimu
31/05/2018
in Business News, Front Page
3 min read
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Economists have cited corruption and power outages as some of the constraints to successful implementation of the proposed K1.5 trillion 2018/19 National Budget.

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In their presentations during the Economics Association of Malawi (Ecama) Budget Review Workshop in Lilongwe on Tuesday, the economists agreed that more needs to be done if the economy is to benefit the private sector, which is touted as the engine of economic growth.

In his presentation, immediate past president of Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Karl Chokhotho said the future of the production sector looks gloomy, especially with power outages being the order of the day.

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Electricity Supply Corporation of Malawi (Escom) has been facing supply challenges largely attributed to low water levels in the Shire River, the main source of the country’s hydro power generation.

A recent Transparency International Corruption Perception Index (CPI) showed that corruption in the country has worsened since 2012, with the index indicating the country moved up eight places from position 112 in 2015 to 120 in 2016.

The global anti-corruption watchdog stated that Malawi was on position 88 in 2012, but has gone down to 120 largely attributed to massive plunder of public resources known as Cashgate exposed in  2013.

The CPI indicates that a score of 0-100, with zero being highly corrupt. Malawi scored 31, which is within the red zone of the CPI between 0-39.

The increasing rank has the potential to keep away potential investors and development partners who use the CPI as a basis for estimating the level of risks for business and investments in a country

Said Chokotho: “There are two things which I believe will make implementation of the national budget a problem. The first one is corruption and the second one is lack of reliable energy. We can see some policies aimed at empowering the youth, but we need to decisively deal with corruption because it does not make sense that one needs to give bribes before getting a contract.

“There are some bad policies that have also made Malawi suffer. I am happy that the Goods Controls Act was passed in Parliament and will help in the long- run.”

Taking his turn, MCCCI chief executive officer Chancellor Kaferapanjira painted a gloomy picture for the budget implementation, saying growth of private sector is being stifled as government is concentrating on non-production areas.

Among others, he cited the increase of honoraria to traditional leaders, a newly-created youth internship programme and tree-planting and care programme as expenditures that will not benefit the private sector.

“If our graduates are placed on social care then everybody needs social care. What is needed is for companies to increase production and create jobs and not more social programmes,” suggested Kaferapanjira.

On its part, Institute of Chartered Accountants in Malawi (Icam) president Henry Chowawa described the budget as a fallacy.

“The whole budget has not considered power and soon we will not have companies operating. To me government is deliberately creating a dependency syndrome. We were arguing that Fisp [Farm Input Subsidy Programme] beneficiaries should be reduced, but that has not happened,” he said.

On the contrary, Ecama executive director Maleka Thula painted a rosy picture of the budget, saying it has huge potential to turn things around.

“While the budget has huge potential of achieving robust growth, threats remain. The proposed budget has potential of achieving robust growth given favourable basic macroeconomic fundamentals. However, issues of resilience and inclusivity are not clearly outlined,” he said.

Thula asked authorities to strictly monitor the budget so that it remains within the fiscal limits. n

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