As austerity measures bite social services hard, Malawi Government has spent K1.6 billion (about $4.1m) on a new fleet of four-wheel-drive Toyota Prado TX models for 35 ministers and their deputies.
At current market prices, a Toyota Prado TX at Toyota Malawi costs K46 million (about $118 000), bringing the total bill to the taxpayer at K1.610 billion (about $4.1m).
The splurge on the vehicles comes amid painful economic reforms that are impacting on 65 percent of the 14 million people living below the poverty line.
It also comes at a time public hospitals have run out of essential medicines and many people are going hungry, not because of food shortages, but because they cannot afford.
But spokesperson for Malawi’s Ministry of Finance, Nations Msowoya, said in an e-mailed response this week that government is buying the vehicles because it is replacing the old fleet of Mercedes Benz cars, which has been costly to maintain.
He said: “The procurement of these vehicles is in line with the government circular of 2012, where among other things, government directed that ministers should use vehicles that are cheaper to run and maintain.
“In line with the same circular, the new vehicles will replace the Mercedes which are currently being used by ministers. To recover the costs of Mercedes, the government will later sell them.”
The ministers are the likely candidates to buy the Mercedes Benz vehicles as per their conditions of service, which stipulates that a sitting minister shall be entitled to buy a ministerial vehicle at 10 percent of its original purchase price provided that it has been running for not less than five years.
But our findings show that the current fleet of E –class Mercedes Benz cars have not been in use for five years.
The cars were bought during the late president Bingu wa Mutharika’s second term of office, which started in May 2009.
Henry Kachaje, an independent economic commentator, while lauding government for the decision to switch to a more cost-effective fleet, said on Wednesday that the timing was wrong “because the country is still going through painful reforms.”
Said Kachaje in an e-mailed response: “Vehicles cost more in running expenses over time in comparison to purchase price. Such an initiative, however, must be taken with a full review of the cash-flow situation the government finds itself in.
“Spending over K1 billion [$4.1m] will have a bearing not only on the cash flow position of the government, but also on the forex reserves as the new vehicles, though bought through a local dealer, will have to be imported.”
Kachaje, who runs a business advisory and consulting firm, said another consideration has to be the disposal value of the existing fleet of Mercedes Benz.
“If the fleet is in very good running condition, it would have been prudent to replace them at the end of their depreciated period as experience has shown that the disposal price of such vehicles tends to be much lower than one would have hoped,” he said.
President Joyce Banda is trying to implement an austerity budget and her far-reaching move since she took over has been the devaluation of the kwacha in a painful bid to stabilise the economy and allow it to pick up steam later.
She promised to sell the ministerial Mercs and the presidential jet as one way of cutting expenditure.
The President also sacrificed 30 percent of her pay to reflect how committed she is to austerity.
But her critics argue that the pay cut is only symbolic as it can neither affect her perks given how much she earns through allowances with her non-stop local and international travel.