MCCCI cries for arrears

Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has expressed displeasure with government for only settling K71 billion (about $110.5million) of private sector arrears since last year.

Government still owes the private sector K155 billion (about $241.2million).

In an interview with Business Review, MCCCI immediate past president Newton Kambala said the slow progress by government in paying arrears is affecting private sector growth.

He said the chamber recently approached the Auditor General to plead with him to speed up verification of the outstanding arrears.

Commenting recently on why the process to clear the arrears has been slow, Minister of Finance, Economic Planning and Development Goodall Gondwe said the audit has revealed that some of the claims were not authentic.

“We have discovered that some did not carry out the work they are claiming to have done. Where some claimed to have built a bridge, our audit found there is no bridge. This process of verifying claims is taking time, but it has to be done,” he said.

Gondwe, however, assured the private sector players that government would ‘keep its word’ to ensure that the current debt is offloaded in three consecutive financial years through issuance of zero coupon promissory notes so that companies can use them to access funds from commercial banks.

He also said government has been issuing bonds to restructure the debt. The bonds have, so far, received lukewarm reception, a development he described as not worrying.

“I am not worried at all. We will still repay [arrears],” said Gondwe.

So far, the private sector debt has been categorised in three, basing on maturity. The first category, worth K50 billion to be paid as first installment, was expected to mature this financial year.

However, Kambala is not amused, saying those that got promissory notes have been negatively affected by the high lending rates. Lending rates stand at 36 percent.

“Unfortunately, a majority [of those who provided goods and services] have not been paid. Even those who have been given promissory notes have to discount the notes at very disadvantaging rates,” he said.

“In the same fashion, arrears for the supply of goods and services, government, through the Malawi Revenue Authority (MRA), owes private sector a lot of money through unpaid Value Added Tax [VAT] refunds, which some are being hit by heavy tax penalties thus straining business cash flows further”. n