Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has decried lack of tangible long-term investment capital in the country.
The chamber—touted as the engine room of the country’s economy—has offered government possible solutions to the challenge to the new government pursekeeper.
In its 2020-21 pre-budget consultation written submissions to Ministry of Finance Felix Mlusu, MCCCI expresses worry that the financial market remains dominated by short-term commercial lending instruments.
MCCCI’s director of business environment and policy advocacy Madalitso Mandiwa Kazembe said interventions have been made in long-term financing such as the establishment of Malawi Agricultural and Industrial Investment Corporation (Maiic), but the business community is yet to see delivery of targeted financial services.
She pointed out that even the Export Development Fund (EDF) has not demonstrated effective operations to support businesses.
Kazembe said: “Government should empower the EDF as an effective channel to support export development.
“Another proposal is for the government to introduce the credit guarantee scheme. This is highly demanded by industries as the world continues to grow rapidly in these modern times”.
She noted that exporters do not have government or institutions backing credit insurance for growth in export markets.
Kazembe emphasised that government preference or incentives to exporters in terms of foreign currency, finance and other tax issues is highly recommended.
The chamber has also called on the need to create access to long-term financing, and incentivising companies to list on the Malawi Stock Exchange (MSE) as the capital market has great potential to create wealth and value for stakeholders.
Kazembe said: “To encourage listing on the MSE, we propose that companies that list through an offer for subscription and offer a minimum of 25 percent float to the public should benefit from preferential tax.
“This should be by way of a 2.5 percentage point reduction in the corporate tax payable effectively 27.5 percent corporate tax for the immediate three years post-listing”.
In an interview, Ministry of Finance spokesperson Williams Banda said currently Treasury is analysing and consolidating all submitted proposals, as such he was not in position to comment on MCCCI suggestions.
“However we are grateful to all stakeholders for the response given to our request for pre-budget consultation written submissions,” he said.
Tax expert Misheck Msiska, who works with Ernest and Young consultants, said apart from the concerns from the private sector, government also, needs to simplify procedures for businesses to get registered and start operations.
He also wants government to clarify and enhance tax incentives that enable businesses to create employment and skills development, and encourage value addition.
“Government needs to reform the Malawi Revenue Authority [MRA] and clear its image among taxpayers, including MRA’s procedures and interaction with taxpayers.
“Currently, MRA is viewed as unfair, inconsiderate, militant, incompetent and corrupt, and that exacerbates tax non-compliance among taxpayers,” said Msiska.