Treasury says hosting the 33rd Southern African Development Community (Sadc) Summit may have brought fiscal burdens to government, but it was worth the sacrifice.
Treasury spokesperson Nations Msowoya said in an interview on Wednesday that while the Ministry of Finance cannot quantify the benefits of hosting the summit at this stage, he believes the fruits are many.
Last week, government conceded that Sadc costs, plus a K1 billion emergency advance from Treasury to the Malawi Electoral Commission (MEC), has destabilised public finances, forcing the Ministry of Finance to halve monthly public service funding to government ministries, departments and agencies.
Public financial pressure aside, Msowoya argued on Wednesday: “As Ministry of Finance, we may not exactly quantify immediately the specific benefits. The summit delegates were able to buy goods and services such as airtime, taxi services, sleep in our hotels and eat in various restaurants. [Delegates] were able to bring their currency and exchange it with the Malawi kwacha.”
He explained that the benefits were spread out to different aspects of the economy, including farming as hotels that hosted delegates bought their food supplies such as beef, rice and fruits from Malawian farmers, thereby bringing multiplier effects to the economy.
“Therefore, farmers from across these industries were able to sell more. In economics, we call such linkages backward and forward linkages. That is, the Sadc summit increased demand for goods and services [and] as a result, industries that supply raw materials to other industries such as hotels benefitted. If business activities pick up, it means people pay more taxes through VAT [value added tax] to government,” he said.
Msowoya said what government also did was to provide opportunities for business.
For example, he said, to cater for delegates, government secured car hire, catering and printing services, which contributed to the country’s gross domestic product (GDP) while the Sadc summit enabled consumption, investment, net trade and government spending added to national output.
Apart from the direct and indirect gains to the country, Msowoya said Malawi is also obliged to host Sadc meetings when its turn comes.
He said refusing to host Sadc meetings would mean that government is questioning the values and ethos for which the regional grouping was established.
On his part, Malawi Tourism Association executive director Sam Botomani said the summit was a give and take affair.
Botomani cited foreign exchange that delegates brought into the country as well as international goodwill as the up sides of hosting the meeting.
On the downside, Botomani said there were some hidden costs that the country incurred during the meeting that would be difficult to quantify.
“For example, roads were closed around the area where the meetings were taking place. Imagine how many times they closed the road to the airport and how they inconvenienced people,” he said.
He said next time government considers hosting such high profile events they must consider not only accommodation facilities but also roads to ensure smooth mobility.
“People were inconvenienced. Malawi road network is very poor to host such events,” said Botomani. n