Malawi’s business climate ‘hostile’

MCCCI recently carried out a survey among its members, and concluded that the country’s business sector left a lot to be desired. The survey noted that despite recent improvement on a number of fronts, “Malawi’s business climate remains unfriendly”. According to MCCCI chief executive Chancellor Kaferapanjira, participating firms had listed currency fluctuations, the high cost of transport, the cost and difficulty of accessing finance, and the number of tariffs and taxes as negatively affecting business. Bureaucracy and corruption were also cited as contributing to the high costs of doing business in Malawi, and although “they have improved compared to previous years . . . most respondents said the improvement was not enough,” Kaferapanjira observed. “The fact that the private sector is raising these issues is important,” the Director of Private Sector Development in the Ministry of Trade and Private Sector Development, Macleod Tsilizani, journalists. “It is only fair for the private sector to challenge the government. We need to understand their plight and work together, but there is a lot of work to be done,” he noted. Kaferapanjira said the survey results would help the business community to negotiate an agenda, in collaboration with the government, on how to improve the situation. According to Tsilizani, “the government has to enhance the public-private partnership to address these issues and meet with industry. “The private sector is the engine of growth, and the government’s role is the oil that makes it run, to create an enabling environment for businesses”. “We intend to put forward a coalition paper with priority areas that need work, but we realise they (the government) have limited resources,” Kaferapanjira commented. With a gross national income of US$170 per capita, landlocked Malawi with few natural resources is one of the poorest countries in the world. Meanwhile, economic experts are warning the government to be serious with budget allocations and adhere to statutory provisions following revelations that State Residences, home to President Bingu wa Mutharika, have not submitted expenditure monthly returns since July last year. Malawi Economic Justice Network (MEJN) acting executive director Mabvuto Bamusi said submission of returns was also the basis of transparency and accountability in the way funds were used by different ministries, including the State Residences. “Our assessment has shown that State Residences have not submitted their returns since July and that many ministries are not submitting regularly their monthly figures. Government should therefore be seen to be serious with the budget allocations and adhere to statutory provisions because once the budget is passed by parliament it is law,” Bamusi said in a statement. Bamusi advised the government to pay attention to “gray areas” relating to late submission of monthly returns, tracking expenditure in ministries, providing data to the public timely and ensuring that funds are used for the intended purpose as it enters the last phase of the 2005/2006 financial year. Presenting a mid year budget review at the Central Office of Information recently alongside Malawi Health Equity Network (MHEN) national director, John Njunga, Bamusi noted that lack of monthly returns by ministries was making it difficult for government to spend according to statutory provisions. The Mejn boss further bemoaned confidentiality of monthly funding allocations by the Ministry of Finance to different ministries, saying this was making it difficult to know how much funding they are receiving. “It is difficult to know how much ministries are getting for their recurrent and development budget. Some ministries may be under-performing because of poor monthly allocations, this is another area government ought to address,” he said. In its assessment, the economic watchdog says government has made some positive signs in the management of the budget, citing payment of K3,2 million to service its US$3 billion debt including transfers to the HIPC account during the first quarter. Total government revenue (including grants) in the first and second quarter of the 2005/2006 fiscal year has amounted to K31,1bn representing a six monthly increase of K3,2bn, although total domestic revenue has fallen by K1,1bn to K15,4bn against an increase of K684.7million recorded in the previous quarter of the 2004/2005 fiscal year, says the report. The review attributes the decrease in domestic revenue emerging from both tax and non-tax revenues to a decrease in domestic receipts. Mejn has therefore recommended to government to widen the tax base by finding ways of taxing the informal sector and enforcement of mechanism of arresting tax evasion. In its mid year health sector budget review, MHEN national director Njunga said even though the K9,5bn allocated was not enough in line with the Abuja declaration which demands at least 15 percent of the national budget, overall the performance of the health sector has been satisfactory given the fact that they are implementing activities according to plan.

March 2006
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