‘Account number one is breeding mistrust’
People’s Progressive Movement (PPM) presidential candidate Mark Katsonga Phiri has been relentless in advancing the need to abolish government’s consolidated account, Account Number One. Our news analyst EPHRAIM NYONDO sat down with him to get the gist of his proposal.
Q:What is Account Number One?
A:
Well, it is an account where all government revenues—taxes, donor aid—is banked at the Reserve Bank. It was introduced by the one party State and has been unnecessarily maintained and grossly abused by the succeeding multi-party regimes, contrary to dictates of decentralisation and devolution power. What is amazing is: It is an account which is kept secretly. Nobody , apart from senior people in government, knows what happens to it.
Q: Why should we, then, be concerned with this account?
A:
I will give an example of public companies such as banks. They are owned by a small group of people. But you will see that regularly that their bank accounts are published in the newspapers. Since these banks deals with people’s money, the public must know. So, what more with government money?
Q: So is that enough to warrant its abolishment?
A:
One, the secretive nature of how the account is kept—Nobody knows it and this is breeding abuse of public money. I am sure you are aware that K92 billion was stolen between 2005 and 2012. And another K6 billion has been stolen in the past two years. All this because of the secretive nature of how the account is run. Two, the segregative nature of the utilisation of that money i.e. the money is controlled by the President. The President as a result has the audacity to say ‘I am not developing that area because it is full of opposition people’. This is totally uncalled for because government money is tax money and everybody is a taxpayer.
If we close this account, get decentralised and open accounts in districts, it means the money will be close to the people who own it. The money will be controlled by people who are close to the owners of the money. Segregation in terms of development will disappear. We cannot begin to talk about decentralisation without considering how government collects and uses money. If we remain centralised, Malawians will never benefit from their money.
Q: So if you close this account, how will government funds its operations?
A:
Government will have revenue, but again will be collected at that local level. I will give you example of taxes which are ideal for local government use. One, tax collected from everybody’s salary, Pay As You Earn (Paye); and two, Value Added Tax (VAT), money collected from everything people buy. This money belongs to the people. It is theirs, they have to directly benefit from it through development in their area at that local level. Come on, does it make sense that a poor person in Nsanje buys salt and the VAT goes to Account Number One in Lilongwe? It does not. Two, taxes such as import and export duty, corporate tax should go to central government.
When you look at the four main taxes we have talked about here, you will find that Paye and VAT comprise 60 percent of our tax collection. While 40 percent comprise corporate tax and import and export duties. The 40 percent is more than enough to run central government. And 60 percent is again adequate to run local government. This is how PPM will manage our taxation system in Malawi.
Q: But wait a minute! Some districts are well endowed both in population and economic opportunities. Are we not going to create a Malawi where some districts will be richer than the others?
A:
That question, to me, means you want Africa as a continent to be one country. This is not possible. That is why South Africa is richer than Malawi. In Malawi, it is the same thing. You have poor districts such as Chiradzulu compared to Blantyre. But look at the needs of people in Chiradzulu and look at the opportunities there. People flock to towns which were created by a whiteman. Look at Blantyre: it is a city that was created by a whiteman. Blantyre, before the whiteman, was not any different from Chiradzulu. Since the whiteman came here and started developing Blantyre, we have believed that it is only Blantyre that can develop. Give Chiradzulu the opportunity. It can grow bigger and even better than Blantyre. I have said more than one once, before: there is no country which is poor and there is no area within the country which is poor. Each country has resources. We have got countries with more minimal resources than Malawi. But they voted into office leaders with brains able to turn around their natural resources into wealth. The problem in Malawi is that we do not have leadership that can turn our natural resources into money.
Q: So what mechanism will you put in place to avoid abuse of the money at local councils?
A:
Every council will have a Local Government Collection Accounts which will be subject to council oversight and quarterly audits. These accounts will also be subject to strict parliamentary oversight and quarterly audits. The inflows and outflows of the news account will be subject to monthly publication in the press for transparency. In terms of revenue collection, we will set up MRA Tax Collection bases at every district. Councils shall also be empowered to eventually graduate to entities which would be able to borrow development funds from banks and [fund] their own services like police, health and education.
Q: But your plan calls for a strong and apolitical local governance system which, sorry to say, we don’t have right now.
A:
Yes, we really do not have it now but that does not mean that we cannot have it. It is a question of making a decision of choice. As PPM, in our 20-Point Plan, we will compensate and encourage key stakeholders of the councils. For instance, district commissioners (DC) will be upgraded, adequately compensated and their position strengthened to be in line with the additional governance responsibilities of a district.
