APM growth claims draw fire

President Peter Mutharika’s State of the Nation Address continues to attract controversy with an economic expert being the latest to punch holes into claims that the current administration’s policies are responsible for the country’s recent improvement on the Ease of Doing Business Index by World Bank.

Mutharika in glorifying his government’s apparent achievement on the economic front told Parliament that the country had improved by 23 places on the global index, an assertion that was dismissed by leader of opposition Lazarus Chakwera who, in his official response to the address, said the country had just risen by a mere three percent.

But Ben Kalua, professor of economics at Chancellor College, a constituent college of the University of Malawi, in an interview this week described the President’s claims as misrepresentation of facts, arguing that the global index is based on economic legal frameworks the current administration cannot make claims to.

He noted that the conditions for the improvement were put in place by the preceding Joyce Banda-led administration.

“Let us get one thing clear; whether the country has improved by a rating of 20 percent or three percent, what is clear is that things happened because of moves that cannot be attributed to the current government. It’s laws that were passed by other people that have contributed to the improvement,” said Kalua.

He explained that following the difficult period of the zero-aid budget and near economic collapse in 2011, after change of power in 2012, government brought forward several reform bills and policies that improved the business environment.

Finance, Economic Planning and Development Minister Goodall Gondwe, however, leapt to the defence of the President in a separate interview, saying the current administration was responsible for the gain in positive pro-business perception and business goodwill.

Gondwe insisted that the current index is based on events in the Mutharika era.

“The index holds surveys at intervals of one to two years. After the survey, it directly shows on the index why you have improved. During last and this year, we have done things such as organising the Malawi Investment Forum which has improved the perception of people and others; hence, the improvement,” he said.

The minister said the country was also likely to continue improving as the World Bank has indicated it was impressed by some initiatives being undertaken at the moment, including the public reforms.

“We are likely to do even better. I was talking to the World Bank representative and she thinks we will do even better next year. With all due respect to the Joyce Banda administration, I think they concentrated a lot on improving the macro-economic situation of the country; they did better in that aspect but on doing business, this administration has done better,” said Gondwe.

Mutharika told Parliament that his government had taken “unprecedented steps in creating a conducive business and investment environment.”

“The establishment of the One Stop Service Centre at the Malawi Investment and Trade Centre has significantly improved the process of investing in our country. The reforms are yielding positive results.

“Malawians may be pleased to note that our country has now risen on the World Bank Doing Business Index ranking for 2016. Malawi has jumped 23 places up the doing business ladder. This is a positive direction and we are determined to push our global ranking even further. We must claim our place in the world,” said Mutharika in his speech.

According to the official Index website which ranks economies on their ease of doing business based on the regulatory environment and whether it is more conducive to the starting and operation of a local firm.

The website highlight that the country has jumped three places on the rankings from its position 144 in 2015 to 141 in 2016 and on another indicator called Distance to Frontier, the gain is by 1.29 percent. The country is ranked 51.3 percent in 2016 from 49.74 percent in 2015.

The rankings are determined by sorting the aggregate distance to frontier scores on 10 topics, each consisting of several indicators, giving equal weight to each topic and the rankings for all economies this year were benchmarked up to June 2015, according to the website.

On Malawi, some of the issues considered include process of applying for a Certificate of Incorporation at the Registrar General of the Ministry of Justice which the website reported that on average it takes five days while it takes 14 days if done by mail; whether companies are receiving premise inspections from Occupational Safety and Health Department, registration of a workplace, among others. n