The still-new Minister of Finance Simplex Chithyola-Banda has come with new ideas for revamping the economy. As they say that a new broom sweeps cleaner, Chithyola-Banda has undertaken to explain complex economic equations and graphs to traditional chiefs, and to carefully hand-pick civil society persons.
What is worrying, though, is how, in line with the middle name ‘Chithyola’, the minister is prepared to break the back of Malawians with austerity and other bitter pills necessary to heal the economy which is on its death bed.
One wonders if the finance minister was bold enough to explain to the chiefs and the other groups, that the economy was soon to receive a shock therapy in form of the 44 percent currency devaluation that was announced by the Reserve Bank of Malawi on Wednesday evening this week. It would be interesting to appreciate the simplest language that ‘Honourable Simplex’ would use to ensure that the chiefs understand the complex calculations and implications behind this massive devaluation of the kwacha.
The minister of finance might have had innocent intentions for consulting chiefs on the state of the economy. What is intriguing though is whether the minister was courageous enough to point out that Malawi’s economy is in the doldrums partly because of corruption. The reality that chiefs need to know is that over 30 percent of Malawi’s budget expenditure is lost to corruption while procurement continues as the major source of leakage and fraud. Malawi’s economy is saddled with high cost of corruption.
High level political corruption continues to influence misallocation of resources and is a catalyst for plunder of budget funds. Recently, tax payers’ money was lost when Government transferred millions of kwacha to a ‘butchery’ in the United Kingdom, in the name of fertiliser procurement. Malawi is also grappling with grand corruption allegations involving UK businessperson Zuneth Sattar where billions of kwacha were allegedly siphoned.
Honourable Chithyola-Banda should have gone further to indicate that Malawi economy is not ticking because the national budget is dominated with consumption expenditures, leaving little room for investment expenditures. Of these consumption expenditures, salaries for civil servants top the list. What this means essentially is that the small tax revenue collected through Malawi Revenue Authority goes straight into payment of salaries.
Then there is the Affordable Inputs Programme (AIP) budget which is over K100 billion yet this year, the number of beneficiaries has been slashed. Malawi continues to spend billions on fertiliser subsidies yet the numbers of people that are stricken with hunger continues to rise. AIP appears to be a deliberate arrangement for more corruption, and an opportunity for weaponisation of fertiliser as a tool for political campaign.
Furthermore, the stakeholders that the minister of finance is meeting should be told the truth that the economy is choked with high and fast rising public debts now hovering at a staggering K9.6 trillion. Too much government borrowing on the domestic market is the main reason public debt has hit the roof. Such domestic borrowing is occasioned by budget deficits where revenues are consistently below expenditure requirements.
The traditional chiefs being consulted by Honourable Chithyola-Banda needed to understand that too much domestic and foreign travel by the President and other senior government officials is another cause for rising public debt. The appetite for foreign travel is a drain on scarce forex. Forex scarcity leads to multiple scarcities of essential commodities such as fuel, medicines and fertilisers.
If not carefully designed, the attempts to explain complex economic issues in simplest terms, may in itself be another cost to the taxpayer, and a form of political patronage through allowances paid to the participating chiefs and other stakeholders.