Two government ministries—Natural Resources, Energy and Mines as well as Finance—and a labour expert have said Escom’s move to import wood poles at the expense of local suppliers is detrimental to Malawi’s economy.
Spokesperson for the Ministry of Natural Resources, Energy and Mines Sangwani Phiri said in an e-mail interview on Thursday that importing poles “would be tantamount to depleting the country’s much- needed and scarce foreign exchange resource”.
“It could be in order for any prudent government with stringent fiscal policies to probe such a move by any company of quasi-government status if suspected to be itching to import any similar product which can locally be procured and in the country’s national currency.
“This could be the most appropriate way to fight against or restrain any such an uneconomical advances by companies like Escom if at all it engaged in the same, from proceeding with the purchase of poles,” Phiri said.
He said any move to export forex turns into promotion and exportation of labour as more Zimbabweans shall have an opportunity of getting employed at the expense of Malawians who could have been employed.
Escom’s decision, he said, could also cost the country millions of kwacha through loss of revenue.
On his part, Treasury spokesperson Nations Msowoya said unless Escom has a good reason of importing wood poles into the country, the exercise was a waste of the little foreign exchange the country has and that it does not make any economic sense.
“If the country can manage to supply timber poles, buying outside the country is not a fair use of forex,” he said.
Labour expert Sunduzwayo Madise said any importation of a product that is locally available in not only exportation of jobs, but also forex and taxes.
“By buying from Zimbabwe it means Malawi jobs have been exported to Zimbabwe, and Zimbabweans have earned forex that could have been in the country as well as the power to earn,” he said.
But Chingota dismissed fears of foreign exchange and labour exports, saying consideration should also be made to the opportunity cost as a result of Escom’s failure to connect domestic and business customers due to unavailability of poles.
She added that increased maintenance costs due to frequent replacement of the poles that are falling due to termites should also be considered.
“That opportunity cost should also be analysed on both micro and macroeconomic dimensions; firstly households and businesses then Escom and the economy at large. The outlay made on the poles would really not match the anticipated losses.
“Looking at another angle social-economically Malawians would suffer if they stay long without being connected due to scarcity of poles emanating from lack of capacity on the part of the local suppliers. Escom would be seen to fail its mandate to electrify the country which by extension would create employment in the country,” she explained.