Cut the Chaff

Let’s not dance around the Road Levy

Nations Msowoya—the spokesperson for the Ministry of Finance, Economic Planning and Development—is a good friend of mine and a former colleague at the Treasury.

I consider him the best spokesperson across government ministries, departments and agencies in the country.

Msowoya—a debt and aid management expert—obviously knows his stuff, is quick to respond to press queries and often provides nuanced responses rather than the boiler-plate one liners that come from most of these public institutions.

But early this week, he sent me into stitches of disappointment. I don’t know what got into him, but for some reason he decided to give a dumb answer to a very straight forward question.

Let me summarise.

The Nation came across credible information that government has—effective July this year—increased the levy rate on petrol from K37 per litre to K60.34, representing an increase of 63.1 percent while that on diesel jumped from K32 per litre to K74.82, a jump of 133 percent.

Naturally, the paper went to the Treasury spokesperson for an explanation of the reasons for the increase; why the hike was done silently without announcing to the public; how much Capital Hill expected to rake from the increase and how government would ensure value for money from the resources.

Similar questions went to the Roads Fund Administration (RFA), which manages resources for the roads sub-sector.

Msowoya’s response was more shocking than the silent levies hike: “Treasury is not aware that there has been an increase on petrol and diesel levies.” Really?

Now, road levies are the main source of revenue for the RFA, accounting for more than 90 percent of money to the Roads Authority (RA), which is the implementing arm.

Granted, it is the Malawi Energy Regulatory Authority (Mera) that collects the Roads Fund fuel levy from petroleum companies under the Petroleum Importers Limited consortium.

After collecting it, Mera sends the money directly to the RFA, which in turn disburses to RA to finance projects.

Thus, the Road Levy and other levies on fuel do not go into the Consolidated Fund or the so-called Malawi Government Account Number One but rather to specific institutions.

So, I appreciate that Treasury may not have direct involvement in the movement of money from the Road Levy, but certainly, the kitty keeper can never be divorced from any decision to revise levies.

This is because such money (in this case from the Road Levy) is reflected in the national budget whose custodian is the Ministry of Finance, Economic Planning and Development.

These monies are designated funds not just for accounting and monitoring purposes, but also for counterpart matching purposes with some development partners such as the European Union (EU) which, as I recall, at one point used to put in 20 times any amount collected from the Road Levy for roads infrastructure development and rehabilitation.

Indeed, it is Treasury—in particular the Ministry’s Debt and Aid Division where Msowoya himself is a senior officer—that negotiates such aid with donors like the EU. Some of the issues negotiated include how much government would contribute to the roads budget, especially through the fuel levy. Most importantly, any revenue raising measure has economic implications which are analysed by Treasury’s Revenue Division before a decision is made to increase or decreased. So, how can Treasury not be aware of an increase in the Road Levy?

These are the transparency and accountability issues that bring in unnecessary mistrust of the government intentions with certain decisions.

I want to believe that government makes decisions in the best interests of its citizens. In that case, it should come out in the open to explain to people those decisions without cowering under desks at Capital Hill.

Good economic governance demands that Capital Hill does so. n

 

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One Comment

  1. I happen to to have been part of the RMI(Road Maintenance Initiative 1995-1997), the committee that setup and designed the Parliamentary Act that brought the National Roads Authority (later revised to RA) to life. I also was involved in designing the responsibilities, roles and financing of this body. Initially, the NRA was designated only to look at the maintenance of roads (no new roads, etc). The financing was through Road User Charges coming from 10% of the pump price of motive fuels. As the Kwacha has depreciated and the pump price increased, surely the Road Levy should also surely increase, but thats on paper. What Government decides is something else, always contrary to the initial objectives of setting up an organisation. I would expect the road levies to be atleast MK70/litre.

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