Some non-governmental organisations (NGOs) have accused government of stifling their operations by raising their annual fees by almost 1 900 percent to about K1 million. They argue the decision is not sustainable.
The decision comes at a time when the government has argued that a lot of money is being channelled through NGOs following Cashgate—the plunder of resources at Capital Hill exposed in September 2013—and loss of confidence in public finance management systems by donors.
Until January 1 2018, the annual fees payable by NGOs was K50 000 and the registration fees was also K50 000.
But according to the Non-Governmental Organisations (Fees) Regulations of 2017 gazetted effective January 1 2018, the annual registration fee has been increased to payable within the first three months of the year.
An NGO that used to pay K50 000 in annual fees will now be required to pay K1 million, an increase of 1 900 percent.
The fees are in four categories of levels of annual income and corresponding fees, as outlined in the Second Schedule.
Category A is for NGOs with annual incomes below K100 million who will be required to pay annual fees of K100 000; category B is for those with incomes above K100 million, but below K500 million which will pay K250 000 fees while those with earnings above K500 million and below K2 billion will pay K1 million in annual fees.
An NGO with annual income above K2 billion, usually international organisations, will be paying a K2 million annual fee, according to the schedule.
NGOs whose payment was not made when the regulations came into effect on January 1 2018 have until March 31 2018 to pay the annual fees.
According to Section 6 (3) of the regulations, the annual income declared in the financial statements and audited accounts which the NGOs submit annually will form the basis of the fees.
Failure to pay the fees will incur penalties and the NGOs will face suspension of their operations if they fail to pay within three months, according to the notice.
Section 7 reads: “Where an annual fee is not paid within three months of the commencement of the calendar year, a surcharge of 5 percent of the fees due shall be payable within three months after which period the board shall suspend operations of the registered NGO in accordance with the Act.”
But local NGOs have decried the manner in which the fees have been increased, alleging that there were sinister motives behind the increase in annual fees.
Former board chairperson of Council for NGOs in Malawi (Congoma), McBain Mkandawire, said the issue of annual fees was not conclusive at the NGO Board annual general meeting held last year.
He said: “There was a proposal that the annual fees should be levied at two percent of annual income, but we are surprised at this type of fees that has come out.”
Mkandawire also bemoaned that he learnt about the new fees when he asked the secretary at Youth Network and Counselling (Yoneco), which he heads, to inquire about an invoice for the fees.
He said: “Why are the regulations being developed now when the law was enacted a long time ago and this was not there? We are seeing a lot of sinister motives and a calculated move to stifle civil society in this country.”
Mkandawire argued that the government and the NGO Board of Malawi were under the misconceived notion that funding for activities was money just set aside as earnings when that was not the case.
He said: “NGOs are not earning money, it is for programmes and projects. Most NGOs rely on donor funding and no funder can include payment of fees to NGO Board.
“I am now wondering if NGOs are going to survive with such payments when they are already struggling to pay the little fees that was there. I foresee that a lot of NGOs will be suspended.
“We are fast losing trust in the NGO Board, we are not sure whether they represent the interests of the NGOs, their own interests or the interests of the government.”
On his part, Centre for the Development of People (Cedep) executive director Gift Trapence said the newly introduced fees are meant to kill civil society space.
He said NGOs were already struggling to get funding for activities but the government cannot differentiate between earnings and funds for projects.
Said Trapence: “We get funding for activities and very little goes to NGOs administration. NGOs will find it problematic to raise funds for the fees since over 90 percent of their funds are for activities.”
He said the move was suspicious, especially ahead of the 2019 Tripartite Elections when civil society organisations (CSOs) working on governance watch the government closely.
But NGO Board chairperson Abigail Dzimadzi yesterday defended the new fees arguing only about 20 NGOs would be paying K2 million.
She said: “We know that the majority of NGOs are below the K100 000 band which is an increase from K50 000. According to the information that we have, that is less than 20 NGOs. Only those NGOs whose programmes amount to above K2 billion are the ones that will be paying K2 million in [annual] fees.”
Dzimadzi conceded that the NGO Board did not consult NGOs because these were regulations not policies which had to be consultative in nature.
She said the assessment was based on the 125 NGOs out of 500 registered NGOs which complied with reporting audited financial statements to the NGO Board in 2017.
Dzimadzi said the new fees would help improve the effectiveness of the NGO Board.
The NGO Act requires NGOs to submit to the NGO Board annual audited financial statements within three months after the end of the financial year which includes cash donations and non-cash donations.