the MRA revenue performance report for October (as published both in The Nation and The Daily Times of November 18 2014) shows government collected tax revenue that was nine percent less than the projected K45 billion.
October revenue collection performance is the worst since the beginning of the new fiscal year in July. Cumulatively, the negative variance is at two percent in the first four months.
The parity could be a reflection of economic slowdown. It could also be that the K45 billion target was unrealistically higher than what MRA could squeeze out of the thin cow government depends on. Either way, the shortfall in projected revenues only aggravates the over K200 billion deficit and arrears.
Unlike in the past two years, government has this year started rolling out its budget with a minus on the revenue side. How about on the expenditure side?
The kwacha has significantly depreciated by over 20 percent in October alone. The tool currently being relied on to stabilise the currency is the monetary policy, but real respite awaits the opening of the next tobacco market—the country’s major forex earner—some six months away.
Sticking to budget under the prevailing economic circumstances is virtually impossible. The public sector is already rocked in sporadic labour disputes and the demand for delivery of quality public goods and services is rising by the day.
A strike by civil servants was only averted after government agreed to adjust their salaries by up to 45 percent. That deal, which bloated the budget on the outset, sent ripples to the other arms of government. For the past two weeks, ancillary members of staff in the Judiciary have been on strike, demanding a 45 percent pay rise.
This week, staff in the Legislature has joined the bandwagon, demanding a 45 percent pay-rise. Who’s next? On Wednesday, toddlers were out on the street in Blantyre, blocking roads and stoning motorists. They were demanding that government pay October salaries of their disgruntled teacher who had dropped the chalk and duster.
The civil society wants APM to deliver on his campaign promises which included free cement and iron sheers. As if all this isn’t enough, some Malawians want federalism or outright secession. Things are falling apart.
But a stitch on time saves nine, they say. Our woes ought to be fixed sooner. Finance Minister Goodall Gondwe sounds optimistic in his public pronouncements, saying the economy will stabilise soon. He’s banking on the prospects that budgetary support might resume.
But the real challenge for APM is to earn the confidence of the majority (64 percent) of the electorate who denied him the vote. My take is that whatever good monetary policies folks in the Reserve Bank may have, they are simply an insufficient tool for stabilising the economy.
What needs fixing first of all is politics. APM needs to offer his colleagues in the opposition much more than a mere handshake and lunch at the State House.
He should form an inclusive government with the opposition so that together they can unite the nation to support the kind of change needed to address the causes of our economic plight. I bet such a government would also be more acceptable to donors.
In case folks doubt the doability of my proposal, let’s remember that when Nelson Mandela won the elections in South Africa in 1994, he deliberately shared power with his hitherto bitter rivals including leaders of the apartheid government he trounced. It’s an arrangement that enabled him to bring the change in South Africa that mesmerises the world to this day.
Likewise, after the botched elections in Kenya in 2007, Mwai Kibaki shared power with Raila Odinga to quell the bloodbath that ensued in the aftermath of the polls and unite the nation.
Even in Zimbabwe after the first botched 2008 elections, stability and economic recovery only started when Robert Mugabe and Morgan Tsvangirai formed government together despite that their union was openly described as a marriage of convenience.
When democracy derails—as is currently the case with Malawi—power sharing is an old and tested tool for putting it back on course. Now is the time for APM to seriously consider introducing it. Procrastination creates a problem that’ll require nine stitches to fix!