Treasury for diversified road revenue streams
Ministry of Finance and Economic Affairs has dared Roads Fund Administration (RFA) to diversify their revenue streams as government strives to share the already limited resources with other competing needs.
Speaking when he officially opened the African Road Maintenance Funds Association Southern African Focal Group meeting in Blantyre yesterday, Secretary to the Treasury Betchani Tchereni said depending on the same old ways of collecting revenue for the fund will mean continued financing challenges for the construction, maintenance and rehabilitation of roads.
He said: “We need to begin to think about innovations in a manner we finance our roads. We cannot do business as usual.
“We have Treasury that thinks about other social aspects as well as food security, hospitals and schools. If we continue to depend on the same ways we used to find revenues, it could take us another 60 years to take the road network to rise to 60 percent.”
While bemoaning the poor workmanship of some of the country’s roads, which he said is draining government resources, Tchereni urged RFA to improve on its resource absorption to make good use of resources.
“We need $900 million [about K1.5 trillion] to reconstruct Cyclone Freddy damages for a country which even fails to generate $600 million [about K1 trillion] in exports,” he said.
As at January 2024, data showed that Malawi faced a K126 billion deficit for road maintenance and rehabilitation. In the 2023/24 financial year only K24 billion was allocated in the national budget for road maintenance against the projected K150 billion.
Despite its important role, the country’s road infrastructure faces a financial deficit K2.3 trillion for various categories of roads, including confirmed donor contributions for 355.7 kilometres of road maintenance
and rehabilitation activities, according to the World Bank.
For Malawi to accelerate economic development and achieve the Malawi 2063, the road industry needs to provide 200 kilometres of new or upgraded sealed roads annually, according to the 2024 Malawi Government Annual Economic Report.
RFA board chairperson Mathews Chikankheni said the fund gets much of its revenues from road levy, tolling and international transit, which he said are not enough to sustain the country’s roads.
He said: “Revenues are not enough. To construct proper roads, we need a minimum of $1 million [about K1.7 billion) per
kilometre which is not possible to do with the revenues we are getting.
“We are looking at other sources of funds to repair more roads, including increasing the number of toll gates and we also want a share of the road taxes which go direct to account number one.We want a bit of shares to finance the roads.”
Besides the road maintenance levy, RFA also collects toll fees on the M1 between Blantyre and Lilongwe where two toll gates were erected at Chingeni in Ntcheu and Kalinyeke in Dedza.
On his part, African Road Maintenance Funds Association-Southern African Focal Group chairperson Nkekeletse Makara said most of the road funds in the region are not efficient because of limitations in the collection of road users charges.
He said this is contrary to the African Union Agenda 2063 of enabling free movement and connectivity and enhancing economic gains of countries in the region.
Malawi has a road network length of 25 000 kilometres, accounting for 99 percent of passenger service, 70 percent of domestic freight and 90 percent of international freight, according to RFA.
It says although the assessment established that government is committed to an efficient road network that is well maintained and linking both urban and rural areas to local and international markets, there is a significant mismatch between the level of resources required and availability of donor finance.
There are also insufficient road sector revenues to cover the full network’s maintenance needs and there is substantial climate exposure.
