✓Malawi’s Economic Crisis: 44% Kwacha Devaluation Sparks Widespread Concern
✓Critics Slam Chithyola Banda’s Presentation as “Theoretical” and “Lacking Clarity”
✓Experts Call for Urgent Action to Address Economic Woes
Finance Minister Simplex Chithyola Banda,l has come under fire for presenting what analysts and accountability groups describe as a half-baked, redundant and theoretical statement that offers little hope in rescuing the majority poor from the cruel jaws of the harsh 44 percent kwacha devaluation and other woes.
During mid year budget review on Wednesday 4th December 2024 at pariament, Chithyola Banda outlined a number of cushioning measures to restore the long unstable economy which has subjected the nation to economic struggles.
He said government has centered this year’s mid year budget review on austerity measures and economic recovery policies .
In his statement during the presentation, Banda stated that government is focused on recovering and stabilizing the country’s economy which has been hit by both internal and external factors ranging from bad weather conditions to low productivity.
Banda also said that this year’s mid year budget review has included austerity measures as well as fiscal measures aimed at dealing with some of the hurdles affecting the country’s economy.
The finance minister continued by highlighting some of the austerity measures set aside to bail out the country from this economic crisis and reduce public expenditure including the removal of Value Added Tax(VAT) waiver on motor vehicle imports for privileged individuals including the President, Cabinet ministers, Members of Parliament as well as other government officials in an effort to ensure that every individual contributes to the tax revenue realization.
Apart from this, the government has also embarked on the full implementation of Electronic Excise Tax stamps to ensure that every individual involved in selling excisable goods pays tax also introducing the opening of a voluntary tax compliance window for motorcyclists to handle the registering of motorcyclists in the country for easy tax retention .
The review has since been presented to the parliament and is expected to be debated by members of parliament before it is approved .
Added Chithyola: “With immediate effect, the Reserve Bank of Malawi has restricted all Authorised Foreign Exchange Dealers to sell foreign exchange in cash over the counter in any foreign currency to the equivalent of US$2,000 per traveller.
“Any amount beyond this limit must be placed on an electronic bank cardin line with the existing Regulations.”
Speaking in an interview with Security Monitor, Economic Commentator, Kingsley Jassi argues the minister failed to outline practical measures, in the short to medium term, that can begin to bring the economy back on its feet.
“It’s still a wait for IMF program without the country’s own practical efforts for economic recover. A number of projects and programs have been mentioned as some measures but these are things we have been hearing for a long time now,” says Jassi.
He further wonders why government is only banking on donor funded programs like social cash transfer without its own measures to safeguard the people from the adverse effects of the devaluation.
Adds Jassi: “We are talking about a crisis that will push millions into poverty, how will these people be cushioned by their government?
“Malawians should just brace for tough times that will come with high inflation, increased crime rate, hunger and poor public service delivery because the economy is shaping up so badly.”
Center for Social Accountability and Transparency-CSAT Executive Director Willy Kambwandira thinks the minister missed an opportunity to answer questions from Malawians through the media.
“Again, his presentation lacked clarity on so many aspects, it is unfortunate that he refused to take questions. That tells us government has no direction on how they intend to deal with the impact of devaluation,” says Kambwandira.
In his reaction, governance expert and lecturer at the Malawi University of Business and Applied Sciences-MUBAS, Andrew Kaponya suggests President Lazarus Chakwera must trim his cabinet to 15, reduce internal and external travels and control expenditures on some things.
“The minister’s statement is a missed opportunity for gaining people’s trust in economic management. He was supposed to focus more on managing and reducing pain that Malawians are feeling now than bringing in some interventions that have previously failed,” he says.
“He has recycled some interventions like that of carbon trading and employment of additional health workers. This is not new,” argues Kaponya.
On the other hand, Center for Democracy and Economic Development Initiatives-CDEDI Executive Director Sylvester Namiwa thinks the current regime is highly insensitive to the plight of the majority poor by prescribing bitter pills to everyone and everything apart from President Chakwera and his cronies.
“This evil must be rejected. It’s not about stimulating economic growth, it’s a desperate attempt to stay afloat after running down the economy through wasteful government clearly mirrored through unwarranted and costly global and domestic trotting with large that life entourage. The much touted press briefing was simply a waste of time,” says Namiwa.
He believes ‘desperate and clueless’ people are at work; suggesting an urgent need for an all inclusive stakeholders conference “to draft a consensus so that we should rescue this country from the jaws of heartless people.”
He argues: “Let’s push Public Affairs Committee Chair Monsignor Patrick Thawale to act . Otherwise, all the future leaders will be taking us for granted. The damage these Tonse Alliance has caused is so huge.”
During his presentation, Chithyola Banda further faulted the country’s endless borrowing since 1994; saying such has resulted in no benefits to the economy.
“That’s why we had stories of officials from Reserve Bank paying themselves over 20 million Kwacha a month and over 300 million per year, earning multiple times more than Presidents and Ministers, and yet leaving the financial sector to its own devices and leaving banks to prey on Malawians with exorbitant interest rates that do not grow production in the economy,” he said.
Two days ago, PAC spokesperson Bishop Gilford Matonga said that their board already endorsed the conference proposal and that they are currently drafting its theme.
But he couldn’t indicate the actual dates for it; saying they were still hunting for financial resources.
Bishop Matonga also said they plan to re-engage President Chakwera, who is currently on foreign trips, on the kwacha devaluation.
