It is very disappointing that Chakwera’s government can fool Malawians that all economic problems our country is facing are due to COVID 19 pandemic, previous regime’s mismanagement of economy, natural floods, and recently Russia-Ukraine war.
The truth of the matter is that this current regime has dismally failed to manage our economy. In fact, it has no tangible economic policies to cushion the adverse effects of the aforementioned problems
I still recall the time Brian Banda asked the presidential candidate, Lazarus Chakwera about the top priorities he would desire to accomplish in 100 days once voted into power. Disappointingly, he answered that his priority is budget. This did not convince Brian but to probe him further as to ask what would be priority areas in that budget? Again disappointingly, the reply was too general such as agriculture, health and education. No! Malawians were expecting Lazarus Chakwera to competently articulate issues that mattered most.
The responses from him gave me an impression that he was not aware of urgent aspirations and expectations of desperate Malawians. For sure, Malawians had solid reasons to agitate for a regime change.
Just a flashback, when Joyce Banda was asked the same question about her priority areas in 100 days in office, she was quick to point out that she would ensure that there was a steady availability of fuel and forex which were scarce commodities at that time. This provided a sense of hope to the hopeless Malawians. Indeed within 100 days of her reign, there was no longer a scarcity of fuel and forex. Electricity black outs had improved. For sure, Joyce Banda outperformed Lazarus Chakwera during their 100 days in office.
Fortunately, the former president Joyce Banda is still alive and she is also part of the Tonse Alliance. So what makes it difficult for President Chakwera to tap such experience from her? The recent scarcity of forex and fuel is grossly worrisome.
For starters, the root causes of inflation and scarcity of forex in Malawi are multifaceted.
Pragmatically, to resolve such problems, one simply needs to answer basic questions such as how does Malawi get its forex? What are the major factors that affect inflation rates specifically in Malawi?
As a matter of background, Chakwera’s government has been in power since 2020. We have not experienced scarcity of forex since then. Therefore, it is absurd to blame the previous government for a dwindling economy after being in power for close to 2 years.
In my own view, the blame lies squarely on Chakwera’s government for mismanaging our economy.
- Mismanaged overexpenditure
There is gross evidence that Chakwera government’s mission is to wantonly squander government coffers. Amid economic meltdown, the president, the vice president, cabinet ministers , and members of parliament had their salaries hugely increased.
Imagine a mere cabinet minister could charter a private jet at the expense of tax payers’ money.
Chakwera himself spent weeks and weeks on a global tour spending lots of forex. Just to prove that this government has no austere measures to cut down expenditure, Chilima was forced to cut down his bloated number of delegates to the US meeting after a public outcry. As this is not enough, recently President was on another tour inspecting crops, visiting ADMARC depots and later conducting development rallies all at the expense of taxpayers’ money.
All I am saying is that there is no control to monitor expenditure over the income flows. For sure, this creates a financial deficit.
- More imports than exports
There are no tangible economic policies of any kind to ensure that Malawi exports more finished products than what it imports. Malawi as a country has not diversified much on exporting finished goods and services. There has been the same trend in the previous regimes and it remains so. There is no transformative change in this arena. It is business as usual. Unfortunately, our trusted tobacco, the current major forex earner, has not currently fetched much on the market either. However, Chakwera’s government is still poised to overspend no matter what the cost.
- Cosmetic social economic recovery plan
Some months ago, there was pomposity on the inauguration of social economic recovery plan under the tutelage of the vice president. Currently, we are crying foul over scarcity of forex and fuel. Was the economic recovery plan implemented? Doubtful it stands. It was just cosmetic just to fool Malawians that the government is doing something about the dwindling economy. It was paradoxical to note that the economic plan needed billions of Kwachas for its successful implementation. It was a flop on the word go.
- Focus on consumption rather than on revenue collection policies
Chakwera’s economic policies hinge more on consumption than increasing revenue collection. Over 50% of Chakwera’s budget is spent on personal emoluments and other recurring consumables. Imagine salaries and income tax free bands were increased when revenue collection is low. How do you implement duty free week when you have meagre income flows? How do you promote free water and electricity connection when the service providers are already grappling with effects of COVID 19 pandemic and global economic recess?
- Unsustainable farm input agricultural subsidy programme
International Monetary Fund advised the Chakwera government to strike a balance on the number of beneficiaries of farm input subsidy programme so that some resources can be used channeled towards efforts of increasing revenue collection. However, Chakwera’s government was adamant.
Instead, it maintained the same number of beneficiaries amid rising costs of agricultural commodities. Unfortunately, Malawi government is spending more on the farm input subsidy programme than it gets from it leading to loss of forex.
- Wasted government resources on COVID 19 vaccines
The COVID 19 vaccines are not entirely free. Malawi pays for the logistics costs such as transportation and storage. Unfortunately, that money goes into the drain when expired vaccines are destroyed. Most Malawians still shun COVID 19 vaccines.
- Chakwera’s government canceled the IMF credit facility agreement
With a deficit between income flows and expenditure, every government usually resorts to domestic and international borrowing.
In their own wisdom, Tonse Alliance government canceled the IMF credit facility agreement clinched by the previous regime. They thought they were clever. Little did they know that it was another steady source of forex inflow. Instead, Chakwera government concentrated on servicing domestic debts as a means to appease their political campaign funders thereby depleting government coffers.
Now there is no forex to buy fuel and medical drugs. Vinyo watha. There is no wine anymore. They have been caught unawares or they deliberately seem to appear so.
Way forward
All is not lost. The Chakwera government must stop a blame game and look objectively into the aforementioned issues. The bottom line is that this government must formulate policies that will benefit the local citizens. It should not shy away from consulting notable experts in a particular field. We can assist.
Furthermore, caution should be taken when devaluing the kwacha with an intent to just please IMF. Even the pricing of fuel can be managed locally such that when global fuel prices increase, our local fuel prices can remain the same. Our local fuel prices should only increase when there is a considerable global fuel price increase.
Rick Dzida
rdzida@gmx.com
