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Budget, MGDS III mismatch irks industry

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The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said it is worried by the failure of the 2018/19 national budget to speak the same language with the recently launched Malawi Growth and Development Strategy (MGDS) III.

President Peter Mutharika in March launched the medium term blueprint whose theme is ‘Building a Productive, Competitive and Resilient Nation’.

MGDS III has five key priorities namely Agriculture, Water development and Climate Change; Education and Skills Development; Energy, Industry and Tourism Development; Transport and ICT Infrastructure and Health and Population.

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But in its post budget analysis released on Wednesday, MCCCI says, as the first year of implementation of the strategy begins, the annual budget plan has not oriented itself to achieve the goals set therein.

“The budget is not clear on how the private sector will be promoted especially considering that incentives are being taken away. The dwindling private sector requires a stimulus package which is missing in the budget.

“Countries such as [United States of America] USA which the budget has referred to, are implementing an expansionary fiscal policy through reduction of corporate income taxes from 35 percent to 21 percent. This implies that the resultant expansion of investments in these developed countries’ economies, instead of providing opportunities for countries like Malawi, will instead flood our markets to absorb their products,” MCCCI says.

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The Chamber says the budget does not outline short term solutions for energy supply, adding that there are no clear energy supply opportunities in sight that would be sufficient for boosting the productive capacity.

“The indicated solutions in the budget are all medium to long term solutions but [there are] no clear interim measures to mitigate the energy crisis that Malawi is currently facing considering that the generator sets that were procured have proved to be expensive to run and are unable to cater to the electricity demands.

“Private sector will continue shrinking if electricity woes continue and it will face huge losses if 2021 is the projected period that Malawi should expect to have stable electricity,” reads part of the analysis.

The Chamber further notes that the budget lacks a solid foundation for economic growth, considering that Malawi is still associated with high costs of doing business compared to other countries in the region.

“For instance, transport costs have not declined and continue to contribute 55 percent of total costs of production and one wonders whether Malawi’s tradable commodities can be promoted particularly in the emerging and developing countries as stipulated by the budget,” it says.

During the launch of MGDS III, Mutharika described the strategy as a manifesto of the nation, saying it represents the collective hopes and dreams of the people, the convictions and aspirations of the nation.

“We want to become a productive nation by increasing agricultural production and sustainability with better water management and irrigation. We are moving beyond rain-fed subsistence farming to make commercial agriculture the catalyst for industrialisation,” he said.

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