The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has said in spite of the Covid-19 pandemic, the business environment in Malawi continues to be poor for it to stimulate private sector in terms of increased output as well as making new investments.
In its submission of private sector pre-budget inputs for the 2020/21 fiscal year to Finance Minister, Joseph Mwanamvekha, MCCCI says the 2019 Malawi Business Climate Survey which is an annual survey it conducts revealed many obstacles to doing business for manufacturers in Malawi.
MCCCI says although there has been a slight improvement in electricity supply during the 2019/20 fiscal period compared to the previous years, it has still been associated with uncertainty of black outs and high fixed costs.
This, according to MCCCI, is due to a lack of investment in energy generation as planned.
MCCCI says the private sector expects full support by the government on energy generation initiatives by among others improving governance in Escom to ensure that resources from increased tariffs are used for intended purposes.
The Chamber further notes that the current political environment has been characterised by country-wide demonstrations, judicial hearings and lack of dialogue among political leaders which has created a lot of uncertainty in the country.
It says uncertainty is very bad for an economy as this alters aggregate demand due to the change in behaviour of consumers and makes strategic planning very difficult for companies.
“There is need to strengthen the role of technical officers. The Public Finance Management Act is a very legal framework that provides accountability of Controlling Officers in Government and needs to be finalized,” the chamber says.
MCCCI has also bemoaned the deficiency of long term and specialized finance instruments, saying the market remains dominated by short term commercial lending instruments.
It says although interventions have been made in this area such as the establishment of Malawi Agricultural and Industrial Investment Corporation, the business community is yet to see delivery of its financial services.
The industry mouthpiece says the Export Development Fund (EDF) has not demonstrated effective operations to support businesses.
According to MCCCI, the cost of doing business is high in Malawi, with a relatively high tax burden and compliance costs in the region.
It says the high tax burden makes local products less competitive in terms of prices against neighbouring countries and on the domestic front this gives smuggled products a competitive advantage.
MCCCI has also asked the government to consider lowering corporate tax from 30 percent to 20 percent.
It says corporate tax is one of the taxes that should be considered as one of the stimulus package tax for businesses to stimulate growth and investment.
The chamber says lowering corporate tax can also help businesses to be productive and create more jobs which is one of the economic problems in the country.
Treasury Spokesperson, Williams Banda, Wednesday said the Ministry of Finance will review all the contributions received with other stakeholders and see which ones could be incorporated in this year’s budget.
He added that some contributions could also be considered in the subsequent years.