The Malawi Confederation of Chambers of Commerce and Industry (MCCCI)— an umbrella body for private sector players in the country—has urged the government to consider working with industry players and de-risk investments to stimulate local economic growth.
The proposal is contained in the chamber’s response to the K5.9 trillion national budget statement for the 2024-25 financial year which Finance Minister Simplex Chithyola Banda presented to Parliament last Friday.
Among other interventions, the private sector mouth-piece calls on the government to come up with a Special Purpose Vehicle (SPV) or an Industrial Development Fund in the next financial year to provide patient capital specifically targeting investments in the manufacturing sector.
“This will help to combat the unavailability of finance (Sic), which is affecting investment, and enhance development of the manufacturing sector which is one of the sectors that has so much potential for value addition,” the document reads.
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MCCCI also calls for protection of the country’s mushrooming industries, including win e – making business, to grow the country’s export basket.
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It proposes a reduction in excise rate on local fruit wines to 10 percent from the current 95 percent, “to encourage the survival of this emerging industry and domestic small scale fruit suppliers who derive their livelihood from this market”.
The chamber proposes introduction of a 25 percent preferential corporate tax for a period of up to three years for firms upon listing on the Malawi Stock Exchange when a company raises new capital for the business.
It says this, coupled with other measures, would entice more firms to list on the local bourse.
To enhance activity in the construction sector, MCCCI says the government should consider revising downwards the 10 percent withholding tax to 4 percent for contractors and subcontractors in the building and construction industries.
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“The increase from four percent which to 10 percent in the 2023–24 budget had a negative impact on the sector. Businesses in the sector operate on stringent margins, and the increase has affected work delivery,” says MCCCI.
Meanwhile, the chamber has since hailed the government for raising development expenditure allocation despite increased demand for social safety programmes, which it rates as a step towards the right direction.
Development expenditure for the coming financial year is pegged at K1.77 trillion from K1.08 trillion in the 2023-24 financial year.
The proportion of development expenditure to the total budget now stands at 30 percent, up from 24 percent in the 2023–24 financial year.
“This is a clear signal to the private sector that the government is serious about its long-term development aspirations,” MCCCI says.
When presenting the budget statement, Chithyola Banda said the financial plan is focusing on investment.
The budget statement was themed ‘From Economic Recovery To Resilience Through Accelerating Production And Enhancing The Legal And Regulatory Environment To Protect The Economy’.
It will be implemented in a more volatile environment characterised by structural challenges with most macroeconomic fundamentals remaining in red.
These and other challenges have led to subdued performance of the private sector for many years.
