Economic commentators have challenged authorities to put in place measures that will turn around the economy so that Malawians do not face the hardships they faced in the just ended year.
Several commentators said in separate interviews that 2015 was a very difficult year.
Economics Association of Malawi executive director Edward Chilima said while at the beginning of 2015, the situation looked promising as talk of stabilising the kwacha, bringing down interest rates to a single digit, among other policy statements, dominated discussions, the last two quarters the situation was different.
“But, as the year went by, most of those key parameters have been off target. Everybody can see that things haven’t been as expected,” said Chilima.
He cites over-expenditure, wastage in the government system, appetite for borrowing as some of the monkeys that stuck to Malawi’s back.
“We don’t see any changes in the agriculture sector, we are still inefficient and we cannot see a very good crop next year. In the tobacco industry, we haven’t seen any intervention so that it should be deferent next year. Otherwise, we see the IMF as key to next year. So 2016 depends on how the reforms are implemented, it depends on how the leaders take risks in making decisions that are very suicidal in terms of politics but very beneficial and strategic to the country,” said Chilima.
Economic Empowerment Action Group president, Lewis Chiwalo, said 2015 was characterised by an “unfavourable environment that made it impossible for local businesses to flourish”.
“One of the issues that discouraged us was the taxation regime. Corporate tax is thwarting business growth and this is affecting the ability of Malawian business owners to diversify their services and products. As things stand, the private sector has no confidence in the market in Malawi,” said Chiwalo.
Indigenous Businesses Association of Malawi president, Mike Mlombwa, said business operators had a lot of challenges to surmount in 2015, “a development that resulted in the business environment not being conducive to our operations”.
Mlombwa added that the business environment in the year gone by was characterised by the dominance of foreign operators who, he said, are sometimes offered tax holidays at the expense of locals.
Mlombwa said indigenous business owners can only flourish once the Reserve Bank of Malawi introduces cut points on interest rates.
“In the year (2015), I attended a business meeting in the United Kingdom where our friends laughed at us when they heard about the operating environment for local businesses in Malawi. Our friends have cut points on interest rates. This means, when a local business entity borrows, say, K200 million from a commercial bank, the bank only charges interest on the first K100 million.
After that, the remaining K100 million taxfree and this helps businesses flourish.
“Otherwise, interest rates are high in Malawi. When one borrows K2 million, they end up repaying K15 million, which is prohibitive. Again, this is why our banks generate more profits than other business.
They reap us through interest rates. No wonder, a lot of foreign nationals are investing in banks in the country. They know that there is a lot of money,” said Mlombwa.
He appeals to government to create an environment that will be conducive for business operations in the country.