By Benadetta Chiwanda Mia:
Malawi Confederation of Chambers of Commerce and Industry (MCCCI) has called for review of tax policies, saying current measures are stifling private sector growth and deterring potential investments in the country.
In its Business Environment Assessment Report for 2024 released on Thursday, MCCCI singles out the 10 percent corporate income tax surcharge on profits exceeding K10 billion introduced in the 2024/25 budget as a major concern for businesses.
MCCCI Chief Executive Officer Daisy Kambalame and President Wisely Phiri co-signed the report which highlights macroeconomic challenges including high production costs, rising interest rates and persistent foreign exchange shortages that characterised the business environment last year.
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“While it aims to increase revenue collection, such a policy risks discouraging investment, particularly from large corporations that play a crucial role in driving economic growth, job creation and innovation. High tax burdens on profits make Malawi less attractive as an investment destination,” the report reads.
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The chamber has proposed alternative strategies including tax breaks for specific growth sectors and incentives for companies to reinvest profits in the local economy.
The report also emphasizes the need for prioritizing allocation of foreign exchange to export-oriented sectors like agriculture, manufacturing and mining to boost production capacity and foreign currency generation.
“There is need to address the fiscal deficit to achieve economic recovery and stability. One effective approach is to formulate a budget that aligns closely with actual revenue collection, thereby minimizing reliance on borrowing to finance expenditures,” the report adds.
MCCCI argues this would create more opportunities for private businesses to access affordable financing for investment and expansion while easing inflationary pressures.
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In an interview, economic expert Edward Chilima said the proposals have merit, implementation could be challenging given government’s limited revenue base and growing fiscal deficit.
He warned that the business environment might remain challenging in 2025 as macroeconomic fundamentals show little improvement.
“It is a good call, but the timing could be an issue because this is the period when the government requires more revenue. The government will find it tough to take this proposal, although we know it is a good one.
“The agricultural season does not look promising, especially in the southern region, which might also impact food availability leading to more challenges,” Chilima said.
MCCCI projects continued business challenges this year due to persistent macroeconomic imbalances driven by low productivity, which it says results in diminished revenue, declining exports and limited job creation.
This is coming at a time Minister of Finance Simplex Chithyola Banda is soliciting views from various stakeholders on what should be contained in the 2025/26 national budget.
