Mixed views on industry levy
Associate Professor of Economics at the Malawi University of Business and Applied Sciences (Mubas) Betchani Tchereni has proposed introduction of a manufacturing levy on goods and services to support industrialisation in the economy.
Betchani said this when he made a presentation titled ‘Industry prioritization analysis for Malawi’, at the Economics Association of Malawi’s annual conference in Mangochi.
He pointed out that goods and services such as alcohol, hospitality, car hire services, high schools and all vehicles above 2.5 litre engines could contribute to a fund through the levy and such funds should bankroll establishment of big companies in particular sectors.
Tchereni noted that industrialisation was key but was being delayed due to lack of finance and this is costing the country dearly.
He further challenged the government to embark on mass capitalism by creating young capitalists.
“The idea has always been that when the government is spending money, for example to construct a road, we have always believed that when we employ people there, someone will need soap and there is going to be a company to produce that soap. Our problem has been that the soap is not produced in Malawi.
“We are saying that by 2030 Malawi should become a lower middle income industrialised country not through consumption but production. We therefore need the government to take the lead in establishing big companies and the money for that should come from this levy,” Tcheren said.
In an interview, president of the Malawi Confederation of Chambers of Commerce and Industry James Chimwaza said the answer to industrialisation lies in corporate formations rather than levies.
“There are people with money in Malawi ready to join, with others ready to go into manufacturing. If we go the levy way, the output there is civil service, it will not take off. That’s why we are looking at having cooperatives to benefit from these loans and establish companies.
“When you look at import substitution, it is all about adding value to our agriculture produce and the producers themselves should be involved in setting up these companies. There are too many levies and the proceeds go to Account Number One and one doesn’t know the mechanisms to channel the funds towards establishment of big companies,” Chimwaza said.
In an interview, spokesperson in the Ministry of Finance Williams Banda wondered if proper research was done but indicated that they wait for communication on the same.
“It requires proper research before adopting such ideas but we will wait for a motivation paper from Economics Association of Malawi and see the way forward,” Banda said.
