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Unity in recovering a troubled economy

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TACKLED—Covid vaccination

By Yamikani Phiri

He ad of Blantyre Archdiocese of the Catholic Church, Archbishop Thomas Luke Msusa, recently urged Malawians to be united in the purpose of developing the nation, communities and families.

The revered religious leader stressed that, for the country to move forward, the practice of blame-games, which has found some comfortable space in the minds of many people, should be cast away.

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No one should be a spectator, the archbishop said, because, in their own right, everyone has a crucial role to play in building the nation.

Such sentiments have been stressed before by optimists like me, who believe Malawi’s problems are not that complicated if everyone thrusted their hands onto the deck and resolved to do something with the aim of improving their lives.

Of course, the government has the larger responsibility of developing policies that should promote resilience, reward for hard work and environments that make doing business worthwhile.

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Still, there are acts which everyone should do even in the absence of the so-called enabling policies.

If someone gets subsidised farm inputs and deliberately fails to work hard in their crop fields or sells the inputs altogether, it would be ridiculous to accept an excuse from such a person if they were hit by hunger.

Recently, President Lazarus Chakwera outlined several strategies to be employed when resuscitating the economy that has been terribly battered by the Covid pandemic.

Allow me to digress a little. It is not Malawi’s economy alone that is going through troubled times. Everywhere in the world, prices of commodities are going up and governments are struggling to make their citizens less anxious.

The World Bank predicted that commodity prices would go up globally. The same bank indicated that, from mid next year, economies would begin to stabilise and prices of essential commodities such as oil would begin to ease.

The only challenge is that, in circumstances of economic depression, it is the poorest of the poor who feel the pinch the most.

That is why we are hearing citizens crying in Zambia, Tanzania, Haiti and Bhutan, just to mention a few. We are hearing less grumbling in Germany, the United States and China.

Now that Chakwera has announced a socio-economic recovery plan (Serp), whose views were obviously extensively drawn from stakeholders conversant with economic issues, is there any real hope that the at-least K580 billion billed to drive the strategy will change our fortunes?

The five-pronged scheme has received mixed reactions from stakeholders, with the majority of them—if media comments are anything to go by—indicating they believe the plan will turn around the economy for the better.

Malawi, like the rest of the world, is still battling the Covid pandemic, despite that the present crisis is way lesser than was the case from last year up to early this year.

Still, even if the scourge got to the point where the world accepted it is longer a public health issue of serious concern, economic recovery is essential in any forward-looking agenda because the economy remains in bad shape.

In fact, without broad-based economic expansion, addressing other challenges in sectors such as agriculture, education and health will not be successful.

In the 76-page strategy, Chakwera is outlining how his Tonse Alliance government seeks to ultimately lessen the suffering of Malawians terribly hit by economic hardships and to, essentially, continue growing the economy.

For the next two years, with strategic short-term stints within, government wants Malawians to recover and build back better from the devastating impacts of the pandemic.

It is refreshing to note that Chakwera has not in any way denied that Malawians are going through tough times. In fact, his delivery of the Serp itself was tinged with pain and distress, which appeared to bring out a certain resolve out of the President that things will and should work.

Now that the plan is out there for all to see, government will have no excuse for reneging on any obligation outlined there.

In fact, by announcing it in very clear terms, the President has placed a huge load around his neck, as he clearly knows Malawians will be referring to the Serp now and then to see if any progress in its regard is being made.

That is what leaders must do. They should declare their plans and visions and allow that they should be continuously scrutinised as time goes.

Chakwera talked about structural limitations, gross imbalance between imports and exports, the Covid pandemic and government waste as issues that need to be urgently looked into if the plan were to succeed. Well, they are the very essence of the strategy itself.

“The success of this [Serp] will depend on all of us. It will depend on State actors across my government aligning their activities, programmes, policies, budgets and spending within this plan. If they do not, the economy will not recover.

“Secondly, it will depend on non-State actors, corporations, development partners, foreign investors and private sector players responding to the interventions of this plan in ways that complement it,” the President said.

The invitation is worthwhile; so will be the sanctions to be meted out on those who ‘frustrate’ the strategy.

It is a trite economic fact that a government, especially a developing one, needs to take actions that enable economic recovery by minimising expenditure or creating a positive return on investment.

And that is exactly what the President has stressed in the Serp. Of course, there will be a need for more measures to support a positive return on investment by both local and foreign businesses. Relevant ministries have been invited to tackle this part.

As indicated above, a recovery plan has to look into various sectors of the economy and the one announced by Chakwera is not leaving aside building a resilient and sustainable health system, education, social protection, building a resilient economy and labour market, and building an enabling macroeconomic policy environment.

The areas further have corresponding specific measures designed to trigger sustainable production and productivity in the economy by various actors, State and non-State.

While a huge chunk of the K581 billion strategy goes to the health sector, which is allocated K398 billion, with education getting K57 billion, social protection allocated K9.5 billion, macro-economic policy getting K15.5 billion and labour market K101 billion, it must be stated that the benefits of the allocations will be interflowing, in the sense that if building a resilient and sustainable health system is successful, its outcomes will flow to other sectors.

There is hope that the plan is going to succeed since taxes are billed to be the main source of revenue for its implementation.

This is a smart move as it allows the government to use what is often readily available or able to be collected in time unlike grants and loans, which sometimes take too long to come by.

In fact, banking financing an economic recovery plan on loans and grants is an impractical decision. With various initiatives that government is implementing to expand the tax base, financing the plan will be possible.

Additionally, the Malawi Revenue Authority has significantly improved on tax collection, consistently beating its targets, after it sealed yawning loopholes that allowed extensive tax evasion and avoidance.

On the other hand, counting on official development assistance (ODA), as another key source of financing, could be detrimental to successful implementation of the plan.

While ODA rose to an all-time high in 2020, up 3.5 percent in real terms from 2019, boosted by additional spending mobilised to help developing countries grappling with Covid, such assistance is often not fixed and can leave you napping if you banked on it too much.

For instance, the Serp is time-specific, but ODA may come any time. In fact, it may not even come at all when you most need it.

I hope ODA is not being quoted in the plan as a very contingent source which, if it fails to come by when we need it, will result in the strategy failure to implement.

All in all, the recovery plan is an ambitious blueprint that needs everyone’s support. It clearly spells out what we need to do and how we should do it to recover and grow our economy in the next two years.

It is good that the plan is not leaving behind development initiatives. During times like this, the temptation to concentrate on consumption becomes huge. That is where governments miss it. Consumption must go together will development.

Now, what is important is that the allocated resources are prudently utilised for the achievement of the strategy. The deliberate directive to cut down on public expenditure is crucial in any recovery and growth plan. In fact, any kind of austerity measure in times of economic crisis is essential.

Finally, we have a blueprint that is clearly spelling out the direction the country is taking in recovering and growing an economy severely stressed by the Covid pandemic.

This is not Chakwera’s plan. This is not the Tonse Alliance government’s plan. This is a plan for Malawi. This is a plan which needs everyone on board if it is to be successful. If you are not directly involved in the implementation—though it were doubtful anyone should not be—at least play the oversight task.

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