The World Bank has tipped Malawi to consider exemptions on some duty and Value Added Tax (VAT) to stimulate private sector investments in the country.
This is contained in the 17th edition of the Malawi Economic Monitor, a bi-annual publication by the Bretton Woods institution, published over the weekend.
According to the World Bank, such incentives have proven effective in attracting investment and driving growth.
“The government is encouraged to continue supportive policies, such as VAT and duty exemptions, to stimulate additional private sector investment.
“Additionally, the government can explore other incentives, such as result-based financing (RBF) similar to USAid’s ‘Kickstarter Project’ and the World Bank’s Malawi Energy Access Programme (MEAP), to incentivise more enterprises to enter the Malawian market,” the report reads.
- Advertisement -
It says increased competition will not only drive down prices but also spur innovation and the development of new technologies, enhancing the efficiency and efficacy of off-grid solar systems,” the report reads.
Minister of Finance Sosten Gwengwe said the government is geared to build on the progress made from the existing policies.
“Exemptions increase tax expenditure. Our policy is to incentivise production and cut back on exceptions eligibility. We have lined up energy, agri-processing and mega farms as priority industries attracting incentives,” Gwengwe said.
During the 2023-24 pre-budget consultation meetings, the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) proposed the removal of VAT on some products.
- Advertisement -
- Advertisement -
MCCCI Chief Executive Officer Chancellor Kafelapanjira said the government must consider with seriousness the tax proposals.
“Of serious consideration is the need to promote manufacturing sector growth in the 2023-24 budget to offset the demand for imports, thus promoting import substitution and releasing some pressure from foreign exchange demand,” Kafelapanjira said.
