Intra-Africa Trade Can Boost Africa’s Economy-DHL

Hennie Heymans

African countries need to focus on Intra-Trade and rid some of the barriers affecting cross border trade for the continent to realize substantial economic growth, says one of the leading global brand in the logistics industry, DHL. 

2016-2017 Budget: Estimates At K1.136 Trillion

Minister of Finance and Economic Planning has told National Assembly that this 2016-2017 Financial Year Government will spent a total amount of K1, 136.4 billion (One Trillion, One Hundred and Thirty Six Billion point Four)

This total expenditure and net lending during this year represents 26.1 percent of nominal GDP.

It also represents an increase of 23.9 percent over the 2015-2016 revised expenditure of K902.3 billion.

Among others this budget will allocate K198.5 Billion to the Ministry of Agriculture, which is the highest allocation of resources for this year, and K147.6 Billion for Ministry of Education and K9.8 Billion for the Ministry of Health.

This large allocation to Agriculture comes at a time when the Government has resolved to intensify irrigation farming in order to transform the economy from the excessive dependence on rain-fed agriculture, as a lasting solution to the challenge of climate change.

"The move will also increase the number of harvests per year to more than the current single harvest. This could substantially increase the country’s rate of economic growth." indicated Gondwe

He mentioned that the large scale farming will be intensified through Green Belt Initiative and that Government has decided to formally establish the Greenbelt Authority (GBA) as a stand-alone public agency.

"The authority will be the official agent for the construction of these largescale irrigation infrastructural projects throughout the country in line with the Government’s Irrigation Masterplan, while small-scale irrigation projects will continue to be implemented by the Ministry of Agriculture, Irrigation and Water Development." He said

"Accordingly, the Treasury has established Vote 078 to allocate resources for the administrative and operational expenses of the authority with immediate effect. This will be part of the 2016/17 budget. The large-scale irrigation infrastructure projects will be part of the Government’s development programme." He assured

Of the projected K1.136 trillion, recurrent expenditure will be MK815.5 billion or 18.7 percent of GDP, which is higher than the 2015/16 allocation by 16.8 percent.

According to Gondwe, the Development expenditure will increase by 57.0 percent from MK217.5 billion to MK317.4 billion, or 7.3 percent of GDP.

"Up to K279.8 billion or 82.2 percent of the development budget will be provided by development partners through loans and grants, while local resources will account for the balance of K37.6 billion or 11.8 percent. Therefore, the donor contribution to the development programme is anticipated to increase by 62.0 percent relative to 2015/16." He said

The total revenue and grants during the 2016/17 fiscal year are estimated at K965.2 billion or 22.2 percent of nominal GDP.

Of this amount, some K708.8billion will be tax revenue, K66.0 billion will be non-tax revenue, while K190.4billion will be grants from Malawi's cooperating partners.

"Thus, MK774.8 billion or 80.3 percent of these resources will be domestically generated, while the remaining 19.7 percent will represent donor grants. " he said the Finance Minister

He went on "Compared with the 2015/16 revised budget, tax revenues are projected to increase by 21.8 percent, reflecting the fact that nominal GDP, which is the base for most of the taxes, will grow by 24.0 percent. Tax on income and profits will account for 55.4 percent of total tax revenue, while tax on goods and services will generate 37.2 percent." He said but noted that non-tax revenue is shown to be lower relative to the 2015/16 revised budget estimate of K71.9 billion.

Gondwe mentioned that three key factors and priorities were taken into account when preparing the 2016-2017 budget.

He named the key considerations as putting reflection of agreement between Government and IMF within the context of seventh and eighth reviews of Extended Credit Facility arrangement; assumptions that macroeconomic outlook for the next financial year, where the real GDP growth is projected at 5.1 percent while nominal GDP will grow by 24.0 percent and that the average inflation rate in 2016/17 is projected reach 17.4

The other key consideration was that based on the Government’s short and medium-term policy priorities which are motivated by the objective of ensuring that the country maintains a program with the IMF, while addressing some pressing socio-economic challenges.

On maintaining IMF programme and addressing socio-economic problems, Gondwe therefore indicated that the budget seeks to increase domestic resource mobilization; make available adequate resources for maize procurement, and to support irrigation farming; to ensure that the wage bill is maintained below 7 percent of nominal GDP; and to ensure that resource allocations to the health, education and other critical social sectors remain adequate and a significant proportion of the budget.

2016-2017 Budget: K35.5 Billion For Food Purchase

Government has announced that the 2016/2017 Budget has allocated K35. 5 billion for the purchase of food response.

Minister of Finance and Economic Planning, Goodall Gondwe has announced today when presenting the 2016/2017 Budget estimates.

"Of this amount, MK6.0 billion is in support of the winter cropping initiative to purchase maize from large scale farmers through contract farming." He indicated  

"The total allocation for maize procurement is additional be pleased to note that development partners cooperating under the Multi-Donor Trust Fund in Agriculture have indicated that they may provide additional resources specifically in support of winter cropping." Said Gondwe

He said ADMARC is also purchasing local maize for immediate sales with support provided through Government guarantees for ADMARC to borrow from commercial banks to purchase food for sales to the public.

Hon. Gondwe mentioned that the U.K. and the ADB already pledged their support in response to President Peter Mutharika's disaster call and that United States Government has already pledged support amounting to about US$63 million for humanitarian food assistance, which will be managed by the World Food Program (WFP). In addition he said the ADB has also pledged US$18 million.

He said other support for food crisis will come from Chinese Government who pledged over US$9 million and from the Japanese Government of US$7 million.

But he noted that the IMF has also provided support amounting to US$49 million through the Augmentation of Access facility, which allows the Government to borrow more money from the Reserve Bank of Malawi specifically for this purpose. He added that the World Bank currently conducting a post disaster needs assessment in the country, to determine their level of support through the Crisis Response Window facility a facility that was used by the World Bank to provide support amounting to US$80 million in response to the flood disaster of 2014/15.

Gondewe also mentioned that through resource support from European Union and the World Bank, each district has been allocated with K500 million in this financial year towards Public Works Programme in order to boost rural income among smallholder farmers in rural areas to enable the buy food. He noted that it is clear that people in rural areas have had drastically reduced agricultural production due to the drought, and that their incomes have also been reduced.

The second round crop estimates recently released by the Ministry of Agriculture, Irrigation and Water Development showed that maize production during the 2015/16 growing season has declined by an estimated 12.4 percent relative to production in 2014/15. 

Maize production has been estimated at 2.4 million metric tons. It is estimated that the country requires an additional 790,000 metric tons of relief food to support an estimated 8.4 million people. An additional 250,000 metric tons is required for sale in ADMARC markets, while another 250,000 metric tons is required to restock the strategic grain reserves.

Get 2016-2017 Budget Statement here 

MRA Asks Business Persons To Avoid Corrupt Practices In Borders

Hilda Mkandawire: MRA

Business people in the country have been asked to join forces with Malawi Revenue Authority (MRA) in the fight against corruption in country's borders.

The call was made over the weekend during the meeting organised by the Small and Medium Enterprise Association (SMEA)-Lilongwe chapter on issues about tax.

SMEA members raised alarm on incessant corrupt practices among some MRA officers who often ask for bribes from business persons if they want to have their goods cleared at boarders in good time.

"Most officers delay processes and can't help without us pay them something" reported one of the participants in the meeting 

Responding to this problem, Hilda Mkandawire, the Public Relations Specialist at MRA pleaded with participants and all business persons in the country not to tolerate this unbecoming practice and encouraged every tax payer to report to MRA, any officer who may ask them to pay bribe.

"Don't give money to MRA officers as bribe. MRA does not condone corruption." She warned

"If our officers ask for bribes you should not accept this practice because an MRA officer is paid at the end of the month and please do not pay bribes for them to assist you. It is their job to assist you.” she emphasized 

Mkandawire further cautioned that bribes are vices that haunt growth of businesses as significant part of profit is used to pay for the corrupt officers. She added that this further derail development as Government also fail to correct tax from struggling businesses.

"Please report them to us, and we will deal with it. Remember, without your businesses this country cannot prosper." She added

Other concerns raised by the business persons of which MRA has committed forward them to Management for consideration are bad attitude of officers when helping business persons, delays when clearing goods and interruptions at roadblocks among others.

“Most of them have requested us to have some privacy when they want to discuss their tax issues with MRA officers. We have promised them that we are taking up this request to management to look at this and see whether we can set up some interview rooms in our stations. It is true that when somebody has an issue you wouldn’t want to discuss an issue where there are a lot of people. But this is something that needs to be taken to the management and we will see how management will handle that one.” said Mkandawire later in an interview

“But, we ask all business persons to be compliant so that whenever they pass through the borders they are not delayed. And they should always not avoid tax at boarders and this will even reduce their delays in roadblocks because many people do not declare all their goods at boarders so the roadblocks assists us to verify if the traders have paid tax for all their imported goods." She said

The meeting looked at all areas of domestic, customs and excise tax

One of the participants, Danny Zenengeya who trade as Double Options Investments said was satisfied with most answers from MRA. He said the meeting has helped him to understand reasons why some challenges were happening to him when importing goods and how he is going to avoid them.

"The meeting has been fruit full and we have been advised to report any matters of concern immediately to their offices and also that we have to follow the right channels and pay the tax” he said and urged MRA to improve on time frame issues because some delays in issuance of invoices and finalising some processes prevents him from meeting deadlines of delivering goods and attending to his business.

Jacob Chikoya

Chairperson for Small and Medium Enterprise Association (SMEA) for Lilongwe chapter, Jacob Chikoya who works for Printers Systems said the group decided to invite MRA to enlighten them more on tax related matters because most of the businesses encounter a lot of challenges with MRA officers.

“In other words we would like to be more tax compliance without being penalized as it is the case right now.” he said, then added; “We are very satisfied with their response but listening to them presenting what tax is all about is not a big problem but the problem is only that the officers on the ground they make it difficult for us."

Chikoya has also urged fellow business persons to work together in order to have a better force when negotiating to Government and other enforcement agencies, various issues haunting their businesses.

“We also like to invite all the business people to come forward and join SMEA because we understand that if you have one voice and talking to Government and all other relevant authorities, we can achieve more” pleaded Jacob Chikoya 

Industrial Hemp First Trial: Shows The Plant Is Harmless, Can Be Grown In Malawi

Industrial Hemp trial field 

Preliminary findings from the first round trial of growing Industrial Hemp and identification of varieties of low THC (Tetrahydrocannabinol) has proven that Malawi is suitable land and that five cultivars used in the trial have very low THC. 

THC an active ingredient in marijuana (chemical element that drives people high when they smoke tobacco or ingest alcohol in other words it is the chemical responsible for most of marijuana's psychological effects.)

PP Says First Half Of 2015/16 Budget Underperfomed

Jooma

The opposition People's Party (PP) says it does not agree with Finance Minister claim that the the performance of budget in the first half of 2015 to 2016 fiscal year was good.

When delivering Midyear budget statement in the National Assembly, Finance Minister Goodall Gondwe informed the House that "The performance of the budget this year has been better than before except for the projected expenditure on FISP." 

He said the bulk of expenditure on FISP relates to the imports of fertilizers and in view of the escalated deep depreciation of the currency and the cost of procuring fertilizers.

However, People's Party spokesperson on finance matters in the National Assembly, Ralph Jooma said the performance of the first half of the budget was not all well.

“Am not of the same view, because the minister has already stated that he has underperformed on FISP side by K26 billion. So, that means that the Minister will have to be forced to borrow domestically in order to pay for the FISP.

If you have got arrears it doesn’t mean that you are performing well, if you haven’t spend and yet you are owing your people, is just a question of when you are going to pay them. So it’s not performing well it’s actually just a postponement of an underperformance.” 

Govt Says Nurturing Artisanal, Small Scale Mining Potential To Support Economy

Malawi government is optimistic that transforming the Artisanal and Small Scale Mining (ASM) sub-sector from informal to formal with proper regulation in place, would increase the mining sector income and cause an upward adjustment of mining contribution to the GDP.

Currently the mining sector contributes 10% of Malawi’s GDP and when all the upcoming mining projects are in full operation including proper regulations in ASM, government’s projection is that the contribution of the sector to GDP will move up to 20%.

JTI Asks Malawi Govt To Revise Tobacco Policies

The Japanese Tobacco Industry (JTI) wants Malawi government to address some of the policies and regulations that are directly affecting companies in Tobacco industry.

The company has observed that some of the old regulations are an impediment for a win-win situation among the key players in the tobacco industry.

JTI’s Cooperate Affairs and Communication Director Mr. Limbani Kakhome made these remarks in Lilongwe at a JTI’s facilitated workshop called ‘Regulatory Impact Assessment (RIA) Seminar’ aim at enhance skills for the Directors from various government Ministries and Departments in becoming effective policy and regulatory makers.

Malawi Improving In Financial Sector Activities­- RBM

The Reserve Bank of Malawi (RBM) says over the last ten years, the demand and use of various financial services has continued to register an encouraging upward movement. This is because, a lot of people living in both urban and rural areas have started to practice a saving culture and are engaging themselves in various financial activities.

RBM’s Deputy Governor responsible for Supervision Dr. Grant Kabango said this as Malawi begins 2014 National Financial Literacy Week being commemorated under the theme ‘Financial Literacy: Building a Financially Literate Nation’. And the week has been launched on Monday at Community ground in Lilongwe.