Economic Experts Urge Govt To Allocate More Resources for Investment

Hon Goodall Gondwe being led by
Sergeant at Arms into the Chamber to
Present 2015/2016 budget 

The budget statement for the financial year 2015/2016 continues to receive varied response among politicians and experts, but one thing in common has been a more emphasis on the need to start framing budget that focuses on stimulating productivity and investments.

The K901.6 billion budget estimates presented last Friday by hon Goodall Gondwe, the Finance Minister, has an allocation of K224 billion for development expenditure. 

Henry Kachaje 

President of the Economics Association of Malawi (Ecama) Henry Kachaje, observed that the budget lacks emphasis on investments in the economically productive sectors. He said, now that donors are not likely to support Malawi in its budget, a focus on investment is the right option for Malawi economy.

He further noted that Economic growth which the Minister indicated in the statement is not substantiated by factual evidence of where that growth would come from adding that in a number of areas, the minister was failing short of committing the reforms government is going to undertake by this budget.

“It’s a budget statement that has left us still wondering whether what we are hoping to achieve as a country may be achieved” said Kachaje, as he referred to the Finance Minister's emphasis of hope for resumption of donor aid while acknowledging unlikeliness of their comeback soon.

Dalitso Kubalasa 

Dalitso Kubalasa, Executive Director for Malawi Economic Justice Network (MEJN) 2015/2016 said this budget statement was interesting not so much as a surprising statement because of Finance Minister’s acknowledgement of known tough things Malawi is still sailing through.

But he said the budget has some courageous decisions and very cautious on what is been committed in this budget.

A bit different from Kachaje observation, Kubalasa noted that government has prioritized economically productive areas including the need for further input from stakeholders on challenges facing the fertilizer subsidy programme.

“Another striking element of the budget though no details were explicitly made is on Input subsidy programme where government is acknowledging challenges facing the programme and the need to discuss them with stakeholders.” said Kubalasa

Opposition PP, MCP Holds Different Opinion Over 2015/2016 Budget

Finanance Minister Goodall Gondwe

The two main opposition parties in Parliament have different opinion regarding hope that 2015/2016 financial year budget estimates will promote investiment and production.

Finance Minister Honorable Goodall Gondwe on Friday, announced K901.6 Billion budget estimates which the minister said will be domestically financed and other social sectors will be supported through off-budget from donors. 

Both, Malawi Congress Party (MCP) and Peoples Party (PP) had expectations that the budget shall allocate more resources for investiments and incentives for businesses.

The finance Minister announced that from K901.6 billion, the recurrent expenditure will be K674.6 billion, while development expenditure will amount to K224.0 billion from revised K189.2 billion in 2014/15 budget.

Gondwe said from this Development expenditure, some K173.0 billion will be funded by external resources (development Part I), while K50.0 billion will be funded using domestic resources (development Part II).

“Yes somehow we see positive steps because we can see that about 26% of the budget will be for the development” reacted Ralph Jooma PP spokesperson on Finance matters in parliament and acknowledged government saying it is a way to go for economic progress.

He said is happy to note that K5 billion will be forwarded to councils to address issues of grassroots development, K6.5 billion for the improvement of city roads, while K3 billion for students loan and grants.

Hon Ralph Jooma: This is an investment based
Budget 

He further noted with appraisal that awarding of contracts will be based on assessing number of Malawians to be employed by the company saying this will empower a lot of Malawians.

However, Jooma did not welcome Finance Minister’s decision to allocate few resources to some social sectors because are to receive off-budget funding. Hon Jooma said such is a worry some development since off-budget from donors are often unreliable and moreover, government has no control over such support including on selecting priority areas to which such support should be directed to.

“We can’t rely on that” he said, “As members of Parliament I think we should look at budget and not anything off-budget financing”

He also demands the explanation of the breaking of the allocated K7 billion for decent houses of which the minister admitted that only K2 billion has been used.

Malawi Congress Party (MCP) who earlier said expected the budget that; is explicit on how government intends to solve mess in Subsidy programme; offer incentives to businesses and clears outstanding arrears, has described the whole budget as “Not Pro-Poor and not stimulating Productivity.”

Hon Joseph Njobvuyalema: This is not pro-poor
Budget and does not promote productivity

In his view, Hon Joseph Njobvuyalema MCP spokesperson on finance matters in parliament says “Government should look at real sectors in the country which would promote growth and productivity. That’s not what we have done and it is disappointing”

He said though the budget has allocated more resources to Agriculture, it fall short of comprehensive strategies to sustain the sector in times of calamities especially droughts. He suggested that the budget should have emphasized on irrigation.

The MCP spokesperson emphasized that this budget should have put much focus on strategically allocating resources as means to boost the productivity in agriculture especially on irrigation schemes, commercializing the sector, livestock production even on the tourism and mining sectors.

“The poor people will not benefit” he said, “Mostly they are also budgeting on off-budget, donations these things are outside our plans and we cannot trust that they can stimulate our productivity.” 

He said government has misdirected its priorities in the budget which he also said the budget has only reflected views of professionals and not poor Malawians “It is a very disappointing plan” he added.

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Telecommunication, Custom Duty Fines, Customs Form 12 Goes Up To Support 2015/2016 Budget

Goodall Gondwe Finance Minister 

Minister of Finance presented 2015/2016 budget estimates which largely rely on perfomance on domestic revenue and off-budgetary support from donors.

Suggestively, such a budget shall see Malawians to dig more in their pocket when accessing some services due to tax regime that will concentrate on broadening the tax base in order to generate more domestic resources as well improving administrative efficiency, encouraging tax compliance. 

Likely, in this situation government has been left with no other choice but to raise custom duty on some potential tax revenue generators.

So, get prepared for the new cost of SMS, Internet, Customs and Excise form 12,  Customs Procedure Code for Specialized Broadcasting Equipment for Direct use in Television and Radio Stations (CPC 480) and Customs and Excise Duty Fines though some rates have been reduced.

Minister of Finance Goodall Gondwe when announcing the new tax measures indicated that the amendments were made following various insightful and constructive proposals received during this year’s pre-budget consultations, though a number of them may be considered for future budgets. 

"Mr. Speaker, Sir, the Customs and Excise tax measures to be announced today will become effective from midnight tonight, whereas the Value Added tax (VAt) and Income tax measures will be effective on 1st July 2015, once the relevant bills are passed by this House." He announced 

Increased Customs And Excise Duty Measures

Hon. Gondwe announced that, following the tremendous uptake of the telecommunication services in Malawi, and in order to expand the tax base togenerate resources for this budget, 10% excise duty will be levied on text messaging and all data transfers including internet and similar services. He noted that Government removed customs duties on mobile phones in order to improve access to mobile telecommunication. And went further to remove customs duty on solar cellular telephone chargers. 

Government has removed henceforth, Customs Procedure Code for Specialized Broadcasting Equipment for Direct use in Television and Radio Stations (CPC 480). Such equipments were imported free of Customs duties, VAt and Excise duty, in order to improve information dissemination in Malawi. 

The finance Minister contented that objectives of removing customs duties have been achieved as there is now a proliferation of television and radio stations in Malawi, creating competition in the industry which has given Malawians options to choose from.

Threshold Value for Entry of Goods on Customs Form 12 has been increased from K100,000.00 to K500,000.00 so as to reduce the time spent at the port of entry for small and medium business people or travellers who import goods from neighbouring countries, and to support the ‘Ease of doing Business’ initiatives that the Government is undertaking.

Customs and Excise Duty Fines has been revised upwardsin order to provide for meaningful cost sharing and recover the value eroded by inflation. Now, the minimum fine has gone up from K10, 000.00 to K100,000.00, as the minimum fine in the Customs and Excise Act has been eroded with inflation and does not cover the cost of enforcing compliance. 

Reduced Rates in Excise Duty 

Excise Duty on some Imported Vehicles Government has reduced excise duty rates on motor vehicles under the Customs and Excise tariff Heading 87.03 with an engine capacity exceeding 3,000cc in order to encourage tax compliance.

Excise Duty on Dry Cell Batteries that operate light torches and radios used by most Malawians, especially in the rural areas has been reduced from 30 percent to 10 percent.

On Regional Trade Agreements, Malawi is to migrate to Customs and Excise (Tariffs) Order to COMESA Common Tariffs Nomenclature (CTN) and this will be published in the Government Gazette.

The budget statement furhter indicates that there shall be Taxation Act Amendments including on Tax Policy and Administrative Measures, Amendments of the Malawi Revenue Authority Act, and Amendments of the Value Added Tax Act.

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Goodall Unpacks K901. 6 Billion Budget Estimates for 2015/2016

Hon Goodall Gondwe Arrival at Parliament 

The Minister of Finance, Economic Planning and Development Honorable Goodall Gondwe has unpacked the estimates on the recurrent and development accounts for the budget of the 2015/16 financial year on Friday afternoon in the National Assembly.

Now, the budget has been referred to the committees of Parliament for two week scrutiny before they are considered by the Committee of the Whole vote by vote, and that, thereafter, they be adopted.

Gondwe announced that the total expenditure and net lending in the 2015/16 budget is projected at K901.6 billion “Although this appears to be higher in money terms than the 2014/15 revised total expenditure of K800.7 billion, it is actually lower in real terms." He said



The 2015/16 budget constitutes 26.2 percent of GDP, while the revised budget for 2014/15 accounts for 28.4 percent of GDP.

The recurrent expenditure will be K674.6 billion, while development expenditure will amount to K224.0 billion. Therefore, the share of goods and services that will accrue to the public sector is projected to be lower in 2015/16 than that consumed in 2014/15 Said Gondwe

When making his presentation, Hon Gondwe acknowledged uncertainty of receiving budgetary support from bilateral donors though Malawi is sealing loopholes that led to theft of public money dubbed cashgate. 

He did not even hide to mention that the budget has not only seen a decline in donor budgetary support, but dedicated and project grants as well. 

The Finance Minister however, told the House that more support from donors to Government ministries, departments and agencies shall largely be through off-budget a development which will see votes, particularly those in the social sector, appear underfunded, but may actually be adequately funded when off-budget donor support is added to the budgetary allocation.

But he noted that upward trend in off-budget support as a major source of financing the delivery of public goods and services is not without problems. In particular, he said this development means that the Government (including Parliament) does not have decision making responsibility over an increasing amount of resources available to the public. Therefore, the Government cannot properly decide on expenditure priorities, nor properly plan and time the delivery of goods and services in some critical areas.

But Gondwe said Malawi hold the strong view that greater coordination between the Government and the donors will go far in relieving some pressure on the budget itself, and sustaining the impact of donor support.

Currently, African development Bank resume its budgetary support during the 2014/15 financial year but Malawi government remain hopeful that the other two multilateral institutions, World Bank and the European union, will shortly decide to join the African development Bank.

Outlook of 2015/2016 Budget

Since this year’s budget is premised on no budgetary support, Malawi has strategized to generate adequate local resources to finance activities. Consequently, Gondwe said government has developed the tax measures that will concentrate on improving administrative efficiency, encouraging tax compliance, and broadening the tax base in order to generate more domestic resources.

The finance Minister indicated that the design of this year’s budget is characteristically reflective of the diminishing size of the resource envelope available to the Government, as a percentage of GDP (hence, potentially, in real terms), against the pressure of growing needs to provide critical public goods and services. 

He indicated that the draft budget assumes an optimistic macroeconomic outlook for the next financial year. Inflation rate is projected to decline to 16.4 percent, a general decline in interest rates while economy will register a higher real growth rate of about 7.0 percent.

Gondwe being led onto the chamber by Sergeant at
Arms

Hon Gondwe also said the assumed nominal value of GDP for the 2015/16 Financial Year is K3.4 trillion.

Gondwe said, total revenue and grants are projected at K763.5 billion (22.2%of GDP) which is lower share of GDP than the revised figure for 2014/15 of K683.3 billion, which represented 24.2% of GDP. He said this decline in total revenue and grants as a share of GDP is entirely due to the continued decrease in donor grants, which amounted to K132.8 billion in 2014/15, but are projected to decline to K97.1 billion in 2015/16. 

He even mentioned that project grants, which remained buoyant in the past, are projected to decline from K71.5 billionin in 2014/15 to K52.9 billion in 2015/16. Moreover, he said dedicated grants are projected to decline by about K10.6 billion relative to the 2014/15 revised figure of K47.6 billion.

He said tax revenues are projected to rise from K581.0 billion in 2014/15 to K592.4 billion, as the Malawi revenue Authority (MrA) sets out to strengthen the tax administration regime, and as the economy bounces back from subdued growth.

The Minister said the recurrent expenditure allocation, however, it is proposed to increase wages and salaries by an amount that will raise the salaries of the junior grades in the public service. The budget also provides for the recruitment of some 10,500 primary school teachers and 466 secondary school teachers, who are projected to join the civil service during the last quarter of the financial year. These initiatives as well as an annual wage creep scheduled for implementation in December 2016 will raise the wage bill from K198.0 billion in 2014/15 to an estimated K228.7 billion.

Development expenditure, which was revised to K189.2 billion in K2014/15, is projected to rise to K224.0 billion in 2015/16. Some K173.0 billion of this amount will be funded by external resources (development Part I), while K50.0 billion will be funded using domestic resources (development Part II).

For the first time, an amount of K5 billion or 10 percent of the domestically financed development expenditure, is being set aside for rural development in the district councils. Therefore, together with resources for the local development fund (ldf) and the Constituency development fund (Cdf), local authorities will have command over K30 billion this year, for grassroot development projects.

In addition, the draft budget has provided the sum of K6.5 billion for maintenance and rehabilitation of roads within four cities. Of this amount, the cities of Blantyre and Lilongwe have each been allocated the sum of K2.0 billion, while Mzuzu will receive K1.5 billion, and Zomba will receive K1.0 billion.

Direct allocations to key line ministries

The amount of K133.7 billion has been allocated to the Ministry of Agriculture, Irrigation and Water development; K109.8 billion to the Ministry of Education, Science and technology; and K77.4 billion to the Ministry of Health. However, through off-budget donor resources, Ministry of Health will also receive  about K55.6 billion, making a total of K123.0 billion. Similarly, the Ministry of Gender has a total budgetary allocation of K3.2 billion, and will receive off-budget donor funding amounting to K14.4 billion.

The proposed budget has a planned overall deficit of 4.0 percent of GDP, against 4.2 percent in 2014/15. Below the line, planned domestic borrowing is projected at K25.0 billion, or 0.7 percent of GDP. This compares favourably with the corresponding figures for 2014/15 of K36.8 billion, which is 1.5 percent of GDP. Building on the trend in 2014/15 already described, it is planned to reduce the domestic debt stock further from 15.9 percent to 14.5 percent of GDP in 2015/16. Thus, Malawi could be reaching the internationally accepted ratio of 12.5 percent quite soon.

Get the Full Budget Statement Here...https://docs.google.com/file/d/0B_djmeY3fFSHMm9lVFp3aEYxMkk/edit?usp=docslist_api

Or summary...https://docs.google.com/file/d/0B_djmeY3fFSHTGxISi05YWpoOXM/edit?usp=docslist_api

MCP, PP Expects Investment Based Budget

Minister of Finance, Economic Planning and Development is expected this afternoon to present 2015/2016 National Budget in the National Assembly.

Hon Goodall Gondwe is to present a budget statement whose estimates are approximately up to K900 billion.

Expectations from Malawi Congress Party and Peoples Party

Two major opposition parties spokesperson on finance matters in the national assembly have emphasized that government should bring budget that outlines how it intends to promote productivity and less consumption.

According to Peoples Party (PP) Spokesperson on Budget and Finance Matters in the National Assembly honorable Ralph Jooma, this year's budget has to provide not less than 30% to investment and development with minimal allocation to consumption.

"It must be investment budget otherwise we are going to continue facing a lot of problems in this country." Said Jooma

He noted that focus on investments will help Malawi to realise the growth of private sector and alleviate poverty among Malawians rather than budget which focus more on consumption. He said saving little by little will see Malawi in five year time have stable economy.

Similarly, MCP spokesman for Finance matters in parliament honorable Joseph Njobvuyalema said he expects budget which focus much on Incentives for businesses as one way of enhancing economic productivity.

He also mentioned that since government has expressed its continued focus on Subsidy Programme, this year's budget will not add up to anything if there is no clear explanation as well as effective outline of how the mess that characterised the Subsidy Programmes shall be wipeout out so that it benefits Malawians.

Hon Jobvuyalema also expects to hear how government will sort out its outstanding arrears with various companies.

Mw To Pass Access To Information Law This Year- Special Rapporteur

The Special Rapporteur on Freedom of Expression and Access to Information (ATI) in Africa has expressed hope in the Government of Malawi's assurance that it will enact Access To Information Bill before the end of this year.

An advocate for (ATI) law, Pansy Tlakula, was in Malawi since Sunday on advocacy mission to Malawi to support the initiative of adoption of ATI law and to appreciate the progress made in the enactment of this long awaited legislation. Among others she had series of meetings with ministers, Civil Society Organizations and members of parliament.

Tlakula says is convinced now that there is renewed commitment of the new government to enact the law which is in the process which is steps closer for tabling in parliament.

“We were promised that the bill will be in parliament before the end of the year." She said, "There are a number of issues that still have to be threshed out from the bill and as we speak the bill is in the hands of Minister of Justice and he will be handing it over to the minister of information who has promised us that he will convene in a week or two a meeting of the task force to look at those contentious issues that are still outstanding and to try and resolve them. And after those issues have been resolved, the bill will then be taken to parliament.”

"I know that Malawians have waited for so many years for this access to information law to be a reality but I can assure you that with engagement that I had in the past four days I leave this country with optimism that the bill will indeed see its way through to parliament" said Tlakula who further mentioned that members of parliament assured that they will overwhelmingly support the bill.

But, the special rapporteur has since encouraged Malawians to continue push further for government to live up to its promise on the law. She therefore reminded promises made by President  Professor Peter Mutharika when he campaigned and even in their manifesto of deaire to enact ATI as soon as they get back to power.

"President Mutharika also made similar undertaking when he inaugurated the parliament” she said

“So we were here to encourage him and members of his government to live up to that undertaking" said Tlakula who described her meetings with various officials as "extremely successful"

She continued “I think there is a renewed commitment from government, we have new people in government who have shown commitment to me and I believe what they are saying. I would want to believe that they cannot make these commitments so openly and not deliver on them, and really it is up to the people of this country to go back to them if they don’t deliver on those commitments and to hold them accountable.”

Policy on ATI law was finalised in January 2014 and the Drafted bill was taken to minister of Justice.

Malawi has been struggling for more than 10 years to have Access to Information law and promises were made by governments to adopt the law.

16 countries in Africa have ATI law, the latest being Mozambique

Chairperson for MISA Malawi is Now Excited

MISA Malawi chairperson Thom Khanje considers this high level advocacy mission as timely and imperative in the country’s efforts to have legislation on ATI."

The visit by the Special Rapporteur does not only add impetus to local efforts for Malawi to have legislation on ATI but also demonstrates the importance of ATI in promoting good governance and citizen participation in the democratic process." He said

Khanje also said is happy that after long struggle Malawi Government has shown commitment to enact the law. He a said the law will greatly benefit all Malawians and therefore every Malawian should take part in pushing for the law to be enacted.

The special rapporteur was appointed pursuant to a Resolution of the African Commission on Human and Peoples Rights as adopted at the African Commission’s 38th Ordinary Session on 5th December, 2005.

Among others, the major focus of the rapporteur’s work has been to encourage AU Member States to adopt Access to Information laws which conform to regional and international standards. To that end, the Special Rapporteur led the process for the development of a Model Law on ATI for Africa to assist Member States in the adoption of ATI Laws that are in line with international principles and standards.

The development of the Model Law was a two and a half year long process, which culminated in its adoption by the African Commission in February 2013, and was launched on April 12 during the 53 Ordinary Session of the African Commission which took place from 9 to 23 April 2013 in Banjul, Gambia.

Malawi is one of the country’s that has used the Model Law in drafting its ATI Bill.

Malawi Govt Challenge CSOs "Educate Malawians On Death Penalty, Homosexuality Before Calls On Changing Laws

Samuel Tembenu 

Malawi Government calls civil society to promote debate and conduct civic education on death penalty and homosexuality issues as it reveals her rejection of 41 recommendations that broadly concern such issues during 2nd Cycle Universal Periodic Review by United Nations on Human rights Council.

Justice and Constitution Affairs Minister, Samuel Tembenu was speaking at a Media briefing on Wednesday in Lilongwe following his return from two Sessions in Banjul and Geneva on the status of human rights in Malawi.

He said 199 recommendations were received from State Parties out of which 145 have enjoyed the support of Malawi government and 13 recommendations will need further consultations.

But said 41 recommendations on same sex relationships and death penalty were rejected because Government position is that people should be allowed to debate freely.

He said Government is therefore challenging civil society to carryout extensive civic education to enable the general populace to contribute to the ultimate decision concerning these issues.

He added that people with opposing views and those in support be given necessary tools to freely articulate their respective view points.

Currently in Malawi same sex marriages are criminal offense, however, the justice minister has assured that though there is no intention of changing the law by removing the sections that make homosexual a criminal offense, no one shall be arrested or discriminated against for being a homosexual.

In Banjul, Gambia, Malawi presented her initial and combined report on the African Charter on Human Rights and Peoples Rights to the African Commission. While in Geneva, Malawi underwent a 2nd Cycle Universal Periodic Review (UPR) by United Nations (UN), Human Rights Council.

“In responding to some of the issues raised by states and in providing clarification, Government stated that it has not received official reports with respect to the issue of Homophobia and that the constitutional guarantees of equality and non-discrimination apply to all people in Malawi without distinction on any grounds.” He said

“Government has done it by setting up a Law Commission to look at these issues like constitutional conferences that were done before where issues of same sex relationships and death penalty were discussed and Malawians said no.”

He then challenged “The current proponents of same sex relationships are the civil society organizations so the challenge we are giving to them is that go out into the village, let the ordinary man understand what you are talking about if you win him over then we should start talking about changing the law but before Malawians understand this thing we cannot change the law.”

“It will not help anybody shouting at government that you haven’t done this” he said, “Let’s take it back to the people because any law that has to be made in this country should be an expression of aspiration of the people Malawi.”

Among others, the minister mentioned that Malawi also informed UN of the various measures being implemented to address the emerging issues of attacks against persons with albinism.

He also indicated that government denied reports made to the UN on the threats to Human rights Defenders and on the issue of curtailment of the right to assembly and holding peaceful demonstrations. He said government has invited UN Special Rapporteur on Human Rights and Rapporteur on Freedom of Assembly to Malawi to assess the situation.

Hon. Tembenu said UPR process will lead to government adopting a number of commitments through acceptance of recommendations that state parties have advanced to Malawi on continued improvement of the human rights situation.

He expressed Malawi Government commitment that, relevant laws will be enacted, continued implementation of relevant programmes and policies, ratification of relevant international human rights instruments, continued strengthening of the capacity of human rights and governance institutions and continued cooperation with United Nations mechanisms.

The Minister said Malawi has been commended in all the two sessions for making strides in the promotion of human rights in areas of gender and women rights, children rights, human rights of vulnerable categories, civil and political rights as well as economic, social and cultural rights.