Chakwera is right, banks and corporations are treated as sacred cows in Malawi

It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning. ~ Henry Ford

Malawi’s leader of opposition, Lazarus Chakwera recently ruffled a few feathers when in his response to 2014/15 proposed national budget he accused Malawi government of offering ‘tax breaks’ to banks and corporations at the expense of struggling Malawians. ‘Experts’ on taxation and monetary issues swiftly faulted Chakwera’s statement on technical grounds.

Corporations and monetary institutions have ‘experts’, including the best legal minds money can buy to talk on their behalf. Monetary institutions tend to be faceless. Chakwera was not going to win the argument. The ‘experts’ explained to The Nation newspaper of 21/09/2014 how Chakwera got his facts wrong and how the institutions are not enjoying the said ‘tax breaks’.

I am not an ‘expert’ on these matters so I will avoid all technicalities, in case I get something ‘wrong’ as well. However, it is important to point out that even though some specifics of Chakwera’s statement were technically ‘wrong’, the essence of his statement is valid: banks and corporations are making extortionate amount of profits over poor Malawians.

Chakwera: Right

Chakwera: Right

‘Experts’ can always argue on technical grounds because they take advantage of legalese, disregarding the reality on the ground. This is where the difference between Chakwera and the ‘experts’ comes in. ‘Experts’ speak for their employers and people who give them consultancies, not poor people who cook and wash for them.

On the other, Chakwera, as a politician, is a people’s representative. It is his duty to speak for the unheard, folks who do the cooking and cleaning for the ‘experts.’ Chakwera spoke for the majority who stand to lose badly in this sacrificial ‘Zero-Aid’ budget. He wants the sacrifice shared.

Intelligence is not a preserve of the powerful elite, poor people knowledge and feelings as well. Only that they lack means and channels to express themselves. This is why their representatives like Chakwera must speak for them. ‘Experts’ have easy access to the media because they are considered ‘newsworthy’. Even worse, whatever ‘experts’ say is treated as gospel truth and often reported unchallenged as if their opinions are value-free. The poor mainly get into the media as helpless victims looking for sympathy. So they are hardly taken seriously.

Chakwera may not have been technically correct but the truth is that banks and corporations, specifically mobile phone companies, are minting in this country, at the expense of poor Malawians.

In April 2012 when the country’s economy was in free-fall, following Bingu wa Mutharika’s failed economic experiments, Nyasa Times reported on “Malawi banks ripping off clients in 2011 [financial year].” Mind the semantics, the word ‘client’ is preferred by marketers because it sounds more innocent, you get a different sense when you replace it with citizens, which is more accurate. Nyasa Times reported:

“Among these [banks] are Standard Bank, which has achieved an after tax profit of MK3.5 Billion from MK3.5 billion in 2010. National Bank of Malawi has made MK1.6 billion profit, up from MK1.4 billion recorded in 2010. While FMB has registered a net profit of MK2.01 for the year ended December 31, 2011, which is an increase from MK1.8 billion made as at December 31, in 2010.”

When unpicking Chakwera’s statement these issues needed to be taken into account. Adding these issues into context one cannot fault the essence of Chakwera’s statement. He has a point when he says banks are reporting “unconscionable profit margins on the backs of working Malawians whose purchasing power is steadily being bled to death.”

Let us face it, poverty is a tale of our time. Read your newspapers and you will see. The Nation of 3rd September 2014 reported on Innovation for Poverty Action report, which has established that “only 2 people of 100 graduate from poverty in five years.” You may hear about economic growth and impressive GDP figures Malawi is registering but these do never correspond with the reality on the ground.

Every human development report makes a grim reading. In a second successive year, the 2014 United Nation’s Global Human Development report has ranked Malawi on 174 out of 187 countries. This is a country where banks are making exorbitant profits. Malawi has some of the most expensive Mobile phone tariffs world. Yet, mobile phone companies get tax reduction?

Press Corporation Limited, the country’s largest conglomerate, recently announced MK10.6 billion after tax profit. Of this profit, The Nation newspaper quoted the groups, Chief Executive Matthews Chikaonda, “Telecommunications segment [of the conglomerate] which comprises Malawi Telecommunications Limited (MTL) and TNM delivered ‘exceptional’ results.” And why not when TNM announces MK1.8 billion profits? People are feeling it.

It is not a coincidence that the former Cabinet Minister, Clement Stambuli has joined the chorus reverberating across Malawi to boycott Airtel Malawi Blackberry services following an upward revision of their services.

We must see things as they are. Growing banking sector is of no use for poor Malawians majority of whom live on less than a Dollar a day. Of what use are incentives on ‘banking vans’ and ATM machines in a country that has majority of its citizens earning their living in the informal sector where 2 out of 5 of them are reportedly earning MK10, 000 a month?

Yes, “Chakwera, others should speak from informed point,” as The Nation editorial (12/09/2014) argued. Herein is some evidence that Chakwera is not dreamer – banks and corporations must contribute more to the economy, and it is the role of the government to ensure that this is the case. No society can be happy and call itself civilised if majority of its citizens are poor and living in misery.

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26 thoughts on “Chakwera is right, banks and corporations are treated as sacred cows in Malawi”

  1. myao weni weni says:

    The profits are abnormal indeed. To some extent I agree what the leader of opposition is saying.

  2. Jelbin mk says:

    This is food for greater thoughts keep it up Mr.

  3. Kamatchetcha says:

    nyc blog have articulated very constructive points…. Chakwera z right…but i think its all about politics…bcause with zero-aid budget, myt demand heavy domestic borrowing and the gvt z tryn to play it smart if the banks hve to release the funds when needed. Banks exploit poor pple…

  4. true man says:

    tax holiday, why not gvng to new employz?

  5. jobo says:

    Awa ndiye a president anthu.

  6. Kanyama Chima says:

    Chakwera is right. The banks are ripping us out of our sweat. Imagine an increase of 138 percent in profits . Koma kuMalawi!

  7. Optic Computer says:

    Try to open an account of say K15,000 and try make no transactions for two years. If you back to check your account balance, you will be lucky to find any tambala there. All will be reduced to nothing through service charges. You will probably even find ngongole yoti ubwezere bank yo.

  8. Usova says:

    Banks and cellphone companies are rich because of corruption Ask anyone who knows.

  9. wobeba wanga says:

    achakwera pitani mukalalike inu

  10. Nobel says:

    Its a syndicate. Let Chakwera reveal these robbers.

  11. Ntadza says:

    The problem is that Malawi is a free market economy that has low disposable income and uncompetitive and there is too much collusion amongst the big companies and politicians in the government benefit from them, raising taxes won’t solve the problem because they will just raise their prices again. The solution is change of policy but of course we missed the opportunity in may to change things.


    AYise Jimmy, Mwalemba Bwino apatu nkhani. Experts try to confuse us with technicalities and in the end we fall. Look at Oscar Pistorius’ case. He admitted killing his girlfriend. Why try him? Just put him in jail man, but technicalities are for the Rich as is the case in Malawi.

  13. Kalyoto Mbulo says:

    Good analysis. Hon. Dr. Chakwera is not a dreamer he knows what he talks about.

  14. kachikho says:

    Yes Malawians are being ripped off by BANKS AND CELLPHONE companies so there was no need to reduce their taxes specially now that donors are no longer supporting our national budget. Aiertel is wholly owned by foreign investors and their rates are too high and they employ tricks in the name of competition to reap off poor Malawians. They should pay higher taxes as way of getting back what they steal from poor Malawians so that the budget for buying the much needed medicines can be increase to save lives of many people who are dying due to lack of medicines and other facilities in our hospitals while the rich are being sent to hospitals outside Malawi using the taxes paid by the poor people

  15. Che Ndembo says:

    It is really a pertinent observation as made many contributors to Hon Dr. Chakwera’s epic speech as a contributor to this so called zero-aid -budget. I have for quite along time been wondering what specific services or goods Malawian banks offer to poor and economically groaning poor Malawians to be accruing hefty end-year profits reeling in billions. Almost all governments including the current one, seem to have no interest or do to have the capacity to politically put any form of reasonable confrontation with banks in order to address this longstanding economic challenge let alone tackle this all-time sin being unilaterally perpetrated and declared on innocent Malawians. While many of complain about all this evil to an extent of making them leave accessing bank loans from commercial banks, much of finger-pointing should however be directed towards our very own Reserve bank of Malawi. This is a mercilessly financial institution which formulate deliberate non-Malawi economy friendly economic policies in teh comfort of their backyard. This very bank’s policies hit hard on commercial banks with high interest rates which they too offload the hefty lending rate onto the bank customers interested to lend money from the banks. This is quite unfortunate. Mr. Chuka and the Minister of Finance as well as Economic Planning Unit of the government are the ones who silently keep themselves quiet on this subject from commenting on such hard-to-tackle issues. Speaking on the DOHA DEBATES, in the last few years, I remember, one of the president from Iceland religiously lamented the way banks across the world are taken as the Untouchables whilst mercilessly milking countries through high bank lending rates which stream down to local citizens of countries in conformity with the monetary policy guidelines of the IMF, World Bank and many more other money lending institutions across the world. These cruelly impose hefty interests on countries getting loans, a fact which help to further widen up the existing gap between the rich and the poor. So guys, do not expect anything good in the short-term from these banks. It should therefore be incumbent upon any successive government to come up with a deliberate policy which will see a proliferation of community banks within Malawi formulated on own Malawian-friendly monetary policies, if at all we can manage to effect them. Chendembo Ndangodutsamo.

  16. Misuku boyz says:

    The Hon. Speaks out important point affecting the rural masses, but put him there, it will be the opposite.

  17. Poor Malawi says:

    High cost of living yet 24% salary increase to be received (by command) through banks which has high charges (fee) on saving the little hard earnings, high charges on withdrawing the very little hard earnings, increased charges when using ATM to withdraw the very little hard earnings yet giving “tax breaks” for banks in the name of creating favourable business environment.

    Its true what the bible says: those with a lot will be given more and those with little will be snatched the little. I wish Islamic banking was introduced in Malawi or we go back to old system of kulandilira salary pa Mkeka and kukumbira ndalama pansi pa corner ya nyumba kuchipinda.

  18. LIVESTOCK MAN says:

    Now we have started thinking and placing ourselves to the rightful positions. Living within our means. Poverty is the gap or difference between the rich and disadvantaged ones. I totally agree with the observations of the above article. The 85% + rural poor population that live in remote areas, majority of whom are women, producing food and agriculture products for the few in urban centers are completely detached from benefits of many services including banking services. When you see a service provider in the rural areas just wait to see how the poor will have his/her blood sucked and how he will be exploited by the end of the day.

    I still argue that sustainable rural development that can take people of of poverty are approaches that suit their non formal arrangements. Village Savings and Loans systems (village micro financing) are ideal and attainable for our rural people. Livestock is a moving bank. Distribution of chickens and cows is a miracle to ending poverty in rural areas. But we need to invest in the rural areas not continuously plundering all public funds at Capital Hill. A Fool look for dungs where a cow has not browsed. The other time I calculated, I found that it is possible to pump water from Lake Malawi in Salima to Mchinji or Kasungu (the Malawi Bread Baskets) with MK2.Billion and supply water to many farmers to irrigated their crops. This is the money that one blood sucker bank or mobile phone operator can have as profit after leaping the thin and miserable Malawians. With cashgate this is the money that one civil servant can steal from public purse for personal enrichment. This is the time that we break this devilish spirit of exploiting the poor.

  19. Kadushu says:

    Mwalemba bwino ma Expertwa amazitenga ngati ozindikira kwambiri. chakwera Moto osamusiya APM azolowera

  20. lecklessness says:

    I wait with great patience for the day when this machine of a man will take over govt from these clueless idoits who do not have the welfare of the poor Malawians at heart.

  21. Pacharo says:

    You are right Baba.

  22. This article has given the public a clear synopsis on inequalities that exist in our country,soon or later the state of perseverance will wear out and the country will be thrown in turmoil!Thumbs Up Jimmy and Lazarus for the voice.

  23. P Mkandawire says:

    PCL executives get huge bunuses on the back of National Bank results which is one of the banks reaping off poor Malawians.

    Now we hear tha Mateyu Chikaonda is getting Mk6 million per month in car allowance!!! What is the justification and was this approved by the PCL board? If it was, the the board integrity ought to be questioned. Even at National Bank employees get bonus equal to 36 salaries, why should employees get far more than shareholders?

    If you study PCL mid year results, cash flow has deteriorated to alarming levels and the group did not generate positive cash flow. The opening cash balance in January was MK54 billion but as at 30 June, 2014 the balance was only MK18 billion. Surprisingly the write up was silent on cashflow position.

    Things are falling apart and the centre cannot hold.

  24. loveness says:

    well said the secret well wishers are always getting first class treatment and getting away with murder. you are right if the truth is exposed than you will revolution in the country.

  25. Atate with Kamphongo wa kwa Masikini says:

    Just imagine I need to pay PAYE, VAT, Levy, and not forgetting Tithe to the church. So How much money is left to be used by my family?

  26. Kanyimbi says:

    Kanyimbi akuvomereza kuti nkhaniyi ndi yoona komanso wolemba ameneyu amaganizira a Malawi. Chonde Boma chepesani msonkho PAYE kuti mwina tingamapite ndi kandalama ku nyumba.

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