COMMENT: You cannot tax a nation into prosperity — Malawi’s leaders must finally learn this lesson

There is a peculiar kind of madness gripping Malawi’s economic policy, one that would be almost comical if the consequences weren’t so devastating for ordinary people.

While government ministers stand at podiums preaching the gospel of investment, export growth and industrialisation, their own tax authority is quietly strangling the very businesses capable of delivering it.

This week’s extraordinary intervention by the country’s biggest private sector players should serve as a wake-up call to anyone still clinging to the fantasy that Malawi can tax its way to prosperity.

Here we have companies controlling more than ten trillion Kwacha in combined assets — titans of industry with the financial muscle to genuinely transform this economy — standing up in Blantyre and delivering an unambiguous verdict: government’s punishing tax regime is choking the life out of investment.

Let that sink in. These aren’t small traders grumbling about red tape. This is NICO General, Old Mutual and Press Corporation — corporate giants whose combined balance sheets could fund entire infrastructure projects — openly declaring that Malawi’s tax policy is actively repelling the capital the country desperately needs.

NICO General’s chief executive Vizenge Kumwenda didn’t mince his words, and nor should he have.

“Huge tax by government is failing people to invest in this country,” he said, adding that the “continuous review” of tax policy is creating chaos for anyone brave enough to consider putting their money into Malawi.

When was the last time a business leader felt confident enough to speak that plainly? The frustration in that statement should terrify anyone in government who genuinely cares about economic growth.

And yet here we have ministers standing at the same event, talking a big game about export-led growth, special economic zones and processing soya beans for the Chinese and American markets — all while seemingly oblivious to the fact that their own revenue-hungry policies are undermining the very foundation needed to achieve any of it.

The maths simply doesn’t add up. You cannot simultaneously court foreign and domestic investors with talk of “conducive environments” while squeezing every possible Kwacha out of the businesses already operating within your borders.

Investment doesn’t happen in a vacuum — it happens when businesses can see a credible, stable path to profitability.

Endless tax reviews, unpredictable levies and a punishing corporate tax burden are the enemy of exactly that kind of stability.

Nowhere is this contradiction more glaring than in mining. Minister Thoko Tembo openly admitted that Malawi earns a pitiful return from its mineral wealth — just ten percent through licensing and corporate tax — while simultaneously conceding that the sector lacks the skills and finance to become genuinely profitable.

If that isn’t proof that heavy-handed taxation isn’t the answer, nothing is. You cannot squeeze value out of an industry you haven’t first allowed to properly develop.

Then there’s the small matter of energy and forex, two crises so severe that Old Mutual’s Tavona Mbiza felt compelled to state the painfully obvious: Malawi simply cannot industrialise without access to foreign currency.

When goods become artificially expensive because forex is scarce, and when mining cooperatives are reduced to relying on solar panels just to keep operations running, no amount of tax revenue will paper over those fundamental cracks in the economy.

Here is the uncomfortable truth Malawi’s political class must confront: taxation without genuine economic growth is not a strategy, it is a slow bleed.

You can raise VAT, tighten enforcement and squeeze every formal business till the pips squeak, but if the underlying economy isn’t producing, exporting and industrialising, all you are doing is taxing an ever-shrinking pie.

Eventually, businesses either collapse, flee to the informal sector, or simply stop investing altogether — exactly the outcome the private sector is now warning against.

Government’s instinct, understandably, is to reach for the tax lever because it is the quickest way to plug short-term budget holes. But quick fixes are not the same as sustainable strategy.

Real prosperity comes from unleashing the very sectors ministers claim to champion: agriculture, mining, tourism and manufacturing. It comes from fixing the energy grid so gold cooperatives aren’t reliant on patchy solar power. It comes from stabilising the forex market so businesses can actually plan for the future.

And yes, it comes from resisting the temptation to treat every fiscal shortfall as an excuse for another tax hike.

Malawi’s business leaders have now said, clearly and publicly, what many have long suspected: the country’s tax and energy policies are the barrier, not the solution.

Government would do well to listen — because no economy in history has ever taxed its way into prosperity. They have only ever grown their way there.

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