DPP’s cement subsidy criticised by University of Malawi experts

Democratic Progressive Party’s (DPP)’s ambitious agenda to introduce new subsidies on cement and iron sheets, has been received new criticism from a quantity surveyor at the Malawi Polytechnic, a constituent college of the University of Malawi, Rodrick Chipunde.

Chipunde, who is the Head in the Department of Land Economics and Quantity Surveying, has argued that reducing the cement price is a welcome idea but should be done through inviting more players into the cement manufacturing business,  stressing that the proposed subsidy programme is not good for the country’s economy.

“This is not a welcome economic idea at all cost,” Chipunde is quoted in the business page of Daily Times of July 12.

Chilipunde:Ne w subsidies on cement and iron sheets not a welcome economic idea
Chilipunde:Ne w subsidies on cement and iron sheets not a welcome economic idea

He suggested that the DPP government is “trying to gain political mileage at the expense of economic gains.”

Said Chilipunde as quoted by the paper: “It is vital that such economically destructive ideas should be resisted by the current government if we are to resuscitate the ailing economy that has been worsened by the cash-gate scandal.”.

He added: “the best way to reduce cement prices is to invite more players into the cement manufacturing business in the country who can install integrated cement manufacturing plants so that there should bemore supply of cement on the market that will drive the cost down in line with other Sadc countries based on the rule of supply and demand.”

University of Malawi’s  Chancellor College political analyst Blessings Chinsinga—who has published studies on subsidies in Malawi—is on record saying that subsidies on their own are not bad but, he explained, it is the design of the subsidised projects that is problematic.

Chancellor College  political science lecturer Boniface Dulani is also on record arguing that subsidies have not helped Malawi over the past years and that it has deprived government of money that should have been used to provide essential services in sections such as health and education.

According to Dulani, other than promoting subsidies, “the best way is to create jobs so that people can earn enough to buy food, iron sheets and cement.”

President  Peter Mutharika however is adamant that his government will introduce cement subsidies and  continue with the Farm Input Subsidy Programme (Fisp) whose cost to the economy has ranged from six percent of gross domestic product (GDP) to 16 percent between 2006 and 2013.

Building costs in Malawi are said to be the highest in the southern African region and it is estimated that it costs 55 percent higher to construct any building in the country compared to other countries within the region, according to a recent study by the University of Malawi.

The study, conducted in 2012 by  Chilipunde and his colleague Patrick Khombeza, shows that the high costs of construction in Malawi are to blame for the astronomical costs of construction in the country.

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