Minister of Finance, Economic Planning and Development Goodall Gondwe says plans are at an advanced stage to introduce a K5 000 banknote, designed to reduce the cost of printing money. He ismissed assertions that introduction of such a high value banknote would in the near future be inflationary, saying Malawi is already experiencing low inflation rate at 8.4 percent, according to the National Statistical Office (NSO) data. Official Malawi News Agency (Mana) engaged Gondwe for an exclusive interview. Excerpts:
REPORTER: You touted for an economic development and recently you told the public that Malawi’s inflation is at 8.4 percent, what does that mean?
GONDWE: Indeed I can proudly say that we are moving towards a positive direction. From August inflation was at about 9.3 percent and by September it reached 8.4 per cent meaning that we have a single digit. This means our economy is stabilizing as you are aware that the Kwacha has not depreciated for so long now. That stability is what we mean economic improvement.
REPORTER: What does that 8.4 percent translate to a local Malawian in Nthalire in Chitipa, Malaka in Nsanje, Mkanda in Mchinji and Makanjira in Mangochi?
GONDWE:Inflation rate means the rate at which prices of things are increasing. For example, an amount of Kwacha that one could use to buy something in 1982 should not be the same 15 years later. So if we talk of our inflation at single digit means that we have our prices of things increasing not very heavy on Malawians. If the inflation was double digit that would mean the opposite, that things are increasing in price at an alarming rate. You can agree with me that prices of items on the market are increasing yes but not as serious as one would easily notice. I remember that if you had a salary of K2, 500 per month in 1972 it was very huge. Can you give the same to a young man today and appreciate? Obviously, no. Prices of things were very low. If the items increase at a very speedy rate it is bad because it leaves the salary behind.
REPORTER:How should Malawians help in the economic improvement or development?
GONDWE: Let me firstly define economy for the betterment of the reader outside there. In very simple terms, an economy is made up of several components that form economy. A farmer is producing harvests, fishermen working hard, a carpenter doing his service well, teachers doing well that lead to an improvement in economy.
Everybody must work hard in all their respective fields they are good at. No one must think that hard working is only referred to government or public servants. When we accumulate all these products or services they will lead to an improved economy.
REPORTER: Government has kick-started the Contributory Pension Scheme, what exactly is this scheme?
GONDWE: This contribution pension scheme is where an individual employee pays 5 percent and government contributes 10 percent. These contributions will come from employee’s monthly salary. One is able to know how much he or she will take home after reaching retirement age of 60 years. While for the former type of pension scheme is that one only waits to receive from the government. This money is from the budget which we provide annually to meet such services.
The two schemes are also different in the sense that whether one works for government or private sector an individual employee will still have this account opened and the pension money will still be deposited in the same account. Whether one quits public service and join private sector or vice versa the account remain the same.
Let me hammer that no-one will be allowed to collect his accumulated money in the pension account until he or she reaches 60 years where we assume that one would not be very able to work well and industriously.
REPORTER: How come that government runs its affairs without the full budgetary support, how come you have taken Malawi this far?
GONDWE: Brilliant question Mphatso. It is like a child who has a father who pretends that only through the help of the father he can eat. But when the father dies the child learns to work much harder. This is exactly what I would equate to our situation only through the budgetary support we thought we could not run our country. Now we have ensured financial discipline, and we have been working much harder and as a result improving our economy and paying more taxes and using the same money for running government affairs without any budgetary aid. We have upheld to budgetary discipline so much that we only sequentially prioritize payments for the only seriously required things.
REPORTER: As ministry of finance what are you doing to curb misuse or misappropriation of resources?
GONDWE: Surely, we have tightened the screws to deter possible loopholes for any kind of financial theft. Unfortunately, not everybody can be trusted. The Ministry of Finance is ensuring that the amount of money that is released is used according to what it was intended for. My team and I are working around the clock to ensure that money is spent on meaningful projects like roads, airports, schools etc. We are making sure that the ministry is giving other ministries what they want financially to uplift Malawi through meeting implementation of various projects.
REPORTER: More often we hear that such and such a ministry will have their salaries delayed because their accounts department did not submit A 5 paper in time. What exactly is that?
GONDWE: Very good question. Allow me just to call it a compliance or audit or financial register copy that would enable one knows that the monies are being disbursed to pay the following. This is very crucial and without that how would one know who was paid or not. If I gave you K100, 000 to pay 15 people according to number of days worked and later I ask you to give an account of the money against the list of people, will you not produce that? Surely yes, so that is A 5 paper in simpler terms. This paper will only assure government or treasury that the monies will be released for this list of people.
REPORTER: Malawians have seen a new K2000 bank note and there is a rumour making rounds that soon Reserve bank of Malawi intends to come up with K5, 000. Of what importance is that?
GONDWE:Yes, that is very important because we will serve our foreign currency. It costs 8 million dollars for ordering new bank notes. It is not true that when we come up with this new bank note then we will have prices of things on the market high. By the way, do you know that Malawi is the only country in the SADC region with the least banknote? Tanzania has 10,000 bank note and in Uganda is even higher, these denominations save billions of money for a particular country. In brief the monies that are used to finance the production of new currency are very huge. If we have this K5, 000 bank note it will be very good. On the contrary, if we continue in the situation we are in without coming up with a higher banknote then we continue losing a lot of millions for replacement of the money. It will be laborious to carry a huge bag with money just to buy one item, but with this new note it becomes so simple.
REPORTER: What is your last advice to Malawians as regards economic development, as we wind up our chat?
GONDWE:Let’s uphold to financial integrity, financial prudence, we should stop abusing our positions for personal benefits, we should not collect money that does not belong to us for fear of promoting corruption. If we all adhere to President Peter Mutharika’s three cornerstones we should not have seen cash gate etc. I further appeal to the youthful generation to be more patriotic and work hard for the country, we have one Malawi. Let us avoid fraud. Everything that we do should always be designed to uplift our mother Malawi.Follow and Subscribe Nyasa TV :