The Malawi government has announced it will not smile at parastatals that are failing to make profits and remitting 40% to government coffers.
Principle Secretary in the Ministry of Finance, Patrick Zimpita, made the announcement in Lilongwe saying such state-owned organizations will have a reduced annual budget and where necessary, arrest of top officials.
Parastatals that were cited as failures include Malawi Housing Corporation (MHC), Electricity Supply Corporation of Malawi (Escom) and Agricultural Development and Marketing Corporation (Admarc).
Zimpita said government has been lenient for some time but now it is time to start punishing such parastatals because some officials misuse finances by deliberately forgetting that they are government entities.
“They need to bring profits to government. We have noted that sometimes they can collect taxes but not remit them to government,” explained Zimpita.
Admarc Chief Executive Officer (CEO), Rhino Chiphiko, said there has been little support from government, resulting in failure to make profits.
“It’s difficult to make profits when all the money is being spent on salaries and other essential operations,” he said.
Jordan Chipatala who is CEO for Malawi Housing Corporation said MHC was not making profits because of the low rental fees it was charging its clients.
“Government has accepted that we can hike our rental fees. We raised them this year and we will be doing the same in years to come and we hope to start making profits,” remarked Chipatala.