MALGA reiterates call for bail out package for councils, provision of official vehicles for controlling officers

The Malawi Local Government Association (MALGA) has reignited calls for a bail out package for local councils, asking the Central Government to treat the matter with urgency in the 2022/2023 financial year.

MALGA, an umbrella body for all local governments in Malawi, has also reminded the government to provide official vehicles for the councils controlling officers and directors.

The association has further asked for waiver of duty on official vehicles of mayors and vice mayors so that city councils can afford them.

MALGA has made the calls in its submissions to the Ministry of Finance, for consideration in the implementation of the 2022/2023 national budget.

Hadrod Zeru Mkandawire, MALGA Executive Director,

In the 2021/2022 financial year, government, through the Ministry of Finance, assured it could provide a bail out package for the councils, but it has not fulfilled that, according to MALGA.

Last year, it was reported that, cumulatively, the councils owe various suppliers and service providers in excess of K14 billion, which they have failed to settle due to inadequate funding.

According to the Decentralization Policy and the Local Government Act, the government is supposed to transfer 5 percent of Net National Revenues (NNR), that is excluding grants, to local Councils, as General Resource Fund (GRF) or unconditional grants.

However, according to MALGA, this requirement is not met due to a number of factors, including lack of political will and lack of enforcement or compliance by Treasury, among others.

“All councils are currently indebted with huge outstanding arrears for utilities, salaries, PAYE and suppliers as the current budgeting system contradicts with the matching concept principle and the accruals concept of accounting.

Some of the debt herein referred date back 10 years or so thereby raising doubts of the council’s abilities to clear the same using the yearly funding and local revenues which are already constrained. This has resulted in increased cases of litigations which are equally difficult and expensive on the part of councils and government,” read in part the MALGA submissions to the Ministry of Finance.

MALGA says GRF supports many expenses including councilors’ honoraria, meetings of council and service committees as well as other council operating expenses such as fuel and supervision of development projects by council officers.

The association adds that due to inadequate GRF most councils do not conduct council service committees’ meetings regularly, which affects the oversight role that councilors are supposed to play in councils.

Among other important things, MALGA has, therefore, recommended that in the 2022/2023 budget, government should create a separate budget line for honoraria and other perks for councilors, separating it from GRF.

“The challenge with the current arrangement, where honoraria for councilors is paid from GRF, is that, for most cases, all the GRF is spent on councilors’ honoraria leaving very little or nothing for other council operating expenses,” says MALGA.

On provision of official vehicles for the councils controlling officers and directors and waiver of duty on official vehicles of mayors and deputy mayors, the association says government should consider this seriously, as is the case with all other officers in the public service.

The association discloses that some mayors in the country are yet to be provided with official vehicles due to liquidity challenges in the local governments.

“As we did during the 2021/22 pre – budget consultations, we would like to bring to the attention of the Minister that controlling officers of local governments, especially the district councils, continue to  operate without official vehicles. The central government expects the local government to be procuring these vehicles from own funds, but with the current revenue streams of local governments, this has proved to be a tall order.

The position of a mayor and chairperson of a council, despite being a predominantly perceived a ceremonial one, carries with huge political, corporate governance and social responsibility for the business of a local government in Malawi.

It, therefore, follows that the level of commitment the mayor and chairperson renders to the council business, has a bearing on the performance of his or her council. Much as we appreciate that these positions and the councillorship are voluntary positions, provision of basic necessities to office of a mayor and chairperson is critical if we are to improve the performance of local governments in Malawi,” says MALGA.

The association, among other important things, then recommends the removal of duty on official vehicles for mayors and deputy mayors of big urban councils, namely; Blantyre, Lilongwe, Mzuzu and Zomba so that the acquisition of the official vehicles for mayors and deputies should be affordable to these councils.

It adds that government should purchase official vehicles for mayors of small urban councils, namely; Luchenza, Mangochi, Kasungu and municipalities as these councils cannot afford to buy the vehicles due to their revenue base.

In view of all these challenges, MALGA has suggested that government should consider implementing the Local Government Act Third Schedule, which provides for ceded revenue as one of the sources of revenue for local government authorities.

The association says the Decentralization Policy identifies toll fees, gambling and casino fees, fuel/levy fee, motor vehicle registration fees and industrial registration fees, among others.

“The Policy further stipulates that the redistribution of the aforementioned ceded revenues shall be guided by a formula approved by cabinet. It is regrettable that the formula is yet to be developed 23 years on.

Government should start redistributing the ceded revenue in the 2022/2023 national budget to the local government authorities considering that ceded revenues will continue to grow in the perspective of the operationalization of the toll gates at Chingeni and Kalinyeke,” says MALGA.

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