Opposition Democratic Progressive Party (DPP) spokesperson of Finance and the Economy in Parliament Joseph Mwanamvekha has decried the hike in the price of electricity, saying it would have negative ripple effect to the rest of the economy and hurt poor Malawians even more.
Mwanamvekha said this in interview with Nyasa Times in reaction to a recent announcement by the Malawi Energy Regulatory authority (MERA) of a hike in electricity prices by as much as 10.62 percent.
The former finance minister said the price increase is a “sad development “ for the economy because the price of electricity is already high in Malawi and the latest hike will only help to make matters worse, particularly for poor people.
He added that a majority of Malawians cannot afford these prohibitive prices and they will only be forced to look for alternative sources of energy such as charcoal and firewood something that will likely exacerbate environmental degradation, a problem which Malawi is currently grappling with.
“Apart from increasing the production of charcoal, the hike in electricity tariff will also increase the cost of production in industries, which forces companies to pass on this cost to the final consumer.
“The situation will likely trigger a runaway inflation as prices of products and services will rise due to the rising cost of electricity used to power production,” said Mwanamvekha, adding that this rise will hurt the poor most, the very people that government vowed to protect.
Mwanamvekha said this is not the right time for government to raise the price of electricity because the economy has already slowed down due to the effects of Covid-19.
Said Mwanamvekha: “A few weeks ago government raised the price of fuel with over 8.5 percent, a move which triggered a corresponding rise in the prices of other products and services such as transportation.
“As if that is not enough, MERA is now coming with another bad news of a hike in the price of electricity in an economy that is clearly limping. This is obviously too much for a typical Malawian. How do they think people will survive?”
The former Minister of Finance said government ought to have curated measures to arrest what he described as the “ haemorrhage of the economy” because people are going to get hurt.
He suggested measures such as the increasing of buying prices for commodities such as soya, beans, Nandolo, groundnuts and other legumes by State produce marketer Agricultural Development and Marketing Corporation (Admarc) so that farmers are able to cart a decent income from their produce and have some disposable income to spend and to save.
On this point the former Treasury czar said government must encourage and stimulate the production of substitute products to discourage imports and to save forex.
“Under the DPP administration, we had a deliberate policy of encouraging the consumption of home-grown products under the banner of ‘Buy Malawian’. This was a deliberate measure to encourage the consumption of Malawian made products among Malawians. It is a way of stimulating the growth of the economy, and ensuring that more Malawians, particularly SMEs are involved in enterprise.
“Government must adopt and promote this policy if it is serious about turning this country from being a predominantly importing and consuming economy into a predominantly producing and exporting economy,” said Mwanamvekha.
He also added that an effective way to deal with inflation as well as to reduce the flight of forex from the country is for government to quickly negotiate for budget support with the Inteernational Monetary Fund (IMF), adding that the money that comes in the country through budgetary support help in cushioning the economy against the shocks that often come about as a result of lack of forex in a country.
Mwanamvekha further said government must prioritize increasing electricity generation by, among other things, allowing the operation of independent power producers or opening up the energy industry so that there are many players in the production and distribution of electricity as this is one of the ways Malawians can enjoy lower electricity tariffs.
“I am also calling on government to ensure that the K72 billion loan that was promised during the campaIn period to be disbursed through microfinance firm National Economic Empowerment Fund ( Neef) is quickly made available to SMEs so that they begin to play their rightful role as the engine of economic development,” said Mwanamvekha.
He added that the current Minister of Finance, Felix Mlusu, must also increase the salaries of civil servants in the 2021/2022 budget which he is expected to present in June this year so that they have enough disposable income to meet their various requirements.
MERA announced a 10.62 percent hike in the price of electricity on Monday, March 29. Making the announcement at a media briefing, the organisation’s Public Relations Manager, Fiona Khonje said the decision has been made due to developments in the economy, which include the kwacha depreciating by 5.92 percent. Eelier this month, the organization also raised the price of fuel.Follow and Subscribe Nyasa TV :