OXFAM chides finance ministry on AIP: ‘Unsustainable’

OXFAM Malawi has pointed out that it was wrong for finance minister, Felix Mlusu, to assign 60 percent of budgetary allocation for Ministry of Agriculture towards the implementation of the Affordable Input Programme (AIP).

OXFAM Malawi country director, Lingalireni Mihowa, noted that the over 15 percent of the budgetary allocation to AIP should have massively helped in serving domestic debts which are presently unprecedented in the country, and also could have been utilized to implement a number of programmes.

Mihowa- domestic debts unsustainable pic by Tione Andsen (Mana)

Mihowa said on Monday at Sunbird Capital Hotel in the capital Lilongwe during the Budget Analysis Report Dissemination meeting with Parliamentary Committees that current domestic debt remains unsustainable and that there was need to critically review if the country’s economy was to grow to expected levels.

According to Mihowa, in budgetary allocation for the 2021/2022 financial year, domestic debts stand second after Ministry of Education on its allocation.

She said: “The Ministry of Finance should make careful considerations to ensure that the domestic debts should be sustainably managed by control of total expenditure and increasing revenue base generation.”

Mihowa observed that AIP should be clearly defined as a social protection programme or agricultural productivity programme and a clear policy direction should be made to ensure that those beneficiaries should be able to graduate from the programme.

She said a review of such a programme should be made to have tangible evidence as to how the beneficiaries are maximizing it.

“There was need to have a cost benefit analysis on the programme in order to come up with an informed decision regarding the future implementation of the programme,” Mihowa suggested.

She said if 60 percent of budgetary was meant for AIP, this means research and extension service need to be prioritize by providing it adequate funding.

The OXFAM director said AIP has been seen as a crop development programme leaving out the other sector like livestock production in which AIP beneficiaries are not encouraged to venture into.

Ganda- unrealistic projection on exchange rate pic by Tione Andsen (Mana)

OXFAM Malawi reservations come barely a week after Mlusu admitted that AIP was not sustainable in the long-term, and that Treasury was working on an exit strategy model.

Mlusu said last Friday in Blantyre when he courted Economics Association of Malawi (Ecama) membership and private sector post-budget meeting, that considering that the AIP was derived from an election campaign promise, government could not just scrap it.

He said Treasury has been reducing its expenditure line to reduce pressure on the fiscus.

“As government, we believe that AIP cannot go on forever. We must find a way of exiting at some point.

“Obviously, this was a campaign promise we made. We have done this in one year. Obviously, it cannot make sense for us to scrap it come the second year,” Mlusu said.

In the proposed K1.9 trillion 2021/22 National Budget, the agriculture sector has been allocated K284.4 billion, which is 14.3 percent of the total budget.

However, in line with first pillar of Malawi 2063 which is agriculture productivity and commercialisation, K142 billion has been allocated to the AIP to benefit at least 3.5 million farming households.

The AIP allocation, which has taken up 50 percent of the national agriculture budget, is part of the total allocation to the agriculture sector.

Economics Association of Malawi (ECAMA) President, Lauryn Nyasulu said her organization jointly worked with Oxfam to assess the budget presentation and Oxfam was lead implementer.

She said the analysis has revealed that budget implementation faces a lot challenges such as large diversion of funds, high budget deficit and abuse of public resources.

According to Nyasulu, ECAMA would make sure that public resources are properly managed through evidence-based research to inform policy decision making in public Finance management.

Chairperson of Budget and Finance Committee, Gladys Ganda noted that the large amount of budgetary allocation for Ministry of Education was meant for wages and salaries despite being ranked number one in allocation order.

Ganda said in the education allocation there were no investments for the sector to be implemented in the coming financial year.

Ganda said the Minister Finance has been unrealistic in the projection of exchange rate in which he indicated that kwacha would be selling at K750.00 to the American dollar was presently already at K800.00.

According to Ganda, Mlusu has a mammoth task to ensure that the kwacha gains its value by putting in place economic practical measures.

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