Private sector finally responds to the budget: Says it’s a tough, ambitious but gives hope to businesses and poor people
Leading voices in the private sectors such as Economics Association of Malawi (Ecama), The Malawi Confederation of Chambers of Commerce and Industry (MCCCI) and the Institute of Chartered Accountants in Malawi have, in their varying interpretation, converged at a conclusion that the 2024-25 national budget is tough and ambitious but its inspiring hope among businesses and poor Malawians.
Minister of Finance Simplex Chithyola Banda presented the K5.98 trillion financial blueprint to Parliament on Friday.
In an interview, Ecama acting Vice President Bertha Bangara Chikadza said there are numerous developments that inspire stability and growth of the economy in the coming financial year.
For example, Chikadza mentioned the 30 percent development allocation, an increase in non-tax measure to increase revenue, alignment of the budget to the State of the Nation Address and an emphasis on the Agriculture, Tourism and Mining (ATM) strategy.
“We have seen the government pumping resources into mega farms, the mining sector and tourism for them to contribute significantly to Gross Domestic Product (GDP); so, we are saying this is something we can hope for as an economy. We also noted establishment of the mining company by the government; this is commendable because we shouldn’t wait for investors to come and establish a company and exploit our resources.
“We have seen some measures that the government has put in place, for example, taxing importation of finished products such as foods. They are trying to encourage people to import raw materials and that is one way of making sure that industries are functioning. So, this is also something we hoped for as we are trying to recover the economy,” Chikadza said.
In a separate interview, MCCCI President Lekani Katandula said there are some measures that will be pleasing to some members of the private sector such as reductions on taxes on mobile money transactions but, on the other side, the government is extending the tax rate for businesses making profits of more than K10 billion to a higher rate of 40 percent, which will disappoint others.
“There are bits and pieces that cover manufacturing like reduction of excise taxes on some clear bears from 40 percent to 20 percent. So, some members of the private sector will again benefit from that development,” Katandula said.
Icam Director of Technical and Membership Services Charles Chimpeni said the government has been very positive in terms of responding to some of the tax measure propositions which they made such as the tax-free rate and reduction of withholding tax on mobile money transactions.
National Planning Commission (NPC) Director General Thomas Munthali said the budget prioritises the productive sectors and does grow the development budget without neglecting the key social sectors that are key to building human capital for sustaining growth.
“This focus, including on the secondary cities and allocating more funds to local councils, lays important foundations for building self-reliant communities across the nation. Unlike the previous budgets that had to focus on supporting the battered livelihoods and rehabilitation efforts due to exogenous shocks, this budget sends a ‘serious’ signal to both State and non-State actors that the government wants Malawi to create wealth and be self-reliant at all levels.
“This signal is important because almost all the six indicators of economic recovery highlighted by the minister at the end of his budget speech are largely due to donor support—which is not sustainable. The nation needs to create wealth out of necessity,” Munthali said.
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