Chakwera felt not intimidated for anticipated “hostile reception” ahead of his SONA on Friday

* As a former member of this House, I have friends and colleagues on both sides of the political divide

* And some of them warned me that my reception in this Chamber today may be hostile

* However, I have come today without anxiety, not only because it is required of me to be here by Section 89 of our Republic’s Constitution

* But also because the time I spent as a Member of this House persuades me that both sides of the political divide are dominated by serious and patriotic men and women

* Who have gathered here for no other reason than to debate respectfully about what is best for Malawians

By Duncan Mlanjira

Ahead of President Lazarus Chakwera State of the Nation Address (SONA) on Friday, some Members of Parliament wore tailored suits made from sacks, as a show of rags purportedly claiming that they are being worn by the poor — as a protest that under the leadership of Chakwera, Malawians are poorer than ever.

However, the public scoffed off this type of protest which prompted renowned social issues commentator, Wati Mkandawire to post on Facebook a picture of one of the MPs who posed in the suit made from sacks and standing beside an expensive plasma TV.

He wrote: “A poverty-stricken suffering MP with plasma TV and can afford to waste money to go to a tailor to make a suit he will never wear again.

“The irony: Please don’t mock the poor. There are better ways of protesting against wrong policies and be on the side of the poor, rather than using ‘allowances’ to show you can afford throwing away tax payers money.”

This was in protest even before they had heard what was contained in Chakwera’s  SONA and when he did, he started by saying: “As a former member of this House, I have friends and colleagues on both sides of the political divide, and some of them warned me that my reception in this Chamber today may be hostile.

“However, I have come today without anxiety, not only because it is required of me to be here by Section 89 of our Republic’s Constitution, but also because the time I spent as a Member of this House persuades me that both sides of the political divide are dominated by serious and patriotic men and women — who have gathered here for no other reason than to debate respectfully about what is best for Malawians.

“And so, both today and when I return to answer questions, I am eager to engage in that debate in this House that is Honourable, and not a circus.”

He thus went on to take cognizance that Malawi is at a crossroads — a crossroads at which we must take sacrificial action now to transform our economy and reform our governance systems. In this regard, I come bearing some bad news, some good news, and an urgent appeal.”

Macroeconomic Overview

He admitted that “the bad news is evident to all Malawians”, saying on the economic front, “the bad news is that our macroeconomic indicators signal that our economy is suffering from several vulnerabilities”.

“While the GDP growth in 2021 was 4.6%, a rebound from the 0.8% growth registered in the year I took office, that rebound receded to 1.2% in 2022 and is not expected to recover beyond 2.7% in 2023.

“Even a cursory look at inflation rates is not encouraging. The average annual inflation rate for 2021 was in the single digits at 9.1%, and yet this increased by more than double to 20.9% in 2022, way above the central bank’s target of 5%, with no prospect of reaching that target in 2023, whose inflation rate is projected to be 18.2%.

“Similarly, food inflation rose sharply from 13.6% in 2021 to a staggering 31.3% as of two months ago, while non-food inflation doubled from 9.3% to 18.6% in the same period. These deteriorating trends are consistent with and connected to similar trends around the world.

“According to last month’s IMF World Economic Outlook report, the growth of the global economy slowed down from 6.0% in 2021 to 3.4% in 2022, and it is projected to slow down even further to 2.9% this year.

“Even advanced economies are expected to register a growth decline from 2.7% in 2022 to 1.2% in 2023. And here within our Sub-Saharan region, the trends are the same, with economic growth slowing down from 4.7% in 2021 to 3.8% in 2022, with no prospects of an increase in 2023.”

He added that the global economic slowdown has even spread to the neighboring countries, saying the growth of the Tanzanian and Zambian economies has slowed down from 4.9% and 4.6% in 2021 to 4.5% and 2.9% in 2022 respectively.

“The fact is, with our economy being heavily dependent on strategic foreign imports like fuel, fertilizer, pharmaceuticals, and other commodities from countries whose economies have been severely disrupted by war, or Covid-related lockdowns, or Government-imposed tight monetary policies, it is simply unrealistic to not expect any adverse effects on our own economy.

“As if these blows from the global economy were not painful enough, our economy also came under assault from exogenous shocks within our own context, such as continuing pressure from servicing our mountain of debt, adverse weather conditions that affected the 2021/2022 agriculture growing season, and two successive tropical storms that destroyed lives, livelihoods, infrastructure, and a third of our electricity generation capacity.

“One consequence of the sudden reduction in the power supply is that industries have had to resort to using overpriced diesel to run their factories. Therefore, the fuel shortage crisis we went through during the year can be attributed, in large part, to an increase in local demand for imported petroleum products and a sharp rise in the price of those products globally.

Trade Balance

To appreciate the knock-on effects of the global economic thunderbolts that have hit the economy, Chakwera said “one needs only look at what has happened to our trade balance”, saying: “While the trade deficit went down from US$2.07 billion in 2021 to US$564.41 million in 2022, this reduction was not driven by an increase in exports as would be the case in a robust economy.

“Rather, it was driven by a sharp drop in imports caused by the scarcity of foreign exchange, resulting in a protracted balance of payment problem.

“For example, the gross official reserves recorded at end-December was 1.21 months of import cover, down from 2.73 months of import cover in June 2020 and down from 1.72 months of import cover in December 2021.

“Our structural challenges in generating foreign exchange have impeded the importation of commodities critical to our economy, such as the importation of pharmaceuticals, which fell by 80% in 2022, and the importation of fertilizer and diesel, which both fell by over 30%, resulting in supply shortages that have caused great pain to Malawians.

Monetary Policy

“The disruptions in the global economy and their effect on commodity prices forced us to adopt a cautiously tightened monetary policy over the past two years based on the need to manage inflation risk, preserve the value of the currency, and sustain the recovery of our economy.

“The Kwacha has thus been allowed to gradually adjust in alignment to its appropriate market value to somewhat absorb global commodity price shocks.”

Fiscal Performance

“The depreciation of our currency continues to have lagged effects, especially on prices and public spending. The primary budget deficit for 2022/2023 is expected to be 7.1% of GDP, and though this is slightly lower than the original projection of 7.7%, it is still well above the recommended level of 3% that is stipulated in the Public Finance Management Act.

“To mitigate against this, my Administration has been implementing significant debt restructuring and avoiding debt-incurring policies, as well as pursuing concessionary funding from foreign sources. But it must be understood, Madam Speaker, that while all these measures are designed to slow the bleeding, they are not enough to stop it or heal the primary wound hemorrhaging our economy.

“That wound is the fact that we as a people and as a country are simply not producing enough valuable goods and services to generate the forex and revenue necessary to pay off our debt, engage in meaningful development, free ourselves from foreign aid, and make our economy resilient against external shocks, disasters, public health crises, and global disruptions.

“As of mid-year, the outturn for domestic revenues was estimated at K805.8 billion, 6.8% of GDP, of which K766.6 billion is tax revenue and K39.2 billion is non-tax.

“At the close of the fiscal year, it is expected that domestic revenue will have amounted to K1.628 trillion, 13.7% of GDP. This revenue generation performance is not good enough to change the living conditions of Malawians.

Living Conditions

The President further took cognizance that the citizenry’s poverty is at precedent harsh levels, saying “millions are still unable to feed themselves [and that] in 2020, over 2.6 million people in 581,775 households were determined to be food insecure.

“Despite the successes of the Affordable Inputs Programme in 2021, over 1.6 million people in 367,395 households were still determined to be food insecure, which increased by more than double in 2022. In the past three months alone, my Administration has had to support over 3.8 million Malawians in 847,421 households in all three regions of the country with food items or cash to buy food.”

He singled out one sad moment for him that on MP from Mulanje thanked the President “for ensuring that the people in his constituency who are food insecure had received their allocation of food, for he feared that his constituency would be excluded from the relief because he sits on the opposition side and because he knows that past Administrations had a habit of politicizing food and using cycles of hunger for political ends”.

“But that is not the vision I have for the country, and that is not what Malawians want. What Malawians want is for us to become a nation of people who can produce enough to afford to feed themselves without owing anyone here at home or abroad any thanks for it.

“For this reason, Madam Speaker, restructuring our economy to be productive enough to create wealth, create jobs, and achieve food security in order to move our country towards becoming a low-middle-income economy and acceleration of the achievements of Sustainable Development Goals (SDGs) — as spelled out in the MW2063 First 10-Year Implementation Plan (MIP-1) — is the urgent task at hand and remains my Administration’s top priority.”

He thus unveiled the theme of his address: ‘Delivering Economic Transformation and Governance Reform through Sacrificial Action and Service Excellence’.