* Budget alignment to pillar’s priority intervention of Agriculture Productivity & Commercialization, Industrialization and Urbanization is weak
* The country is far from the target inflation of less than 10% and growth rate of at least 6%, which threatens achievement of the desired growth
By Duncan Mlanjira
In its analysis of the 2024/2025 National Budget, Parliamentary Committee on Budget observes that government needs to put up strategies of how to attain the macroeconomic stability — saying the country is far from the target inflation of less than 10% and growth rate of at least 6%, which threatens achievement of the desired growth.
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The 2024/2025 Budget allocated votes towards pillars of MW2063 Implementation Plan-1 (MIP-1) which are Agriculture Productivity & Commercialization, Industrialization and Urbanization.
Pillar 1: Agriculture Productivity & Commercialization
The Committee observed that the “significance of agriculture to the Malawian economy cannot be overemphasized — however, growth rates in the sector have been subdued in the recent past.
“In 2023, the sector only grew by 0.8%. According to budget document number 3, the pillar has been allocated K497.57 billion in the 2024/25 budget from K383.5 billion in 2023/24 financial year representing an increase of 29.8% (K114 billion).
“The increase is largely influenced by affordable inputs program (AIP), which has increased by K51.47 billion and K40 billion allocation to ADMARC. AIP is allocated K161.3 billion representing 32.4% of the pillar’s budget.”
The Committee further notes that in the proposed budget, the allocation for maize purchases to National Food Reserve Agency (NFRA) has been maintained at K12.0 billion — and in its view, the legislators say the K12.0 billion may not suffice to purchase enough maize to ensure sustained and affordable supply of maize.
Thus the Committee suggested that allocation towards NFRA needs to be significantly revised upwards — while it is also cognizant of the K40.0 billion that has been allocated to ADMARC for its operations.
“Considering the current high prices of maize and the effects of El Niño on agricultural production, the country is at serious food security risk.
“Therefore, the Committee is of the view that part of the allocation towards ADMARC should also be used to cater for maize purchases as opposed to being used for operations in its whole entirety.
“Allocation towards the agriculture markets sub-program has significantly increased from a revised 2023/24 estimate of K27.6 billion to a proposed allocation of K161.8 billion.
“Given the current volatility in agricultural markets, the Committee would like to be appraised on what the K27.6 billion has achieved and what has warranted such as significant hike.”
Mega farms
The Committee observes that the mega farms initiative “has not been scaled up that much to boost agricultural productivity as only 689 hectors of land is targeted for maize, cotton and soybean production”. “Further, the development budget is over-reliant on foreign funding and locally funded project provision has been reduced. The Committee realized that the pillar missed the target of 2021-2023 implementation period for some interventions and is yet to start implementation of some programs including:
* legislation of all irrigation schemes to secure land use rights;
* legislation for the establishment of structured markets for all existing national export strategy prioritized strategic crops, livestock and fisheries;
* review and alignment of Control of Goods Act and Regulations;
* redesigning of AIP program;
* capacity building for producers’ compliance to international/regional standards for increased market access;
* expansion of storage capacity for grains and legumes;
* Production of low-cost and small-scale farm machinery for farmers, largely through PPP arrangements.
Mega farms
The Committee established that the budget is not fully aligned to the pillar’s priority interventions and that the pillar is usually well resourced but the challenge is prioritization and slow progress in implementing programs and projects.
Pillar 2: Industrialization
The Committee says it is well understood that the Industrialization Pillar “seeks to have a vibrant knowledge-based economy with a strong manufacturing industry — which is central to Malawi’s transformation agenda of inclusive wealth creation and self-reliance”.
“The pillar has been allocated a total of K64.5 billion in the 2024/25 budget representing a 94.3% increase of the budget from K33.2 billion in 2023/24 revised budget.
“The Committee appreciates that the budget provision for the pillar has been doubled. However, the level of investment is still not adequate to industrialize our agriculture and mining sectors and transform the country into self-reliance.
“The MIP-1 recognizes mining as another very important sector supporting the Industrialization Pillar — therefore, the Committee analyzed some key interventions in MIP-1 one whose implementation period have elapsed:
* Re-commissioning of Kayelekera Uranium with properly negotiated agreements (2021-23 implementation period) — this project is also behind schedule citing prolonged MDA negotiations as the cause for the delay;
* Development of mining of rare earth minerals in Phalombe Songwe Hills (2021- 23 implementation period) — this project also has not taken off citing prolonged negotiations as the reason for the delay;
* Operationalization of Kanyika Nobium Mining which was supposed to run from 2022 to 2023;
* Establishment of Mining Regulatory Authority (2021-22 implementation period);
* Development of Malingunde Graphite and Kasiya Rutile Project was planned for 2021-2023;
* Finalization of the review of the Mines and Minerals (Mineral Title) Act and mines safety regulations.
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“Since mining has been identified as one of the key sectors to drive growth in the 2024/25 FY, the Committee calls on the Minister to provide an update on implementation of these key projects.”
Other off-track interventions that the Committee observed include facilitation of enactment of the Special Economic Zones Bill — covering all strategic sectors, development of national economic empowerment strategy for indigenous industrialists and creation of a large Government-led innovation fund targeting individuals and institutions to develop innovations that can be patented.
“The Committee is compelled to conclude that the investments in the sectors under this pillar depict very weak alignment to the MIP-1 priorities with nearly 50% of the interventions either missing targeted implementation period or yet to be started.”
Pillar 3: Urbanization
This pillar envisions a Malawi with excellent urban centers and tourism hubs that have requisite modern socio-economic amenities,” says the Committee but observes that it has been allocated a total of K155.5 billion in the 2024/25 budget from K72.6 billion in 2023/24 revised budget.
“The targeted interventions include tourism development, infrastructure development planning, development of secondary cities and legislation. The Committee is aware that there are a number of projects under the pillar such as;
* Public Land Infrastructure Development in Cities project (K2 billion from K500 million);
* National Land Reforms Roll-Out Project (K2 billion from K300 million) each from K500 million in 2023/24 revised budget;
* Construction of new Mzuzu Airport (K5 billion from K1 billion);
* Modernization of KIA (K15 billion from K18 billion in 2023/24 revised budget);
* Upgrading of Essential Aviation Safety and Equipment (K10 billion);
* Construction of an Arts Development Centre (K1 billion from K500 million) and;
* Rehabilitation of Blantyre Cultural Centre (K1 billion from K500 million).
Since all these projects are ongoing, the Committee is asking for a thorough progress report from the Finance Minister, saying it is also aware that implementation of other interventions under this focus area have either not started or have missed target, including the following:
* review and harmonization of the various pieces of creative arts and heritage legislation, aligning them to other jurisdictions, both at the regional and international level;
* conducting civic education on urban development, subsidiary legislation and emerging issues;
* development and review of laws and policies that foster eco-tourism;
* review of regulations for audio-visual works for the Africa Region;
* developing and implementing strategic plans for the Ministry(ies) coordinating this Pillar; and
* building institutional, technical and human resource capacity in the institutions that will be coordinating urbanization.
“The Committee contends that, like is the case in the other two pillars, budget alignment to this pillar’s priority intervention is weak,” observes the Committee.
Soon after the Finance Minister presented the National Budget, Standard Bank Plc Chief Executive, Phillip Madinga observed that the 2024/25 budget addresses the need to boost foreign currency supply by proposing export strategies through mega farms, labour export, mining, tourism and enhancement of diaspora remittances.
He added that based on the enhancement of revenue collection professes, anticipated donor inflow opportunities, rationalization of expenditures and additional focus on production sector, the 2024/25 budget gives hope to a better Malawi on the road to achieving the MW2063 vision.
