* Congratulates Chakwera on the management of regulatory state-owned enterprises (SOEs) and statutory parastatals, saying migrating their bank accounts to the RBM was well overdue
* Recommends a specialised account management team division with dedicated staff in RBM to monitor expenditure patterns of the SOEs
* With a quarterly review committee process initiated to monitor expenditure patterns
By Duncan Mlanjira
President Lazarus Chakwera State of the Nation Address (SONA) that was made in Parliament yesterday was “well-presented and detailed, dealing with pertinent issues the Malawi economy is facing”.
Advertisement
This is the response from South Africa-based Chief Economist, Chifipa Mhango, who said “it was indeed a brave speech under the challenges outlined”.
“Within 24 hours, I have had the privilege to listen to two SONAs, one presented by President Cyril Ramaphosa in the country I reside, South Africa, and the later by President Dr Lazarus Chakwera, in my country of birth, Malawi.
“I cannot go without noticing that the two countries face similar challenges on the economic front in relation toregulatory state-owned enterprises (SOEs) and statutory parastatals’ fiscal challenges, electricity supply challenges, logistical infrastructure network challenges, high levels of unemployment — especially among the youth and high costs of living, especially food prices, relatively.
“However, what is more important is in putting up the mechanism to dealing with the above-mentioned key challenges. I will leave that to the politicians in the respective Parliaments to interrogate the contents on progress achieved so far and the various initiatives to address the challenges identified across sectors.”
Returning to Malawi’s SONA, Mhango believes President Chakwera “can never be faulted on the presentation of his speech, probably among the best in the world. However, key is to ensure that whatever has been articulated in the speech translates to action on the ground so that the people of Malawi see the fruits speedily.
“I am pleased to note the level of detail that was presented on progress and the related plans across the various sectors. It is a clear sign that if the country can remain focussed, with its leadership prioritising the needs of its masses, then a lot can be done for Malawi.
“It is always important to remind political players that giving hope to Malawians cannot be in speech alone but also in the actions they take.”
Chifipa Mhango
On the general economic policy, Mhango said while the President acknowledges the high levels of inflation rate, currently at 34.5%, dealing with the food aspects of inflation now standing at 43.5% “should be prioritised, as it touches strongly on the suffering of Malawians”.
“There is, therefore, a need for Government to strongly administer the reaction of retailers that take advantage of the Reserve Bank of Malawi currency devaluation to increase prices of goods, especially food items with no rationale at times, and in an exorbitant way — a strong enforcement of fair trading principles is required.
“I personally commend His Excellency the President on the matter regarding the managing of SOEs in terms of their bank account holders as well as acknowledging the challenging financial position some are in.
“Migrating SOEs bank accounts to the RBM was well overdue — in fact, to support the President on this, I would recommend a specialised account management team division with dedicated staff in RBM that monitors expenditure patterns of these SOEs, with a quarterly review committee process initiated to monitor expenditure patterns.
The Reserve Bank of Malawi
“I accept that the Boards are assigned this responsibility, but a ‘Big Brother’ approach is key especially for those SOEs that have a challenging track record of weak governance structures.”
Mhango further advised that the RBM may be required to increase its capacity to deal with this new challenge and also advised the President and his team to scrutinize the Public Finance Management Act 1994 as a guide or whether there is any need to amend it accordingly.
On the economic growth patterns for Malawi, Mhango says he strongly agrees with the President for setting high goals for the country, saying: “I have personally challenged this concept of celebrating economic growth rates of anything below 5% for the Malawi economy.
“I did that recently in my views published in Maravi Express during the Minister of Finance’s pre-budget consultations in January 2024, to which I stated what growth rates of below 5% imply for small economies like Malawi.
“It is important that economies emerging from a low base relative to other bigger economies grow at a faster rate, because in comparison, a 3.2% for Malawi economy versus a 3.2% for an economy the size of South Africa or USA means that countries such as Malawi will always remain behind, for the impact in terms of the value added will always be lesser.
“I, therefore, state that after going through the details in President Chakwera’s SONA and plans across the various sectors or sphere of Government, Malawi can achieve a more than 5% economic growth rate. It only requires focus and adherence to the plans and raising the delivery bar.”
On Governance, the Don Consultancy Group Chief Economist feels that President Chakwera should take every opportunity to continue sensitizing the nation on matters related to corruption in the country: “The global data on Corruption Index continue to demonstrate this parameter as concerning for Malawi, which scored 34 points out of 100 on the 2023 Corruption Perceptions Index reported by Transparency International, which is unchanged from year 2022.
“The Corruption Perceptions Index ranks countries and territories based on how corrupt their public sector is perceived to be, and it seems nothing much has changed in Malawi. That should be an area of decisive focus for the Chakwera administration.”
In opening his SONA, Chakwera reminded Malawians that the country turns 60 years since gaining Independence, saying this is Diamond Jubilee “is no small milestone for any nation, and as far as I am concerned, it is the latest reminder to all of us that we have no luxury to entertain any lack of seriousness”.
“Therefore as I stand here, I am fully expecting that the discussions to be held in this 4th Meeting of the 50th Parliamentary Session will be done with the seriousness commensurate with the maturation of our nation.”
And the Chief Economist wished President Chakwera and fellow Malawians as we celebrate 60 years of Independence and the same for President Cyril Ramaphosa, as South Africa celebrates 30 years of democracy this year: “Let the task of every African leader be the one that instil belief in people that there is value in gaining independence, by seeing their lives change for the better.”
Advertisement