By Chimwemwe Mangazi:
Economic think tank Economics Association of Malawi (Ecama) and the Centre for Social Concern (CfSC) have described President Lazarus Chakwera’s State of the Nation Address as “a lot spread out” for interventions therein to start translating into meaningful economic growth.
In separate responses to our questionnaire, the two institutions agree on the need to have priorities to ensure that the impact of resources invested should be material enough to move a dial on gross domestic product (GDP) and other variables.
WONDERS HOW LONG THE PROPOSALS WILL TAKE TO MATERIALISE-Bangara-Chikhadza
For example, on moving State-Owned Enterprises (SOEs) accounts to the Reserve Bank of Malawi (RBM), Ecama Vice President Bertha Bangara Chikadza said it was not clear as to how the money will be utilised to make sure that the country experiences an improvement.
“The real problem is government’s insatiable appetite to borrow and not source of funds of the commercial banks. By depositing the money to the RBM, do they mean they intend to continue borrowing through the central bank? Because that goes against their own policy to contain the debt problem. However, as Ecama, our biggest worry is that the funds, when at commercial banks, were also available to the private sector for borrowing.
Now it means the amount of commercial funds will be reduced which may lead to higher interest rates, which may negatively affect investment.
“Also, the Visa-free move for travellers from 79 countries into Malawi is quite a good move, and indeed it might attract more people into the country. But we would have loved to see figures. By how much is this going to contribute to GDP, or GDP per person? How will livelihoods of people change and to what extent? How long will some of these proposals take to materialise, let alone bring in significant impact, is what is lacking,” Bangara-Chikadza said.
CfSC Project Officer Kondwani Hara said there is a need to implement measures to stabilise the economy, including addressing forex shortages, fuel supply challenges, and contractual issues with contractors.
“The government should implement sound fiscal and monetary policies to maintain macroeconomic stability, strengthen financial institutions and regulatory frameworks to ensure responsible financial management and encourage savings and investments to increase gross official reserves.
“We need to develop strategies to mitigate the impact of global geopolitical events on the economy, such as building strategic reserves and fostering economic self-sufficiency, where possible.
Continuously monitor global trends and adjust policies accordingly to minimise external vulnerabilities,” Hara said.
President of the Malawi Confederation of Chambers of Commerce and Industry (MCCCI) Lekani Katandula said it was exciting to see the President acknowledge that the policy of keeping the Kwacha stronger than market forces suggest has been harmful to the economy.
“This gives hope that we will have a much more liberalised exchange rate policy which should help incentivise exports and help us avoid shortages of critical imports like fuel, fertiliser and medicine,” Katandula said.
Chakwera delivered the Sona while opening a 2024-25 budget session of Parliament last Friday.