By Linda Kwanjana
The Democratic Progressive Party-led government has gone to town in recent weeks with a well-choreographed narrative. According to them, Malawi is showing early signs of economic recovery, thanks to their progressive policies and actions. Billboards of optimism are being erected, press conferences are being held, and government spokespersons are competing to tell Malawians that the corner has been turned.
But for any Malawian who goes to the market, who tries to board a minibus, who attempts to pay school fees or buy a bag of fertilizer, this narrative is not just false, it is insulting. The biggest majority of Malawians are facing economic pains like they have never faced before. What government is celebrating as recovery is, in reality, making a mountain out of a molehill.
It is true that the government has sweated its lungs out to please the International Monetary Fund. Malawi Revenue Authority has indeed improved revenue collection. Domestic borrowing has reduced on paper. These are the two statistics the government is parading as evidence of recovery. But the fundamental question Malawians must ask is: at what cost has this been achieved?
The increased revenue is not a product of a growing, productive economy. It is a product of increased taxes and the introduction of multiple levies that have ended up squeezing disposable income out of ordinary people and crowding out private investment in the process. Government has not grown the cake; it has simply taken a bigger slice from a shrinking cake. The net effect on the economy has been negative, as we can all see.
A sober look at the economic fundamentals, many of which are acknowledged even in the same Brettonwood institutions’ reports government is quoting selectively, paints a very different picture. A picture in the red.
First, food poverty has deepened. This is obvious. When you tax food products, cooking oil, sugar, bread, and even the transportation that brings food to the market, you make food unreachable for most poor Malawians. A family that used to afford three decent meals a day now struggles to afford one. That is not recovery. That is regression.
Second, inequality is increasing. The current tax regime is brutally regressive. The taxes and levies have thrown many poor people outside the economic sphere altogether. The rich and politically connected find loopholes and exemptions, while the vendor in Limbe, the farmer in Mzimba and the young graduate trying to start a small business bear the full brunt. DPP is creating an economy for the few, not for the many.
Third, unemployment is soaring throwing many, particularly the youth, under the bus. The private sector, which is supposed to be the engine of job creation, has been overtaxed to the point of suffocation. How can a company enhance productivity and generate more jobs when every input is taxed, every transaction is levied, and every attempt to expand is met with a new MRA demand? Companies are not hiring; they are firing. Shops are not opening; they are closing. Young people are not finding jobs; they are finding despair. Suicide cases are becoming as common as breakfast.
Fourth, access to credit remains a major hurdle. Interest rates remain prohibitively high and financial transactions are heavily taxed. The entrepreneur who wants to borrow to grow his business faces a double punishment: high interest from the bank and high taxes from the government on the same transaction. In such an environment, who can invest?
Fifth, the cost of production has skyrocketed. Fuel, electricity and water price increments, coupled with unwarranted taxes on inputs, have come to bite hard. A farmer who wants to produce finds that fertilizer, seed and diesel are all beyond reach. A manufacturer finds that keeping the machines running costs more than the profit he can make. When production costs rise this sharply, the final price must rise, and the consumer pays the price.
Sixth, non-food inflation is still uncontrollable. This has been exacerbated by the fuel and utilities price increments. Transport fares have doubled and tripled. House rentals have gone up. Soap, clothes, building materials – everything that makes life decent has become a luxury. Malawians are not feeling any relief outside the food basket.
Seventh, even the food inflation honeymoon may soon be over as the lean season approaches, to be exacerbated by the looming Elnino weather. The temporary relief brought by the previous maize harvest, called Chakwera maize, and the import suppression tactics, is heading towards a rough end. Granaries are emptying, ADMARC is nowhere to be seen in many areas, and the next harvest is months away. What will happen then? The government has no answer.
Eighth, public debt remains unsustainable and a big headache on the fiscus. Reducing domestic borrowing is commendable, but only if you are not replacing it with more expensive external debt and suffocating the economy to repay it. The debt mountain is still high and every Malawian child being born today inherits it.
Ninth, the trade deficit continues to widen with no value addition in sight. We have no plausible complementaries to our faltering traditional exports. Tobacco is struggling. In the last selling season of the leaf, the country only earned half of what it earned in the previous season. We have failed to add value to our soya, groundnuts, legumes and minerals. We continue to export raw products cheaply and import finished products expensively. No amount of tax collection can fix this structural failure.
Tenth, the foreign exchange crisis seems to have found a permanent home. Forex is still not available in banks. Unconfirmed rumours point fingers at some criminally motivated cabinet ministers who are making a kill out forex scarcity through some staff in the banking sector. Businesses still queue for forex for months. The fuel situation remains precarious. And now, the IMF, which government is so eager to please, is advocating for another wave of currency devaluations, which could be dreadful for Malawians already on their knees.
With all these challenges persisting, celebrating a non-impactful, induced occurrence in revenue collection is sheer madness. It is like celebrating that you have collected more water from a well while the village is dying of thirst because you poisoned the river.
What this government has succeeded in doing is taxing the economy towards oblivion. You cannot tax your way to prosperity. You cannot squeeze a poor population to please Washington and call it economic recovery. True recovery is felt in the pocket of the ordinary Malawian, in the availability of jobs, in the affordability of food, in the lights staying on, and in the hope that tomorrow will be better than today.
None of that is happening. Malawians are hurting, and no amount of propaganda will change that reality.
