No holds barred! A reflection on Gondwe’s K1.1 trillion budget

In his remarks at the beginning of his 77-page budget statement, Malawi’s Finance Minister, Goodall Gondwe, decried what he described as “Western-style bonuses to top executives in the private sector,” and called them a major Government concern because “it entails a waste of resources that could have been re-invested productively.”

Gondwe said these bonuses “worsen income inequalities, and create disincentives in other equally important sectors of the economy.”

Gondwe further argued that salaries of $20,000 or more in Malawi cannot be conducive to investment and social harmony, and called for a rigorous questioning of such tendencies.

While the concerns the Minister of Finance raises in his K1.1 trillion budget are valid, it was disappointing that neither his statement nor public sector reform has taken steps to ensure that government leads by example in living modestly.

A cabinet minister or a permanent secretary, for instance, cannot fly even the shortest distance without using the business class. This is very expensive for our already struggling economy to accommodate.

In 2012, UK’s International Development Secretary at the time, Andrew Mitchell, flew in the economy class from Johannesburg to Lilongwe to discuss aid, while a principal secretary whose ministry was going to receive that aid was in the business class on the same plane.

So, it sounds nice when Gondwe stands on the podium and preaches modesty, and yet right after that speech, if he wants to fly to Blantyre from Lilongwe it will have to be business class.

And this is just one example. There are all the expensive Mercedes Benzes and the Prados that cabinet ministers and principal secretaries use, all of which are pretty costly to maintain.

Thus rather than concentrate on the removal of a speck in the eye of the private sector, it would be better to remove the log in your own. At least, the public sector pays all that money from the profits it makes. It can afford the splendour. Our government, on the other hand, cannot afford the glamorous lifestyle it leads, including a big convoy and maintaining numerous palaces for the president.

As for the budget itself, K1.136 trillion sounds high when mentioning it in kwacha, but its US$450 million less than last year’s budget. For an economy that is predominantly importing, it’s hard to imagine that this will be adequate.

Already, last year hospitals, whose budgets were cut by 50 per cent then, struggled to provide service to Malawians, with crippling medical shortages and grounded ambulances reported frequently throughout the year. Water supply to Zomba and Dedza hospitals, for example, had to be disconnected at some point due to unsettled utility bills, prompting a national outcry.

The lack of budgetary support from donors has exacerbated all these devastating gaps, and Gondwe was under no illusions in his statement that such support would resume. He was only categorical about the African Development Bank as the sole donor that has pledged budgetary support.

Even as he spoke, taking into account all the budgeted expenditures and all the projected revenue, there was a gap of K60 million or thereabouts which will never be covered, turning some minor aspects of the budget into some sort of wish list.

Interestingly, more than a third of the development budget, i.e. K117 billion, has been allocated to finance agricultural projects that, on paper, were supposed to have already been funded by the $156.5 million (K111 billion) the Malawi government borrowed from India’s Import and Export Bank.

Gondwe announced that the government has formed the Greenbelt Authority as a stand-alone public agency responsible for the construction of large-scale irrigation infrastructural projects throughout the country, in line with the Government’s Irrigation Masterplan. Perhaps with this in place, the Greenbelt will take off in earnest, and that the government will no longer be buying tractors for resale to top government officials and other highly connected individuals.

One can only hope that the billions government has allocated will, this time around, do their work. It would be disheartening to hear, in the next budget, that a lion’s share of the development budget has gone to the very same projects once again, without any accountability for this year’s allocation.

While government’s commencement of a comprehensive review of taxation in Malawi is welcome, the elephant in the room is corruption. Last year, a case involving a top Malawi Revenue Authority official who fraudulently cleared an Indian businessman’s goods, died a natural death when the Anti-Corruption Bureau refused to investigate, fearing political backlash.

This way, you can reform tax rules all you want, but there will always be under-collection of revenue due to corruption.

With inflation so high at 21 per cent and the kwacha continuing to tumble down, government should have raised the bracket of the tax-free component of Pay As You Earn, so that those earning low salaries should have a more improved take-home pay. Unfortunately, the finance minister did not take any initiative to that effect, leaving the poor to continue suffering the impact of high inflation and the miserable performance of the kwacha.

What is more baffling, however, is the creation of the National Development Planning Commission. Planning is not what we lack in Malawi; implementation is the problem. There are lots of brilliant plans that have gone awry during implementation, or have not been implemented at all.

Besides, haven’t we had the Ministry of Economic Planning and Development over the last twenty years? Other than playing bawo in their offices, what have they been doing? Heck, even Gondwe’s ministry itself is called the Ministry of Finance, Economic Planning & Development. Why should we need a planning commission? And when we’re done with that, shall we also have an implementing commission?

The fault, Mr Gondwe, is not in lack of planning but in lack of implementation. If you understand that, you will do away with the unnecessary duplication such as creating a planning commission while you yourself are called the minister of finance, economic planning and development.