Malawi Confederation of Chambers of Commerce and Industry (MCCCI) President Wisely Phiri has advised government to revisit its borrowing, arguing the current state of affairs stands in the way of production for wealth generation.
Speaking in an interview over the weekend, Phiri noted that banks in the country prefer to lend to government which borrows for consumption, not for production as does the private sector.
The MCCCI president proposes that government cut down on borrowing as the first step towards bailing the economy.
“First, government should reduce borrowing, especially for small scale farm input subsidy which is just for consumption. If anything, government should borrow to finance mega farming.”
“When supported, the mega farms will produce for sale, thereby boosting their businesses which will eventually translate into job creation for many,” argued Phiri.
According to Phiri, Malawi loses out by investing billions in a farm input subsidy programme in which beneficiaries do not realise enough harvest, obliging government to procure food for free distribution to such people.
In the 2023/24 financial year, government budgeted K117 billion for the Affordable Inputs Programme.
The MCCCI president also lamented high interest rates on bank loans which are a burden for local businesses but ‘manageable’ for government.
In February this year, Minister of Finance and Economic Affairs Simplex Chithyola Banda acknowledged Malawi’s debt burden.
“Malawi’s public debt is unsustainable, and the Government has been working to sustain debt through fiscal adjustment and debt restructuring negotiations with its 10 bilateral and commercial creditors,” Simplex Chithyola Banda said.
“As of December 2023, public debt stood at K12.56 trillion, representing 84.8 percent of GDP, of which total external debt reached K6.62 trillion, while domestic debt amounted to K5.94 trillion,” explained Banda.
For years, some experts, including the Mwapata Institute, have been calling on government to review its farm input subsidy programmes, arguing they drain the national coffers.
