Summer of discontent
© Eldson Chagara/Reuters
Protestors in the streets of Malawi's commercial capital Blantyre
In late June, Malawi’s parliament passed what the government calls a “zero-deficit budget”. It is worth about $ 2 billion, and donor agencies are expected to contribute about 24 %. In the previous fiscal year, their share had been over 40 %. Most of that money was made available by members of the Common Approach to Budgetary Support (CABS), including the EU, Norway, Germany, the World Bank and others.
The government speaks of “zero-deficit” because it wants to fund most of its expenditure through domestically raised taxes, levies and fees. President Bingu wa Mutharika is promoting this policy because most of the donors decided to withhold some of their aid earlier this year. The reasons they indicated included Malawi’s rule-of-law problems, the failure to hold local government elections and other governance issues. They also pointed to macroeconomic challenges like dwindling foreign-exchange reserves and fast rising fuel prices.
Mutharika is now resorting to nationalist rhetoric: “Malawi does not need to continue begging from the west. After 47 years of independence, we need to generate our own resources.” He is raising taxes and imposing new levies. The president says the country can afford doing so, and people need not worry. His supporters in the business community agree.
On the other hand, Chancellor Kaferapanjira, chief executive of Malawi’s Confederation of Chambers of Commerce and Industry, warns that businesses will suffer. The parliamentary opposition and civil society organisations argue that poor Malawians will be hurt. Most of these people live on less than one dollar a day.
Some non-governmental organisations say that the government should increase its spending and invest more instead of squeezing people through taxes and levies. They believe higher taxes will impact on the people since companies will pass higher costs on to consumers in the form of higher prices.
Civil society organisations, backed by opposition parties, have been organising demonstrations all over the country since late June. They called on all Malawians to protest against the government’s economic policies. Security forces tried to suppress some of the demonstrations, and official reports indicate that 19 persons died during rallies. President Mutharika blames the deaths on civil society. Donors, however, see the government at fault. The UN’s Human Rights body is calling for an investigation into the killings.
The protest movements’ list of demands is growing longer. Apart from issues like sufficient fuel availability in the markets, an end to power black-outs and fair coverage of protests by state-run media, it includes restoring good relations between the government and the donors. In mid-August, some critics demanded that the president resign, stating that his arrogance does not help the nation.
There is a double irony to the current crisis. Mutharika’s wish to increase the government’s domestic revenues in order to be able to cope without donor support is in line with what donors demand in principle. They have been reiterating that developing countries must use their own resources to develop. At the same time, even Mutharika’s so called “zero-deficit” still relies on donor support. Whether that will be forthcoming is a big question.
Mutharika is making life harder for many Malawians. Most people wish the president would back down and re-engage with the donors. Cooperation with them had been good in past years. Especially in regard to rural development, Malawi won international praise. Such successes are now in danger of erosion.
Undule Mwakasungura, the executive director of the non-governmental Centre for Human Rights and Rehabilitation, sees the president on the defensive: “He does not want to accept that things are bad and that something must be done to change them.”