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First Merchant Bank (FMB) delivered hard hitting attacks on the Malawi government on Friday, ranging from obsession with macroeconomic stability while ignoring other business constraints, to emphasis on foreign direct investment at the expense of domestic investors.
First Merchant Bank vice chairman Hitesh Anadkat was speaking in Blantyre at the opening of Livingstone Towers office complex which is jointly owned by FMB and investment firm Livingstone Exports Limited.
“We have had macroeconomic instability and have been uncertain whether inflation and interest rates will be low and the exchange rate stable. We have been obsessed about this for a decade,” said Anadkat.
But, he said, even if macroeconomic stability is achieved, it will not be enough unless the government removes many other uncertainties.
“What is the certainty that we will get reliable electricity and water? What is the certainty that when we try to collect debt, courts will not grant illogical injunctions favouring the defaulters and that the sheriffs will actually do their job?”
“What is the certainty that MRA [Malawi Revenue Authority] will indeed prevent illegal imports that kill legitimate manufacturers?” Demanded Anadkat.
He said the private sector also wants to be certain that the MRA will play a fair game—that if surtax refund is due, the tax body should pay the businesses and that if the Authority is supposed to come up with an inflation index once a year to work out capital gains tax, MRA should do it and not be six years in arrears.
Anadkat added: “What is the certainty that parastatals and government departments will buy from local manufacturers at a fair price, instead of giving orders to politically or otherwise connected ‘briefcase’ businessmen?”
“What is the certainty that [cabinet] ministers and civil servants will respond to our queries and reasonable requests in a timely fashion?” He wondered.
The FMB boss added that there is now a perception that civil servants, despite being at their desks, are so worried about corruption suspicions that they have become indecisive and slow to respond.
Anadkat told President Bingu wa Mutharika, who officially opened the joint venture building, that his government should address these problems if the state is to earn the confidence of businesses.
He said although Mutharika has shown the vision to make Malawi prosperous, the country can only get out of “terrible poverty” if there is investment and growth in the private sector.
But the banker said he finds it strange that when interested groups in Malawi discuss investment, the impression given is that ‘foreign investment’ is more important than existing domestic investments which, he argued, are even more critical.”
Anadkat said if government can facilitate the success of domestic investments, foreign investors would flood to Malawi once they see that locals are thriving.
In his speech later, Mutharika repeated—as he had done on countless occasions—that his government will “do everything possible” to ensure a stable macroeconomic climate in Malawi.
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