By Frank Humphreys
Malawi’s K228 billion (US$130 million) grant package for exporters, small and medium enterprises (SMEs) and district councils could help unlock economic opportunities and strengthen public service delivery, but experts say the impact will depend on how transparently and responsibly the resources are managed.
Parliament approved the grant package, which has been described by economic and governance experts as a significant opportunity to support businesses, improve local government systems and contribute to long-term economic growth.
Good governance expert Dr. George Chaima said the funding comes at a time when many local councils and small enterprises continue to face challenges that limit their ability to effectively deliver services and grow their businesses.
He said supporting councils through grants could improve their capacity to provide services, especially considering that many rely on limited revenue sources to meet their responsibilities.
Our councils in the country, as well as the smallholder enterprises, need empowerment. A grant that supports these duties will help councils improve their efficiency and effectiveness in service delivery, said Dr. Chaima.
He added that the SME component of the package could help businesses expand and contribute to economic growth, but stressed that proper management would be critical to achieving the intended benefits.
This will not just help them, but also improve our national economy. It is very important that these grants should be managed prudently to make sure every coin goes towards the needed kind of service required, he said.
Economics Association of Malawi (ECAMA) President and University of Malawi Senior Lecturer in Macroeconomics Dr. Bertha Bangara Chikadza said the governance aspects of the package were equally important because strong financial management systems are necessary for sustainable development.
She said this was particularly important as more public resources, including the Constituency Development Fund (CDF), are now being channelled through local councils, increasing their responsibility in planning, managing and accounting for funds.
Strengthening local government financial management is essential for development because good governance creates the conditions for sustainable economic growth, said Dr. Chikadza.
Economist Loveness Chimombo said the grant-based model provides an opportunity for Malawi to support economic recovery while avoiding additional pressure on the countrys debt situation.She said the foreign currency component for exporters could help address one of the major challenges facing businesses, particularly limited access to foreign exchange needed for productive investments.
If the project leads to more exports or increased production, then supporting businesses would benefit farmers who would supply more, workers who would be in much demand or earn better pay, or even consumers who would benefit from a stabilised economy, said Chimombo.
The experts said the success of the grant package will ultimately depend on ensuring that resources are allocated based on merit, monitored effectively and used for their intended purposes.
