Another lesson in how not to expand the tax base.

The Micro Small and Medium Enterprise Order (2020) is being touted by some as a way for MSMEs to benefit from Government procurement.

But whats not being talked about are the far reaching effects that may result from the correct and totally lawful business registration which the order requires.

Isn’t it the case that as soon any MSME registers as a business, the taxman will at that point be entitled to show up, arms akimbo, sniffing for any tax kwachas that may be lurking around undeclared?

Jokes aside, my point is there’s no guarantee that every single business that registers will benefit from the order. This is why in some countries there is always an option to run micro businesses as sole traders where it is in fact the person running the business who is liable for any taxes that may be due.

Malawi currently has a small tax base, and a small private sector. And while on the surface it may appear like a good idea to try and bring into the formal economy as much as possible of the informal economy, in practice that only works when people do actually have significant resources, which is not the case now, for the majority of people in the informal economy – many of whom live hand to mouth. Already, many small businesses complain that they are overburdened by taxes.

What the Government should have done is to focus on the creation of new large corporate entities… beyond Public – Private Partnerships. I mean organisations that can process goods at scale and export large quantities abroad, at a profit.

You can only squeeze so much profit out of a starving donkey which the Malawian tax base currently is. If you push too hard, and burden the donkey with more than it can take, that donkey will crumble and faint. And you will lose out.

A wiser move is to bring additional resources from outside the country. Our leaders are not seeing the bigger picture in this whole equation. The money is not in asking Malawians to pay yet more taxes.

And for those of you saying it would kill local small enterprise, no it would not. Because those corporate entities can actually work with those small enterprises you mention, helping them in more ways than one, minimally, saving them money. Our leaders need to start thinking like business men/ women.

Let me give you a simple example. Suppose the Government of Malawi (GOM) started a shipping company, and bought 2 Cargo Ships. Instead of the local shipping companies paying British or Italian or Greek Ships, GOM can enter the market at attractive terms, so that those local companies instead use the GOM Cargo Ships, saving a bit of money that way. The insurance of the Ships will be provided by local companies. The trucks which collect the containers from the port will come from Malawi… the whole chain will employ Malawian staff … even some of the food, and generally provisions on the ships for the staff who will be working on deck in the weeks that the Ships navigate between the European / American/ Asian ports and African ports can be cooked or prepared by Malawian companies…

How can all that be a bad thing?

That’s just one example in the logistics field which would give GOM millions of dollars in additional revenue, if you consider the annual earnings of other shipping companies that operate between Europe / US and Africa.

It’s a model Ethiopia (and many other countries) uses quite successfully with their airline and their state owned telecom company. We can learn a lot from them.

President of Tanzania John Magafuli

5 things the International Community can do to help Citizens of countries whose leaders are Anti-vaccine

An Anti-vaccine Protest in Australia on 20th February 2021

While most level headed people agree that life on planet earth cannot return to some sort of normalcy until the whole world population (or a significant percentage of it) is vaccinated against the COVID-19 virus, there are those who continue to actively campaign against the vaccine. Some of such people do not want to receive a vaccine (when it is made available to them), and others have openly indicated that they will resist any attempts to get them vaccinated. The situation is so bad the British Medical Journal recently carried an article asking: ‘Should spreading anti-vaccine misinformation be criminalised?

As previously discussed in a different article, people refusing a vaccination in the midst of a global pandemic presents a major problem to governments everywhere primarily because we know that if not enough people are vaccinated against COVID-19, the world will exist in a semi-nightmare state of constantly grappling with new virus mutations that will be springing up more often than not. Some of those variants will be more resistant to the vaccine candidates currently available, as has happened with the South African Variant.

A similar problem to this threat is the fact that there are influential political and religious leaders in some countries who are anti-vaccine, and are in denial regarding the existence of COVID-19, and have been preaching a negative scare-mongering message against the vaccines, putting their lives and the lives of their country’s citizenry in danger.

Below, I propose 5 things which the international community could do to help and support people who want to be vaccinated, but who live in countries where the leadership is anti-vaccine, or where religious leaders have been spreading false misinformation about the COVID-19 vaccines.

1. Invite the Scientists and Epidiemologists of the Countries concerned to examine random batches of the vaccines sent to them

If they accept to receive Vaccine Supplies then one way of developing confidence in the vaccine and of reducing mistrust is to invite local scientists and epidiemologists to independently study the contents of the vaccine. Admittedly, this could be time consuming, and may involve providing technical know-how and equipment for such exercises.

But when political and religious leaders of several countries have been indifferent or vocal regarding the pandemic, and COVID-19 vaccines, notably Tanzania’s president John Magafuli, South Africa’s Chief Justice Mogoeng Mogoeng, Zambia’s former Vice President Nevers Mumba, even Brazil’s Jair Bolsonaro – who last December claimed that Pfizer’s shot could turn people into crocodiles – letting these countries independently examine the Vaccines seems to me a fair gesture that would go some way to putting those bizarre claims and misinformation firmly to sleep.

2. Empower local Non Governmental Organisations (NGO) to dispel Anti-Vaccination myths.

It’s one thing hearing the World Health Organisation or CNN provide preventative recommendations on TV regarding wearing masks, using hand sanitiser, and observing social distancing; its quite another sitting in a room with familiar faces and hearing that very same message in your own language, from an organisation that is just around the corner from your house, and where one of your friends works. That NGO may have even assisted you with some issue in the past, and you know and trust the lady who runs it.

The closer the the place the message regarding the importance of vaccinations emanates from, the higher the likelihood that more people will take it up. Ultimately, it’s all about trust and if people see and hear those they know, trust and respect (who they may have had first- hand interactions with) say the Vaccine is safe, and recommend it, more people will be persuaded to receive it.

3. Use Embassies as safe zones for the adminstration of the Vaccine to citizens who disagree with their government’s Anti-vaccine stance.

This one may be a bit controversial and may need quite a bit of planning and consultation as to the legal ramifications, but I believe embassies could be used as centers through which vaccines can be administered to citizens of certain countries, where the Government of the country has not procured Vaccine supplies, and in circumstances where there is a at least a presumed permission from the authorities for diplomatic missions of other countries to procure and administer Vaccines.

Alternatively, if the situation is such that there continues to be stiff resistance or opposition to the COVID-19 Vaccines from the Government, then border posts of neighbouring countries could potentially be used as Vaccination centres. In any case, there would be no restriction for a person, passport in hand, to walk across the border into a neighbouring country that is administering vaccinations, to receive the vaccine and after the 15 minute observation period, walk right back across the border into their own country.

Admittedly, this would require quite a significant logistical operation, the support of the borders and immigration ministry, but also human support in terms of temporary shelters and even food for the thousands of people who will be visiting the centres. Further, not every citizen in every country has a passport, so there would have to be some kind of a relaxation of the immigration rules to allow citizens without passports to temporarily enter into a neighbouring country’s territory.

4. Work with the Diaspora to provide reassurance to people who are uncertain.

Manchester Library. The City of Manchester is home to significant Diaspora populations of many countries.

As others have already shown, working with people in the diaspora could be one way of reassuring those who are uncertain as to the safety of the vaccines. Several members of the Malawian diaspora have been instrumental in encouraging their contemporaries within the diaspora and also in Malawi to observe safety and preventative COVID-19 guidelines. Off the top of my head, Doreen Chisiza is a good example. A Similar approach could be taken to encourage Vaccine uptake, as demonstrated by Dr Daniel Dube in the video below (note it is in Chichewa).

5. Be Creative with high impact solutions that have a local context.

The Coffee chain Starbucks has joined efforts to help speed COVID-19 vaccination delivery. (Credit: Joshua Trujillo/Starbucks/ Copyright: Starbucks)

Not every solution that has worked in Manchester or New York in persuading Vaccine uptake amongst skeptics or amongst ethnic minorities is going to be as effective in Islamabad or Lilongwe, so it’s definitely a good idea to use local context in the messaging, whereever appropriate. In Israel for example, one bar is encouraging Vaccine uptake amongst young people by offering a free beer to all who come and receive the COVID-19 Vaccine on its premises. That kind of thing goes viral and garners widespread interest by its very nature, but it is not going to work everywhere. Nevertheless, it shows you the level of creativity that’s going into the vaccination effort across the globe.

A Mibawa TV poster

Thus, it may be the case that working with local stars and well known Civil Society Activists to put out the right kind of messaging about Vaccines through local radio / TV stations and suchlike will be more effective.

Creating Large State owned corporations

They have them in most developed countries, and there is no reason why Malawi shouldn’t have a few.

For example did you know that Parpública, the Portuguese behemoth founded in 2000 and with assets worth US$13 billion, and which owns Air Portugal is a state-owned enterprise?

In the quest to find alternative solutions of economic development, the very first thing our country needs, maybe besides a mindset change, is to raise significant amounts of Capital.

This can be done in a number of ways, but probably one of the best ways is by issuing Sovereign Bonds. Using Sovereign bonds can lessen the debt burden on Malawi, and prevent the country ending up in the debt mess spiral that countries like Zambia and Angola have found themselves in.

This is because aside from the fact that the government would set the terms and conditions of the Sovereign Bonds issuance, it would also allow domestic Investors to invest and would not disproportionately make the country beholden to a foreign financier, private or public.

The reason we need such Capital is to make large strategic investments into infrastructure and equipment, which with proper planning and execution can enable Malawi to manufacture certain products which our people need most (domestic market),  but also for foreign markets, and for which we have a steady and affordable supply of raw materials.

So for example, we can use such Capital to buy a refinery to manufacture Ethanol for use in the Pharmaceutical industry and in alcoholic beverages, and for use as an additive in Vehicle fuels, by expanding and starting one or two additional sugar plantations and processing plants as the ones they have in Dwangwa and Nchalo, in a similar rural area. The ethanol product can also be exported to neighbouring countries cheaply undercutting their current supply chains, but creating a new revenue stream for the Government.

The waste products from the sugar plantations (bagasse https://www.sciencedirect.com/topics/agricultural-and-biological-sciences/bagasse ) can be used as a biofuel, reducing our country’s over-reliance on firewood – which is worsening deforestation situation in Malawi, and is responsible for the numerous floods we experience almost every year.

Similarly, a large Sheet Metal Fabrication factory could be established to manufacture Iron sheets for roof houses (malata) to be used to supply hardware stores across the country.

Both the Sheet Metal Factory and the new Sugar Processing Plant would create employment for thousands of Malawians, and can be scaled intonmuch bigger operations if required. New and organised dwellings and townships can then be created around them. 

This is one way of creating large state owned corporations that can give jobs to thousands of citizens, creating employment across the country.

There would be other added benefits, such as more equitable spreading of the prosperity of the cities into the rural areas, decongesting the cities of traffic, and reducing migration to cities – as more working-age people would choose to live closer to these rural factories – where they can find jobs.

Finally, it would accelerate the provision of decent housing, water, sanitation, communications, energy and transportation infrastructure to the rural areas – factors which would contribute to the fight against poverty.

The Secret to successful state-owned enterprises is how they’re run (The Conversation)

More interesting posts at

http://malawiace.com