Malawi: Chakwera Talks of Malawi Govt Measurers Against Economic Aftershocks of Covid-19 - 'Mark My Words, We Will Win'

President Lazarus Chakwera has said government has put in place measures to see to it that Malawians are provided with safety nets as a relief from the challenges that are there due to the Covid-19 pandemic.

In his televised address to the nation on Sunday, Chakwera his administration has extended the moratorium for loan facilities by the Reserve Bank of Malawi to six months (up to June 2021) to enable businesses that are struggling economically because of the pandemic to survive.

Chakwera also said his administration will start settling arrears the previous administration owed businesses after National Audit Office verification with priority given to small and medium enterprises (SMEs).

"My administration has begun to settle the K228.2 billion bill left by the previous [DPP] administration for goods and services rendered by Malawian businesses. Payments are being made after thorough verification of the claims by the Auditor General's office, but our priority in settling these arears is Small and Medium Enterprises (SMEs), using cash payments to settle small bills and issuing coupon promissory notes on larger amounts," he said.

He said from the K17.5 billion that Treasury released this year for dealing with the second wave of the Covid-19, K1 billion has been set aside for acquisition of masks from local SMEs to ensure liquidity in the local communities.

"To further support SMEs, my administration is enforcing the new Public Procurement and Disposal of Assets Act, which prioritizes local SMEs in the awarding of contracts. In fact, we started this new year with a recently gazetted SME order which confines the procurement of several goods and services to local SMEs.

"This effectively brings to an end the procurement policy of past administrations that allowed the concentration of public contracts in the hands of large and foreign businesses for the supply of goods and services that can ably be supplied by local SMEs," he said.

Additionally, the President said these policies will inject the much-needed liquidity into the economy "by putting money in the pockets of Malawians, enabling them to care for their families, which will in turn stimulate economic activity. "

Chakwera said to prepare for potential liquidity shortages during the coming weeks of the state of national disaster, his administratio has activated the Emergency Liquidity Assistance (ELA) framework to support banks in the event of worsening liquidity conditions.

He also detailed the cushioning measures for the poor that his administration has put in place, including subsidised maize prices at Agricultural Development and Marketing Corporation depots, cash transfers and K40 billion loan fund he said would be revised upwards to the K75 billion promised during the campaign.

Chakwera hailed his Tonse Alliance administration's flagship subsidy programme, the Affordable Inputs Programme (AIP) which benefitted 3.7 million farming families, surpassing its predecessor Farm Inputs Subsidy Programme which targeted 900 000 beneficiaries.

"The flourishing maize fields around the country speak for themselves," he said.

The President said through the Ministry of EconomicPlanning and Development, which is led by the Vice-President Saulos Chilima, government has extended the social cash transfer program to vulnerable households in peri-urban areas to cushion vulnerable and low-income households from Covid-19 socio-economic impacts.

He said 31 percent of the eligible households have already benefitted in the four cities of Blantyre, Lilongwe, Zomba and Mzuzu for the three-month programme.

In a statement issued on Saturday, Ministry of Economic Planning and Development Principal Secretary Winford Masanjala said the programme targets those who derive their livelihoods from piecework, petty trading or may have been laid off from work.

The World Bank observed in its recent Malawi Economic Monitor that Malawi Government should pay attention to poverty reduction policies such as social cash transfers to reduce poverty levels and financial challenges which have been worsened by Covid-19.

The bank said social cash transfers and social welfare services provided by government and other non-State actors could help people escape extreme poverty, close the poverty gap and reduce inequality as well as build household resilience to respond to shocks across the life cycle, which is key to building human capital.

Chakwera also mentioned the gazetting of new minimum wage of K50 000, increased pay as you earn zero-rated bracket from K45 000 to the first K100 000, removal of duty on Covid-19 relevant products such as soap as some of the cushioning measures.

"But I have noted that many merchants have not effected a price reduction to reflect this cushion. I therefore call on businesses to do their part in the pricing of soap so that it has its intended effect on the targeted beneficiaries," he said.

The President was also upbeat that the fight against the pandemic will be won.

"We will win by continuing to adhere to preventive measures so that new infections fall below a positivity rate of 5%, and we are nearly there, because this past week, the positivity rate was 8.4%.

"We will win by continuing to give quality care to those infected with the virus, and this past week, 1,728 people recovered from the virus as a result. We will win by continuing to contribute to the fight as citizens through private initiatives like Feed the Frontline Health Workers Fund, which has supplied over 9000 meals to health personnel in the last eight weeks.

"We will win by protecting ourselves from further infection through the rollout of a nationwide vaccine program, the syringes for which are already in-country in readiness for the arrival of the vaccines on March 5. So mark my words: we will win!"

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