AfDB urges Malawi, others to look inward
The African Development Bank (AfDB) has advised Malawi and other African countries to urgently mobilise domestic resources in the wake of dwindling traditional funding sources in a shifting geopolitical environment. AfDB chief economist and vice-president for economic governance and knowledge management Kevin Urama said in a statement yesterday ahead of annual meetings in Brazzaville, Congo … The post AfDB urges Malawi, others to look inward appeared first on Nation Online.
Black News 
The African Development Bank (AfDB) has advised Malawi and other African countries to urgently mobilise domestic resources in the wake of dwindling traditional funding sources in a shifting geopolitical environment.
AfDB chief economist and vice-president for economic governance and knowledge management Kevin Urama said in a statement yesterday ahead of annual meetings in Brazzaville, Congo Republic that the continent faces a widening gap between its development ambitions and available financing amid tightening global conditions.
He said Africa requires between $184 billion (about K322 trillion) and $221 billion (about K387 trillion) annually to meet infrastructure needs, figures that far exceed current financing flows.
The warning comes after the International Monetary Fund (IMF) cautioned that African economies remain highly exposed to external financing shocks, with declining aid, tighter global financial conditions and rising debt levels limiting policy space.
Urama said the AfDB is advocating for stronger domestic resource mobilisation, improved public financial management and increased use of digitisation to reduce leakages in government systems.
“There is a need to strengthen revenue mobilisation without introducing burdensome tax regimes,” he said, warning that excessive taxation could undermine private sector activity and economic growth.
In an interview yesterday, Economics Association of Malawi president Bertha Bangara-Chikadza said broadening the tax base and strengthening compliance are fundamental pillars of public finance.
However, she stressed that the increased reliance on consumption-based taxes, particularly value added tax (VAT) and new levies could introduce macroeconomic risks that warrant careful monitoring, including demand-side contraction since consumption taxes are inherently regressive.
Bangara-Chikadza, who teaches economics at the University of Malawi, said: “In Malawi, the majority of households spend a large share of disposable income on basic goods such that an increased effective tax rate on consumption reduces real purchasing power, dampens the aggregate demand at a time the private consumption remains the primary driver of gross domestic product growth.”
Minister of Finance, Economic Planning and Decentralisation Joseph Mwanamvekha is quoted as having said that government will continue to strengthen domestic revenue mobilisation efforts, including broadening the tax base, enhancing compliance and modernising tax administration while protecting low-income households and productive sectors.
Meanwhile, AfDB is promoting a new continental framework, the Abidjan Consensus on the New African Architecture for Development to reshape how capital is mobilised and deployed across Africa.
The framework is anchored on four strategic priorities aimed at improving coordination between governments, development partners and private investors.
Malawi is currently grappling with high public debt at about K22.4 trillion, persistent fiscal deficits and limited foreign exchange reserves, factors that constrain its ability to finance
The post AfDB urges Malawi, others to look inward appeared first on Nation Online.
