Some months ago Malawi a south-east African country was ranked by the World Bank as one of the poorest countries in the world. About 85% of the Malawi population lives in rural areas of which many find it hard to afford daily food. Many people cannot provide for their families, as a result of their families being very big due to many other reasons including cultural factors. The government of Malawi has for a while been intervening in the livelihoods of its citizens in a number of ways one of which being the provision of free packages, handouts and subsidies.
This sort of government intervention has in one way or the other contributed to the downfall of Malawi’s economy. . Free packages and subsidies in Malawi ranges from free primary education, subsidized cement and iron sheets, subsidized secondary education and university education which was until recently almost free. In addition to this, there is Farm Input Subsidy program whereby every year the government spent billions of Malawi kwacha subsidizing the farm inputs for the farmers some of which do not use the inputs accordingly. As a result, it has created a dependency syndrome whereby every person is waiting for the government to provide something for almost free to him.
It has created a situation whereby somebody gets married and expects his children to be educated by the state, receive free health care and use farm inputs subsidy program to get fertilizer and seeds for his farm. If he builds a house, he knows the government has already subsidized construction materials (cement and iron sheets).This system is creating a dependency spirit among many Malawians. Many people in this country are not putting their best in their different professions because they know they will get something for free or at a subsidized price. It may be either education, health care, construction materials and farm inputs. This has made many people lazy and they sit at home knowing that government will provide free services to them, shame. It has killed creativity and innovation in many people in this country. Instead of coming up with ways of creating value and prosperity, many people are just waiting for a hand out or a subsidized product
Kelphas Mvula a research fellow at the Center For Free Market Enterprise (CFME) said that “the future of farm input subsidy program significantly contributing to food security in the country is blunt..” He said that not every deserving beneficiary is targeted and even the targeted ones, not everyone puts the subsidized inputs into its proper use. Some resell it at a higher price and reallocate the revenues to other household activities or even trade the inputs for other goods not mentioning the inefficiencies in the system.
My second concern with this program is about the heavy taxes coming in as a result of subsidies and free things. Subsidies take up a greater proportion of the budget for agriculture and at the same time the budget has to be funded. This prompts the government into increasing its tax base so as to fund the budget and provide subsidies to its citizens. In one way or the other, this translates to taking money from the rich and distribute it to the poor through subsidies. In other words, they are taking money from the rich, and provide goods and services to others. Of course everyone including the poor pay taxes. But the amount of taxes differ, the big entrepreneurs pay a lot of money than those who don’t own any company. The government is trying to redistribute wealth, taking part of a rich person’s wealth and give it out to the poor. The government is taking my money I have generated from my own investments and creativity and give as a hand out to someone else staying idle through subsidies. As long as the government continues giving people money though subsidies, there is no hope for this country.
As a country, we need to get out of subsidies and free things if we are to move forward economically. We must realize that every human being whether big or small, rich or poor is able and has potential to create value and prosperity. Taking away subsidies will bring innovation and creativity in this country, since many people will know free things are over and they will strive to provide for their families. We owe our children a better Malawi, and subsidies are taking us backwards as a nation.