Malawi has postponed the introduction of a new electronic tax system until April following widespread protests by small business owners, as outlined by The Guardian.
The planned rollout of the electronic invoicing system (EIS) by the Malawi Revenue Authority, a more detailed tax regime, was due this week. Its delay comes after thousands of small traders shut their shops and held protest marches in the country’s four main cities: Blantyre, Lilongwe, Zomba, and Mzuzu. Tens of thousands had signed petitions against the system, which they claim will cripple their livelihoods.
Protesters dressed in black carried placards criticising the revenue authority for prioritising revenue collection targets while, they say, vendors are struggling. Business owners state they are especially hampered in importing and exporting goods due to a severe foreign currency shortage. They claim this forces them to buy US dollars for imports at nearly three times the official bank rate.
“Our businesses are under threat because of the economy,” said Robert Nachamba, a representative of small business owners, after a group of 1,000 delivered a petition in Blantyre. He argued that declaring goods prices to tax authorities under the new system, on top of high black-market currency costs, would make their commodities more expensive than in neighbouring countries.
The protests are the latest sign of unrest in Malawi, which is tackling aid cuts, foreign currency shortages, and rising costs for necessities. Previous protests over food and fuel prices in September and November saw outbreaks of violence after being hijacked by political groups.
President Peter Mutharika, elected last year on a promise to restore the economy, has implemented adjustments including a 41% rise in fuel prices and a 12% increase in electricity costs. Finance Minister Joseph Mwanamvekha has told citizens to “remain resilient” as the government implements tough measures to stabilise the economy, cut expenditure, and improve revenue collection.
Economists warn that while such measures, including the EIS to combat tax evasion, are technically rational, they must account for the survival of informal sector businesses. Malawian economist Bertha Bangara-Chikadza said the policies are being implemented under extreme macroeconomic challenges. She stated that if the resulting revenue stabilises the economy and improves public services, it could be positive, but if it fails to translate into better infrastructure and energy, it risks further straining the economy.
Malawi follows other African economies, including Kenya, Nigeria, Egypt, and Uganda, in moving to implement mandatory electronic invoicing and real-time tax reporting systems to improve revenue collection and reduce fraud.
