Tax breaks to improve commutes in Lilongwe

Nora Lindstrom, Lilongwe Community Manager
Lilongwe, 6 October 2014

Without a public transportation system, much of Lilongwe's working population relies on minibuses to get to the office. Expensive, overcrowded, and badly maintained, they are not a pleasant or reliable mode of transportation. They are also a nuisance to other road users as drivers stop at will and informal depots take over road space at already busy junctions. Indeed, minibuses are a key contributor to the appalling road safety record not just of Malawi, but also many other countries in sub-Saharan Africa.

A long-term development plan to overhaul the transportation system in Lilongwe was developed in 2010. It calls for large public buses for trunk routes, but maintains licensed minibuses for feeder routes. The aim is eventually to formalise the entire system. The erection of several new bus stops along key routes in the city is a sign of things to come. Still, substantial change is likely to take time, meaning informal minibuses will remain the main mode of transportation in the city for the near future.

That's why the new government's pledge — in its proposed 2014/15 budget — to provide tax breaks for the import of minibuses that are less than five years old is a very welcome move. The move follows a petition by the Minibus Owners Association of Malawi (MOAM); as the Association's Secretary General Coxley Kamange argued in the Nyasa Times in June this year, "We feel if the exercise [sic] duty is removed, it will help us replace old minibuses and that in the end will ensure safety of passengers who are our customers."

As Finance and Economic Minister Goodall Gondwe, in presenting the national budget in early September, noted that "[d]uring the budget consultations this year, there was... a persistent cry from the minibus operators on the need for levelling the play field [sic] with the operators of the large buses who currently import buses of zero to five years old duty free, [...] the government agrees to remove the import duty, import excise, and VAT on minibuses that are zero to five years."

The good news for minibus operators did not end there. The new government also pledged to reduce fuel prices starting September 4, as a result of the stability of the Malawi kwacha and to reduce import costs. MOAM, however, has refused to link the fuel price reduction to fares; instead, Secretary General Kamange has noted the price reduction will allow minibus operators to improve services more generally.

So, two things: removal of import taxes for new minibuses, and reduction in fuel prices. Both government pledges represent a lobbying win for minibus operators, which can reasonably be expected to trickle down to consumers who should in the not-too-distant future be able to enjoy safer and more reliable services. And while more comprehensive efforts will be needed to change the often obnoxious road behaviour of minibus drivers, at least with newer minibuses there might be slightly less toxic black smoke spewed out in the face of other road users.

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