Chikaonda says Malawi needs to hit ‘reset button’ on economic strategies

Press Corporation Limited (PCL) chief executive officer, one of Malawi’s leading business entities has said Malawi is facing a challenge of growth and a sustained crisis of demography.

Chikaonda, who was recently appointed by the President Joyce Banda to head one of her advisory think tanks, High Level Development Council, speaking during a dinner that was hosted by President Banda for a cross section of representatives of business community at Sanjika Palace in Blantyre Friday night,

He said the challenges of growth and a sustained crisis of demography is unattended could have dire security as well as economic, environmental and social consequences to the country.

Chikaonda speaking at a Sanjika  with President Banda

Chikaonda speaking at a Sanjika with President Banda

According to Chikaonda, the delay in addressing these challenges will only make the necessary steps more difficult and very costly.

“This year (2014) is a critical juncture for Malawi as the country attains 50 years of independence on 6th July, 2014.   GDP per capita has been slowly increasing from approximately US$60 in 1964 to US$381 in 2013, which is far from the US$1000 per capita GDP as envisaged in Malawi’s Vision 2020. That is, 50 years after independence and six (6) years before the year 2020, the aspirations of most Malawians are far from being met,” noted Chikaonda.

The former Reserve Bank of Malawi (RBM) governor and ex-finance minister said: “The message is very clear that we have not done well as a nation in the last 50 years and there is therefore urgent need to rethink seriously about where we want to go from here and how are we going to get where we want to go as a nation.”

Chikaonda said for Malawi to reach lower middle-income status under the Vision 2020, the country needs to grow its economy at an average rate of 5.3% for the next 50 years.

“Current government estimates, including those of the International Monetary Fund (IMF) are in this same range,” he said, adding “To achieve the bottom end of ‘upper’ middle-income status will require an annual average growth rate of 8.3% growth for the next 50 years.”

Chikaonda said “there is no question that we need to do things differently in order to have a prosperous Malawi in the next 50 years.”

The economist said   this year offers a “great opportunity for sober reflection” and for the country to “hit the reset button” and come up with new strategies, development plans and implementation programs that will make a real difference in the livelihoods of the people and meet their aspirations.

“It is imperative for the new government to be ushered in after the May, 2014 general elections, and future governments, to introduce and religiously implement such pragmatic (some would say, revolutionary) measures to ensure that Malawi overcomes the serious development challenge alluded to earlier and avert the inevitable crisis which, if left unattended, would guarantee Malawi’s descent into State Failure,” said Chikaonda.

On poverty reduction, Chikaonda said the only way to reduce poverty at a much faster rate in Malawi is to increase the rate of economic growth.

“It is generally agreed that the private sector is the engine for economic growth and social transformation and, as such, an efficient, dynamic, and growing private sector is the only way to accelerate poverty reduction,” he pointed out.

He said it is therefore crucial for governments to put in place policies and institutions that encourage the private sector to become more efficient and productive and to grow faster.

“In this way, the private sector will expand production, increase employment, and pay higher wages and salaries.  This is how the rich countries achieved high incomes for most of their citizens.  There is no reason to believe that today’s poor countries will be able to reduce poverty in any other way,” noted Chikaonda.

The economist said Malawi needs to re-strategize not only in terms of how it can weave its way out of the current economic situation but also how it can effectively engage the private sector and strike a strategic framework that will stand the test of time and effectively harness Malawi’s development potential in line with the aspirations of the citizens.

In her speech at the dinner President Banda spoke of her government’s decision to involve the private sector to play a big role in widespread reforms with which she plans to transform agriculture, mining, transport, trade as well as infrastructural development for new and sustained economic growth.

 

[highlight style=’cream’] Note: Earlier, Chikaonda was quoted erroneously as warning the impact of population bulge on economy of this country. Nyasa Times regrets the errors and unreservedly apologise to Chikaonda. [/highlight]

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