Malawi: Economic engineering versus governance
On Saturday, December 16, 2009, most Malawians woke up to disbelief when a banner headline in one of the weekend newspapers screamed “UK ministers hold fate of Malawi aid”. The article said that the new British High Commissioner to Malawi, Fergus Cochrane-Dyet had disclosed that the UK’s Department for International Development (DfID) disbursement of its annual MK5.4 billion budgetary support to Malawi would depend on UK ministerial approval.
The article proceeded to announce that the resumption of aid will depend on improved governance profile and human rights issues. In a related development, the Reserve Bank Governor, Perks Ligoya, was quoted as saying the International Monitory Fund (IMF) would decide Malawi’s fate on economic support on February 10, 2010.
These disclosures have shocked many Malawians who, since 2005, have lived under the illusion that the Malawi economy is doing very well and that the Mutharika administration has struck a miracle cord that would see a permanent cordial relationship with the Western donors, especially considering that Malawi was certified qualified for debt relief under the Highly Indebted Poor Countries (HIPC) programme in 2005.
But for most technocrats, the mouthful praises of ‘Ngwazi’ Dr. Bingu wa Mutharika’s economic miracle were a rich satire, difficult to comprehend at face value because the basic life of every Malawian, save for those within the ruling elite, has not changed, if anything, the socio-economic environment is at its harshest level as most people cannot afford basic needs of life.
The Ngwazi, so they have argued, was part of the former president Dr. Bakili Muluzi’s assemblage until 2004 when Western donors and financial guardians decided to close down financial taps for Malawi because of corruption and mismanagement. It was unbelievable therefore, the argument went, that Bingu had sooner and suddenly overturned Malawi’s economic misfortunes to earn himself and his regime such rhetoric of being the messiah.
While the Mutharika regime may have started on a promising note during the first term in as far as economic management was concerned boasting of stable macro-economic fundamentals; the regime, probably got drunk with initial success, decided, in the later days of the second term in office, to artificially hold the exchange rate between the Malawi Kwacha against the US dollar. This is where Mutharika missed the plot as an economist of whichever generation.
Mutharika cantankerously declared that Malawi was a sovereign state and that it would therefore not devalue its currency to please Western donors. Buoyed by Zimbabwe’s Robert Mugabe and the new-found Chinese friends, Mutharika went on to challenge the West at some during his regular foreign sojourns that the Western donors are responsible for the economic misfortunes of most Third World countries. In the voices equivalent to those of a Pentecostal Pastor, he spoke against the West and praised the Chinese for the aid that was to come…and suddenly adopted the aggressive no-human-rights approach to governing this country, which is still smarting from the one-party dictatorship.
“Today, he has declared a knee-jerk campaign against declared gays incarcerating them as if they were treason prisoners, denying them bail and subjecting them to inhumane treatment. There are also growing tendencies of extrajudicial killings of suspects by the police, who have massively benefited from the British aid under the Police Reform Programme,” observed Veronica Mashangu of the Citizens Committee on Democracy.
“The economic engineer, as Mutharika has been touted, forgot that Malawi was a capitalist nation whose trading paradigm was squarely hinged on politics of open market economics driven by forces of demand and supply,” further said Mashangu.
Mutharika decided against conventional marketing wisdom that the price of the major forex earner, tobacco, be fixed not by the forces of demand and supply but rather that he and fellow tobacco farmers, should maximize on their earnings by forcing tobacco buyers on the floors to virtually subsidize their production costs, which one economist described as a “strange way of doing business.”
It was unfortunate for the desperate tobacco farmer that for the errant tobacco buyers whose bosses failed to see business sense in the president’s thinking, suffered deportations. What the President forgot was the fact that once a businessman is threatened; he/she will not want to invest in that country and will look for another investment destination. The fixing of tobacco prices also affected cotton, resulting in major buyers Calgrill dis-investing from Malawi.
Thirdly, the Ngwazi has created a frightful financial regime through poor fiscal policies such as the sudden closures of forex bureaus; the closure of the Finance Bank; the stringent requirements for individuals wanting to open bank accounts; and the regular public threats against businesses, coupled with an openly hostile disposition against businesses owned by foreigners. The Ngwazi threatened businesses with closure, nationalization and deportation, the language best known and used by Mugabe.
Fourthly, the use of the police and other organs of the state to suffocate some businesses, especially those associated with opposition leaders, has been another major threat to the socio-economic development of the country.
Fifthly, within six years, the Mutharika administration has commissioned serious violations relating to governance and tenets of democratization to the extent that Malawians have witnessed their hard-won freedom and democracy crumble under the tyrannical machinations of a regime that is interested in staying in power at any cost.
The regime has unlawfully secured the use of public funds for the promotion of the interests or affairs of a political party contrary to section 193 (3) and (4) of the Constitution of the Republic of Malawi.
The Mutharika regime has continued to be wasteful in the use of public resources by among others spending funds that were included in national budget as approved by Parliament.
For instance, the construction of his private Ndata Residence; the road leading to the residence and other roads that were not approved; the acquisition of the presidential jet; and the purchase of excess fertilizer for the subsidy programme, among others, are cases in point.
Mutharika has maintained a large cabinet, carrying with it a lot of luxury; external travel with large entourages has been a regular event; and state residences have been retained as they were in the previous regime despite a pledge to reduce the number to cut operational costs.
For instance, President Mutharika continues to the use Sanjika Palace in Blantyre, Zomba State Lodge, Chikoko Bay in Mangochi and Mzuzu State Lodge. In addition, it is alleged that his private residence at his Bineth Farm in Zimbabwe is believed to be enjoying State Lodge status, completely run on Malawi tax-payers’ money.
The Mutharika regime has continued to disregard the Constitution by its deliberate failure to hold Local Government Elections (LGE) as required by law. The issue about the LGE has assumed serious ramifications affecting the credentials of our multiparty democracy and the decentralization process.
The direct interference in the affairs of the Judiciary is another serious abuse. The present Chief Justice was approved by 50 MPs (out of 193 members) against the required two thirds majority and that the current Chief Justice is a relative and a bona fide member of the an ethnic Mulhako wa Lhomwe sect, where the President is the patron, compromise the neutrality and expected impartiality. The Judiciary has also been under severe attack by the President personally and the Executive in general for any judgement deemed to be against the Executive.
The issue of the Malawi Electoral Commission is another sore area because the commissioners remain disputed and tainted with being either relatives or former classmates of the president.
The Mutharika regime maintains very close ties with Zimbabwe, particularly with Mugabe, whom Mutharika has assisted to remain in power against the popular wish of Zimbabweans. The resources used to support Mugabe would have been better used in the fight against abject poverty among Malawians and the fight against other social ills such as HIV/Aids.
Whilst there has been very huge rhetoric about the purported fight against corruption, which has largely targeted opposition leaders, serving leaders in the Democratic Progressive Party or leaders in the Mutharika government have been spared the rod. There have been disturbing reports about corrupt ministers, presidential aides, civil servants and cronies of the president but no action has been taken.
For example, the Parliamentary Public Accounts Committee Report of 2005/06, entitled “The Investigations into the Operation and Management of Credit Scheme Account in the Ministry of Education,” records the type of corrupt acts and names ministers involved who have been shielded by the President except scapegoat Treasury Secretary Dr. Milton Kutengule and Education Minster Yusuf Mwawa. Over 10 ministers involved were shielded from prosecution.
Former Minister of Information and Civic Education, Patricia Kaliati was named in allegations of receiving bribes from a United Arab Emirates consortium as an inducement to awarding it the Nyika-Vwaza Eco-tourism Concession.
The minister is also named in the awarding of a licence to the second fixed line operator, Access Communications Limited, in disregard to a legal opinion made by Attorney General Dr. Jane Ansah against the award. The Anti-Corruption Bureau and the state have shielded her from prosecution.
The Clerk of Parliament, Matilda Katopola, was found culpable by a House Commission of Inquiry of abuse of office for awarding her private firm a contract to supply stationery to the National Assembly, in a clear breach of public procurement procedures. The president shielded her on grounds that the amount of money involved did not warrant disciplinary action.
There is also a whiff of corruption surrounding the award of road construction contracts, particularly to the Portuguese company Mota Engil, which is working on almost all major road projects. Mota Engil constructed the road to President Mutharika’s private estate, Ndata in Thyolo and a palacial home is taking shape.
The same Mota Engil is a partner in the Shire-Zambezi Waterway project and has also been corruptly been awarded the concession to run the Malawi Lake Service, replacing the role of Tiny Rowland of Lonrho during the one-party regime.
“Where are the Financial Services International Units of the UK and EU…where are they, because Mota Engil is consuming a lot of donor aid through the various dubious contracts?” wondered a governance expert.
Our African leaders should learn to serve as servants of the people, which is their proper role, and then they should hold the wealth of the nation in trust for the people who elected them, not to lead, but to perform the people’s agenda. Government is a trust and the officers are trustees and both the trust and the trustees are created for the benefit of the people.
There is very little reason for one to be a leader of a country if that leader cannot protect the interests and values of its people. It is one thing to declare that the economy is doing fine, and quite another to get this perception resonate with the expectations of the people themselves, in their own crude ways.
Malawians want to witness positive change in their lives as translated into what they spend, what they eat, what they wear, what they live in and under. The evidence must be of such clarity and potency that it must create in people reason to have hope into the future.
Malawi is now standing between the rock and a hard place because the country needs economic aid as it cannot survive on its own. But at the same time, we have run out of the rails of a democratic dispensation; our governance record has hit all-time low; a culture of fear reminiscence of the one-party dictatorship is back in town; and the media and the opposition cannot open their mouths to criticize, or say anything that is contradictory to the thinking of government.
Whatever the case, Malawians need economic aid as much they need their freedom to go about with their daily businesses in an environment of peace and without interference from a tyrannical regime.
The article well articulates most of the weaknesses of this goevrnment, but at the same time I should say the article also smells of the same rhetoric that the government is being accused of. I always emphasize here that sometimes we make comments at this forum thinking running a government that is funded by donors is as simple as eating nsima.
and lets not forget that what we read is always written by people that have political motivatives, aspirations and frustrations as well.
I am not sure how much the author of the article knows about how aid and its conditions impact our sustainable development, but I would want to argue against the fact that standing up to some of the conditions that come with aid is a problem. We are being made into serial beggars just because we want to follow to book what ’some’ guys believe their money should be used for. I know a capitalist free market system works for some, but I am yet to be convinced it is a total answer to most developing economies including Malawi when the capital is controlled by the west and we are just used as the means of production. It will take several generations of us to stand up and face economics shocks while we are building our own means of productions, if not, then dont expect Mutharika or any other next president to massively change Malawi if all we want is to live ‘easy’ with the ’support’ we get. Mutharika should have communicated better on his agenda and how in the long term we are to benefit (and of course he needs to improve his management record), but all of us can also do better as well not to be unnecessarily vocal and too impatient to ‘need economic aid’ and expect our economy to be turned around in a few years. It took others generations to sacrifice for the better future of their next generations. It’s a shame, but am afraid to say I dont see that building spirit in Malawi, we are all too focused on personalities and petty confort. sorry!
I always wonder why authors need to write a lengthy article like this, instead of articulating their issues in a few paragraphs. This article is a put off.
Dear Sir,
you have a level head on your shoulders and I think your arguments reflect accurately what the real issues are here.
capitalism is an economic regime that, in its simplest definition, means that economics be run by free-market forces, and that people re-invest and build on capital which is the chief mode for economic growth. However, capitalism also requires that goods and services full demand patterns, and this means, in a country where people can not demand goods and services, they are automatically eliminated from the supply process. This is why some government regulation is necessary. In addition, you already stated how we do not own much capital in the first place, so there is a need to transfer capital from the west into our economy, usually via funds. capitalism is not the answer for Malawi, but rather, sound economic and political management.
I find Nyasatimes very informative, but sometimes it simply sounds the same hate speech that is not constructive aimed at attacking government, and refusing to see anything right about it. Truth be said, Malawi has moved forward, however, in my own assessment, this government has become choked up by the pathetic political mediocrity that prevails in our nation. I strongly believe that Malawi suffers more from greed, hatred, conspiracy and witch-hunting than it does from poverty because this, may i say, ’spiritual’ essence is what ultimately is deciding where funds go, who gets jobs, who is more equal than the other and so on… until we Malawians decided to say, we have had it with this stupidity and we want to revolutionize our thinking and mode of business, donors can pump in whatever millions they desire but nothing tangible will happen.
Bingu has done some things right, we can take it away from him and his strengths in certain spheres of knowledge and practice are very apparent, but he has great weakness in succumbing to pressure, to child’s play and the need to be worshiped. Thats his down fall. Even Banda who is so praised today had things he was good at but Malawi do not forget that this man orchestrated some of the most brutal atrocities to his own people than even the white-man he removed from this nation before him. lets be objective.
some what tembo as president, and thats okay, but what we have now is Bingu. Can we offer up opinions that will help build this nation within the Bingu regime as opposed to just criticizing nothing tangible in particular, and resounding that same political rhetoric we are trying to prune from our land.
we have no one to lie to except ourselves, only we know the truth, and unless we choose to come to terms with it, we will keep riding around in these circles and heading nowhere.
All this call for Donor boycott of the Malawi government budget support is ill placed. It’s ill placed because it will end up hurting the poor people more while Bingu and his Cronnies continue to enjoy spending the little that is there. Yes he has messed up big time but let’s find a way to force him to do the right things, not to tell donors to withhold their aid: that will be disaster for Southern Africa’s poorest country.
I have always said Bingu and the others running our politics belong to the yesterday generation that’s not capable of tackling the new challenges. They are simply too old to rack their brains to tackle the 21st century challenges. They belong to the old school of thought.Until we have young, vibrant, intelligent and visionary leaders, we’ll remain Southern Africa’s poorest country.
Let me first of all say that i do not have much problems with the current regime they are doing a good job in most of the things though there are few that i feel for them to survive it has to be implemented. As inkosi i do not have problems with this famousand very popular qouta and what Malawians should know that any decision or policy will ever have victims and here my fellow northerners seems to be the victims. But what we should have in mind is that Qouta is good for Malawi as country. What is happenning with qouta there is no region which is benefiting more than the other probably we should talk of these big district but by the end of the day malawi will emerge abalanced nation.Lets not attack the government but offer advise otherwise if we werge a war obviously it will fight back. Here me iam talking as you inkosi and this represent my people from my area which ta no point will not be divided
Better to be ruled by a chewa not lomwe. lomwes are very bad people. tiyeni tigwirane manja 2014 and show these idiots that we need a president who will look at us all as equals and not just fooling people that things are working while him and his tribe are bathing in wealth.
my friend, you are showing us elements of the same cancer you are accusing others of. you yourself are sick in your thinking, how can you say malawians lets rise up against the lomwe? it is this sick, stupid mentality that is killing us because every new president who succeeds another comes in to rescue one type of malawian enemy and picks another malawian enemy. grow up!!!!!
kodi enanu mudzalamulira liti dzikoli tidzakuoneni nzeru zanu zazifupizo? its easier said than done, mudzaziona mukadzafikapo, ngati mutadza… full of frustrations, hatred and selfishness. u think coz Bingu sakuchita zofuna inuyo basi walakwa ena akusangalala naye. of course not all that he does is gud koma olo inu mumasangalatsa aliyese kapena simulakwitsa naye ndi munthu. inu nonse aTcheya ankaba muja muli kuti? IMF where were you when Bakili was syphoning your aid into his coffers? iya inu ndiye nzakwanu. sizaaliyense apa nzatonse. munya muona. mulira magazi misozi atakutherani. and someone with all his sense and two balls under him akulemba zotukwana Bingu iwe Masoambeta siiwe mamuna? mkabudula mwako muli chani? zomwe zili ndi Bingu iwe ulibe. mukuvulirannji. zomwezi? Heheheheede! muphulika. ABingu woyeee!!!!!!!!!!!!!!!!!!!!!
Lonie, Masoambeta is a woman and what she wrote is very true. Anthu akamanena chilungamo its not that they are frustrated. Kuzolowela kunamizidwa basi.
kagwere uko, masoambeta is talking sense here.
Let the donors keep their money until the Malawi government sort out the mess they have created. Giving money to Malawi now is like investing in a black hole thats what I will be telling my donor friends wherever I meet them. Munya muwona alomwe inu
Well done, Blessings! A good article. You are correct about the danger of Mota Engil taking most of Malawi’s civil engineering contracts. Presumably the Ndata palace and road was a gift to Bingu for all the contracts. Last year this company honoured its “social responsibility” programme in Malawi with an expensive driving range at LLW golf club. Poverty alleviation? I don’t know many Malawian golfers. Do you?
The article is to a certain extent void of two important virtues that are necessary when writing about your country, namely objectivity and patriotism. The list of the general weaknesses of this article given below will illustrate my assertion.
1. Paragraph 13: is trying to portray that President Mutharika is extravagant. However the facts given are not adequate to enable one to make a meaningful comparison or a right or wrong judgement. The one million dollar question could be, do we have a defined and an agreed threshold about the maximum number of state residences a president should use in Malawi? If we have one it could be useful to judge whether his actions is right or wrong. Secondly figures about how many state residences were used by the former two presidents during their time could have helped for comparison purpose.
2. Paragraphs 1, 2 and 3: The use of phrases like, most Malawians, many Malawians, most technocrats and basic life of every Malawian. Is an indication that the author is committing a serious fallacy of generalization? He is taking his/her perspectives to be true for every Malawian.
3. Paragraph 7: I don’t understand how one could allege that these fellows are being oppressed by the current President. Is the case of these fellows being held at the state house or in a competent court of law? Will the case of these fellows be held using the existing legal framework of the land or based on arbitrary considerations?
4. Paragraph 8: Free market economic model is not the best there is in the world. As a result all countries of the world, save for communist countries, adopt what is called mixed economic model. A good example of the failures of the free market economic model is the recent credit crunch which happened in the U.S.A. and UK. The ramifications of which are being felt the world over. To reinforce the fact that the free market economic model has weaknesses these two countries, being the first class promoter of free market economic model, paradoxically took over a good number of banks and companies in their respective countries following the crunch in the name of bail-out programmes.
5. Paragraph 8: The economic achievement mentioned by the current government is to do with economic growth. I think a basic understanding of the difference between economic growth and economic development could help to put up a good argument. In most cases economic growth does not immediately translate into tangible benefits to the people because the concept is not distributive in nature. Benefits of economic growth are realised after a long while and when the growth rate is maintained if not improved for a long while as well.
6. Paragraph 9: It is an open secret in Malawi that some forex bureaus and Finance Bank were closed because they seriously contravened banking laws of Malawi; they were not closed arbitrary, as you would like to make us believe. Mind you banking laws in any country are framed with the sole purpose of protecting the interest of the public and the economy as a whole. Following the closure of these institutions new banks have opened doors in Malawi, like First Discount House Bank and International Bank of Malawi. An indication that the environment is conducive for the operation of the financial sector.