Watching the behind-the-scenes short documentary on Joyce Banda, the fourth president of Malawi, it is clear that she is acutely aware of the challenges she faces, as she tries to fix the ailing economy she inherited from her predecessor, Bingu wa Mutharika, who died of a heart attack while in office in April last year. IMF chief Christine Lagarde was in Malawi last week, but while Lagarde praised Banda’s government and their adherence to the IMF’s program, many Malawians remain unconvinced.
In the documentary Banda states that her main worry is how she can possibly get this job done with only two years remaining on the presidential term Mutharika won in 2009. The vice-presidential nominee on Mutharika’s ticket, Banda will be campaigning for herself in 2014, and she’s genuinely worried that local critics calling her Malawi’s “accidental president” have found a label that will stick.
The truth is that Banda was elected as Mutharika’s deputy. This is why Mutharika could not sack her as vice president when he wanted to. Banda may accept the “accidental president” tag as she is trying to distance herself from most of the problems she inherited, which she rightly thinks could compromise her electoral success in 2014.
On the international level, Banda has used the well-documented policy failures of her predecessor to reach out to donors. As she says in the documentary:
“I had to get on course with IMF, devalue the Kwacha [Malawi currency] by 40%, and I am grateful for some of this money that goes towards cash transfers which will help cushion the shock that [the] devaluation has brought about.”
Banda regrets Malawi’s economic dependency, nearly 50 years after attaining political independence. Arguing: “if our friends and international partners do not come, if they packed up today and left, we are dead.” This point defines what has shaped Banda’s administration. The economic and diplomatic mess that Mutharika left handed the bargaining power to donors. This means that Banda is running a country but she has no room for maneuver. She cannot impose her own policies on it, she can only do what needs to be done.
Yet Banda could pay a heavy price for accepting IMF-led economic recovery measures. The 40% currency devaluation has made life unbearable for most Malawians; the inflation rate has accelerated and most basic commodity prices have tripled since the devaluation last April. While Malawians never objected to the devaluation, some local civil society and consumer rights organisations have criticised the government for allowing the Kwacha to float freely against major currencies like the US Dollar.
Recent figures from the Centre for Social Concern (CfSC), a local NGO, indicate that the cost of living among low-income families in cities rose by 20% in 2012. CfSC partly attributes the rise to Banda’s economic reforms. A local consumer watchdog, Cama, has been a fierce critic of the government due to the ever-increasing high cost of living and the lack of adequate measures to cushion consumers from the shocks of devaluation. Cama recently held a demonstration against rising costs of living and it has given the government a 21 days ultimatum to respond to its concerns or face more protests. There is a consensus among Malawians that the economic situation is dire, and even the government agrees.
A local daily newspaper, The Nation, recently reported that an influential group of Malawi’s key donors, comprise the UK, Norway, African Development Bank, European Union, the World Bank and Germany, operating under Common Approach to Budget Support, with UNDP and IMF as “independent” observers, has insisted that Malawi continue with the reforms, as there is no alternative. On her recent visit to Malawi, IMF chief Christine Lagarde also stressed the need for Malawi “to stay the course [of economic reforms].” Lagarde “congratulated President Banda on her bold economic policies… including liberalisation of the foreign exchange market.”
The gulf between the pain of reforms on Malawians and the confidence of the donors in the IMF program is the dilemma Banda faces. She cannot afford to ignore either. This is perhaps the main reason Lagarde’s visit polarised opinion among Malawians. Banda’s administration received the IMF chief warmly, yet in the documentary she makes her frustrations with Western donors clear, admitting she prefers dealing with China’s unconditional aid and investment. She argues:
“China will decide today, we shall develop this. The next day you sign [and] the work starts. We know if it had been the western world we could have been talking for two years: before we give you, you must do this and that. Things that are not related to the project and that is what China do not do.”
Banda knows the challenges facing her country and she no doubt has an idea of how to solve them; she may even have policies for Malawi’s long-term development. Yet the country’s economic dependency dictates that she listens to international financial institutions and donors more than her people and her own convictions. Her critics say she is not bold enough and lacks technical know-how to dictate her own economic terms. It is a plausible argument, yet these critics underestimate or entirely ignore the influence of the donors and international financial institutions. Fighting them is a risk Banda cannot afford to take, at least at the moment.
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