Kachaje: Being discharged from the IMF – ICU

Last week the Minister of Finance, Economic Planning and Development had a sigh of relief when the International Monetary Fund (IMF) mission completed its review of the performance of the Malawian economy.  With the news that “a request to complete the seventh and eighth reviews under the ECF-supported program could be submitted for consideration by the IMF’s Executive Board in May 2016” based on progress to date, there is jubilation and some blotted expectations from some quarters.

Kachaje

Kachaje

Listening to a phone-in radio program on Thursday, I was shocked by some of the comments. Some callers expressed high expectations that prices of goods would come down. One caller was however very skeptical; “We know these people (IMF), they know we are about to sell our tobacco and are here just to steal from us”. This clearly shows that most people have no understanding what the ECF-supported program of the IMF really means.

What is the Extended Credit Facility – Supported Program?

In basic terms, the ECF-supported program is like an economic drip that the IMF puts on “economically sick nations” to help them recover, mainly supporting the balance of payments (BOP). It is a form of financial assistance to countries with protracted (prolonged) balance of payments problems, aimed at helping them move toward a stable and sustainable macroeconomic position consistent with strong and durable poverty reduction and growth.

Let us say Malawi produces goods and sells them to other nations for $100m but at the same time imports goods worth $150m; this means the country will have a negative BOP equal to $50m. The ECF therefore helps Malawi to pay off the balance because it failed to generate enough from its export revenue. As you can see, the ECF is simply a temporary economic relief to help an economically sick nation.

What Should We Do to be Discharged?

The real solution for our sickness is to increase productivity and exports so that we do not have perpetual BOPs challenges. There a number of practical solutions we can employ and below are a few suggestions:

  1. Stop Talking Irrigation and DO Irrigation: The debate on irrigation has dragged on for too long. Let us now implement BIG time. The Economics Association of Malawi (ECAMA) in its pre-budget contributions in the past five years has been consistent; Dedicate K20bn each year from the national budget for five years and invest into irrigation infrastructure. By now we should have had K100bn worth of irrigation infrastructure that can boost our agriculture output.
  1. Trim the Civil Service:  According to the statement released by IMF mission, there is need to exercise restraint on the wage bill “which now accounts for about 34 percent of revenues”. The public sector reforms will not be effective if we do not deal with this “sacred cow”. I know it doesn’t look like a comfortable and politically safe choice to make, but unfortunately, most medicines are not sweet. We used to drink Quinine not because it was sweet, but because it was the medicine that could heal malaria then. Trim the civil service.
  1. Reduce Public Expenditure: We have a bicycle economy with limousine appetites. We want to drive in V8 engines like kings and princes of an oil-rich economy. We want to maintain every state house that Kamuzu had when we can’t even buy anti-biotic in our hospitals. We need to learn to cut the cloth according to our size. Ministers can do with a Toyota Rav 4 or Nissan X-Trail. The Vice President can do with just one official residence. The president must come down from the ivory tower and live closer to his people.
  1. Incentivize Private Sector: If indeed the private sector is the engine for economic growth, then I am afraid this engine is about to knock as it has not been oiled for some time. Government must clear off it arrears with private sector so that it has the liquidity to produce more. Help the Small and Medium Enterprises (SMEs) to grow by buying from them. It is good news that the President declared that government will be buying at least 30% from Malawian businesses. Let this be implemented and not just become another rhetoric.
  1. Re-introduce Youth Week: It is disheartening that some of the loans we have from the African Development Bank (ADB) included resources for construction of public toilets. Those of you that are old enough know that as students we used to construct our own toilets, build teachers’ houses and classroom blocks during Youth Week. We need to bring back the spirit of self-reliance so that we reduce borrowing on things we can do ourselves.
  1. Seal-Off Leakages: There is too much hemorrhage of our limited resources. About two weeks ago, the high court in Blantyre awarded a South African Geologist $100m (about MK69bn) in compensation for some “crooked deals” a few politicians and civil servants did more than a decade ago. This amount, if it is to be paid, will derail our economic recovery plans for years. The amount is more than Malawi Revenue Authority (MRA) collects in taxes in a month. It is three times what we lost during cashgate.
  1. Let us be Discharged, Please: For the past 50 years, Malawi has been frequently admitted in the “IMF Intensive Care Unit (ICU)”. Being declared back on track with the IMF – ECF should never be a cause for celebrations for it basically mean a patient who is back in ICU. We must aim for a full recovery and discharge. Mozambique, Tanzania and Rwanda are examples of African countries that were discharged from the IMF – ICU. We can do it and let this be our final time in the ICU.
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28 thoughts on “Kachaje: Being discharged from the IMF – ICU”

  1. nm says:

    CAN Gvt Listen this time?

  2. Mboni ya boma says:

    Paja a pitala mumafuna kuti anthu asamangokudzudzulani komanso adzipereka ma solutions, nanga apa titi munthu sanabweretse masolutions? Kupanda kutolapo mfundo apa ndye tinena kuti inu muli na pulobulemu, mufunika ku ICU ya ku Zomba mental hospital!

  3. soko says:

    Mr kachaje,our leaders hv eyes bt they don’t see,hv ears don’t hear/listen. Let’s wait for the intern. ORG to do that for us. Ooo lake malawi/shire akulirenji, God guide Malawi.

  4. Arthur says:

    Hope the gvt will listen since they have been looking for such advice. Andalewa amango gwiritsa ntchito ma civil servant tuuuuu eni film ndiwomwewo. Bravo Kachaje.

  5. h. Kachaje says:

    The views that the author of article characterizes of one party system under the mythical capitalism. Some suggestions made are counterproductive in the sense it cannot help our economy. The problem is not with the executive arm of the government but the thieves put in the system. Malawi needs to deal with all such crooks including the britonhood institution such IMF because they are part of the large schema of thieves, slave traders, exploitative institution day robbers of our growing economy.

  6. nyasa says:

    Malawi economy has always been characterized by borrowing for consumption. All local borrowing emanates from govt’s failure to fund it’s operating costs from it’s revenues.That’s very detrimental to any kind of business.

    All this has been enshrined in institutional corruption.

    For example, the tractors that were bought to boost agriculture have been turned into consumption, political govt officials are nowhere near helping to cushion the repayment of the loan leaving taxes overstretched.

    If the president and his cabinet can’t see this, what’s visible to them.

  7. Zilani says:

    This is what has been said over and over again. Unfortunately, it has been said by a critic (in the eyes of DPP political govt officials). Again, this is what every Malawi would like the president told, but that’s not what the president wants to hear.

    I believe the Finance Minister has the same message for the president, but unfortunately, thugs around the president won’t allow him to hear it. If he’s made to hear it, who does that is the enemy.

    When Chilima said njoka saweta, he was very right, but did the president take heed of the advice/warning? No, he even went on to congratulate them for defeating the ammendment proposed to limit his powers.

    Patriotism, is not there, integrity is not there even the much preached hard work is not there. All they want is to earn like CEOs of big multinational company in America.

    There is too much abuse of public resources at the hands of govt employees and politicians. I have always and still don’t see the sense of paying personal fuel allowances to political govt officials and MPs.

    That expenditure does not add any value to our economy. Scrape it off our budget NOW. The savings can substitute the extended credit facility that we badly need without IMF poking thier noses into our affairs.

  8. mavuto says:

    Kachaje where ever you are stay blessed. This is the kind of writing I expect from patriotic citizens of Malawi as a country-suggesting solutions rather than politicking and destructive criticism of government machinery. Well done

  9. Masozi Mwenifumbo says:

    God bless you Kachaje for the sound advice. May the good Lord richly bless. Let’s hope Malawi will take the advice now! Amen.

  10. chibwrya joe says:

    Manganizo a ‘Nyani’ Ali ngati mamuna opezelera mkazi wake akuchita chigololo ndi mamuna wina iye mkumayamikira kuti akugwira bwini ntchitoyo. This leadership deserves no praise at all. They have done unutterable injustice to Mother Malawi. Nyani ndi nyani zoona

  11. mbwiyache says:

    well said big man

  12. Chambe says:

    You have just hit the nail on the head! It’s not that they don’t know about all these solutions; they do. It may be that they lack political will or they are slow or they lacked experience of running the government without donor budget or …….
    PAC has spoken; churches have spoken; economists have spoken but in all these occasions, we have not heard from government on their position about the issues raised. Are we raising our voices in a vacuum where no any government leadership is non existent? We deserve yo know!

  13. Njojo says:

    Well done big man

  14. 30% domestic products? It might be true but then they will be buying 130% foreign products so that to continue exploiting Malawi resources.
    Many who are working in NGOs always make sense when commenting on national development issues, however, once given opportunities to lead, uuuummmm! Their plates becomes full to than the poor.

  15. I have been following Henry Kachaje’s comments even before he became President of Ecama. Mkulu uyu Ali ndi nzeru zeedi. God had blessed us to giving us such kind of person, its up to us to see and make good use of him before it is too late. Even if it means you Henry Kachaje standing for Presidency in 2019. I can assure u, you have my VOTE. Even if u can deputize Good that would be a formidable team.

  16. 2016 welcome says:

    Kachaje has been right in most of his comments. People like @1, Nyani are the worst version of enemies to Malawi. I wouldn’t worry an inch if people like Nyani died today because it would be a blessing in disguise for mother Malawi. For Nyani, he sees everything through the lenses of political party colours at the expense of nation good. And certainly it will be baffling to know that Nyani,by default, has a leadership position. Any wonder the country is in the perpetual mess?

  17. Harawa says:

    Bwana Kachanje,

    I thank you so much for schooling me on the meaning of ECF discharge. Oops! Simply it is discharge from ICU to in-patient ward. Similarly, the preaching of IMF pass is almost same to pupil who has gotten 30% from one of best subjects for the first time waiting his mum and dad to congratulate,

  18. Kenkkk says:

    Kachanje and indeed many others have given us tangible and Very practical solutions to remove us from the intensive care unit(icu) as medically known of the Imf. The problem is that this corrupt thieving dpp govt is not listening, arrogance is its main problem.

    Those against are the same selfish dpp people who are benefitting from the current economic debacle facing the country and at the expense of the whole nation. Corruption rather than solving the economic ills of the country is what these dpp thugs know about.

    Please try to consider the welfare of the people and immediately start implementing what kachanje is advising. Arrogance and know how it all will keep us in the icu unit forever and eventually die.

  19. Sporo says:

    Ine,sindikonda kuchita ndemanga’koma mkuluyu. walemba zinthu zofunikira ku dziko lathuli

  20. mapula says:

    Kachaje thats brilliant ideas especially that one of abandoning FISP and instaed use the money to invest in irrigating the green belt by procuring irrigation equipment and acquiring land belonging to individuals and payment of labour this a grand master of all economy recoveries. l once discussed this issue with Prof Ledley

    1. Robert Daudi says:

      Anybody who disagrees with Kachaje is a fool.

      We need people of Kachaje’s calibre to be our leaders because they are visionally enough to bring change for the betterment of ordinary Malawians on the ground.

      Unfortunately we end up having accidental leaders..May the Lord help Malawi.

  21. Robert Daudi says:

    Thats proper clarification of Extended Credit Facility.

    lts an lnjection given to an intensivelly cared economy to atleast make it stand even though it can’t walk.

    There is nothing to celebrate about here.

    Malawians dont need a microscope to see that the economic status of the country is worse than it has been in all other four adminstrations we have had.

    Malawians must underline this,no country developed with donor aid.its the administration’s good and visionally policies which develops a country.

    Malawi must begin to walk the talk now .we have heard alot about lrrigation farming,dont tell us again do it now.

    There is high interest rates in Malawian banks,the government must intervene as quickly as possible to help bussiness community/private sector ,this will help the fast economic growth of our country.

  22. The Analyst says:

    O………………………………………………………………………………………………………………………………………………………………………………………………………………..O
    Just 10 days ago on 17th March, George Luwayo contributed an article here titled “Of Malawi economic woes and the way out” and strongly suggested that the major problem with Malawi is that critics do not offer solutions. Some of us strongly disagreed!
    . . . If what Kachaje has written, and been writing (just as others) are not possible solutions; then you George and other like-minded souls, are dishonest to the bone marrow.
    ……………………………………………………………………………………………………………………………………………………………………………………………………………..
    You seeeee . . .
    . . . I now know why it it necessary to have people like Joyce Banda for presidents, of course minus her link to cashgate; but such people as JB who know nothing about anything, are more likely to take on board voice of reason from others – who-know-how; than people like APM who are perceived to already kow-how.

    . . . The major problem with Malawi now is that APM being a professor of law, is assumed or expected to know a lot about anything. Thus, technocrats like Good-all-Gondwe can advise him but with an assumption that he knows it already. Such advice is not honest and “not-honest” advice, helps no one.
    . . . Sadly, APM has demonstrated to be just as blank on many issues (including law) as JB or any random vendor from any market.
    . . . Thus, in contradistinction with APM, JB could take on board any advice from anybody hence the roping-in of Mkwezalamba from who-knows-where; and the “azungu akuti”, “azungu akuti” fame; coz for her, whatever the azungu said, was sensible. Some of it was, of course.
    …………………………………………………………………………………………………………………………………………………………………………………………………………………
    . . . In short, George Luwayo and other people who think that people just criticise but offer no feasible solutions, will do themselves great justice by thinking otherwise.
    . . . Coz solutions are many; but the authorities are just too arrogant to take them on board, for they think they know it already; when truth is – they are just as blank, in absolute terms.
    O……………………………………………………………………………………………………………………………………………………………………………………………………………..O

  23. ROBERT says:

    I like the idea of suggesting practical solutions to our ailing economy. We need to be discharged from this ICU

  24. 'Penya says:

    Indeed, the continuation of the IMF facility is indeed not so good news if it means that the patient cannot yet leave the ICU. Any admission to the ICU should be time-bounded; if not, then one might as well end it and let the patient find perpetual rest (die).

  25. Boma says:

    Kachaje ali ndi zeru zochuluka kuposa anthu ena odzikondawa. Maganizo abwino for sick mation, full of crooks.

  26. nyani says:

    my advise to kachanje the dunderhead start your political party.
    kachanje party KP
    economist People Party EPP

    By the way who told you that malawi is at the mercy of economists?

    1. November Rain says:

      Kodi Nyani iwe (as per your title), why dont just you go to hell, where you belong?
      You sound like someone with an unstable mind coz there is nothing wrong with what Kachaje is suggetsing here, unless there is something wrong with your mind.
      Why cant you discredit him on facts?; without wearing a political-party colour?

      Are you sure you can ask, “who told you that Malawi is @ the mercy of economists?”

      Iweyo nde Nyani weniweni, as your title suggests. Go to the jungle where you belong!

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