Kapito against Escom privatisation: Hits at IMF and World Bank

The consumer and human rights activist, John Kapito has warned Millennium Challenge Corporation (MCC) not to use its technical and financial support on the restructuring of Electricity Supply Corporation of Malawi (Escom) as passport to influence and dictate the country’s policies.

Kapito:  No to let Escom go into private hands

Kapito: No to let Escom go into private hands

Kapito has also taken a swipe on the donor community especially the International Monetary Fund (IMF) and the World Bank for dictating the privatization of the country’s public institutions, and blamed the country’s leadership of lacking a clue on grants and loans donors provide to this country.

The consumer advocate made the omments at the time when government is planning to restructure the power market by unbundling Escom, with support from MCC, into two companies amid reports that the same government was considering privatizing strategic stake and management rights of the company.

The Ministry of Natural Resources, Energy and Mining with technical and financial support from Millennium Challenge Account Malawi, said was considering to unbundle ESCOM into two companies- one responsible for generation and the other for transmission and distribution of electricity.

“The fact that they have provided us with a grant or loan must not be a passport for MCC to use as a tool to influence and dictate our policies they can’t give us aid and write our laws but they must encourage us through partnerships to see how best we can navigate to have good energy reforms and policies they can’t use their aid to but our energy policy development programmes,” Kapito told Nyasa Times in an exclusive interview.

Kapito said it was unfortunate that donors have been pushing for the country to privatize its public institutions despite the fact that such initiative has not benefitted Malawians although many of government-owned institutions have been privatized over the years.

“Unfortunately today conditions to privatize or sell public institutions are dictated by those we borrow money from, IMF and World Bank, who do not really care at the future of any developing country until today they can’t answer whether we benefited from the privatisation of our key public industries,” said Kapito.

“Unfortunately our leaders seem clueless and they have no idea of what will be the negative effects of these grants and loans where the people that lend us money become the real armchair leaders”.

He then backed the idea of restructuring the power market by allowing new players to compete with Escom but warned government and the donor community from privatizing the utility company, arguing Malawi was not ready to privatise or sell some stakes in Escom but instead the company should undergo major reform and restructuring.

“We are not ready as country now to let Escom to be in private hands but as Malawians we are ready to restructure Escom so that it is independent from Government interference at the same time making sure that it continues to carry out its social corporate responsibilities to ensure that at least Malawi has attained 70 percent of electricity coverage to its people,’’ explained Kapito.

Kapito believes that Escom can be restructured without selling or privatizing any stakes, saying Malawi can still manage and control its full shares only if the company’s management and corporate structure is independent from Government control.

“If indeed Government needs to load off some of the functions it’s important to do a lot of studies where this has worked; unfortunately any of this has not been successful in any developing economies. The key answer is reform and restructures Escom for the good of Malawians and let us as Malawians own the process’’.

Ministry of Natural Resources, Energy and Mining in collaboration with Malawi Energy Regulatory Authority (Mera), Escom and MCCA-M, is expected to complete the restructuring of Escom is expected to be completed by 30th June 2016. The process will also bring in Independent Power Producers who will be given licenses to produce their own power and sell to the nation.

“It’s early too soon to let Escom to be left in private hands and it will be the worst disaster for Malawians and success for our partners that are pushing for the sale mark my words’’.

About 9 percent of Malawians have access to electricity.

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51 thoughts on “Kapito against Escom privatisation: Hits at IMF and World Bank”

  1. Umodzi says:

    Anatigulitsa kale changosala ndi choti angopanga tsiku loti tonse tizikasesa ku ndata. Zimatiwawa maka mukamatiuza kuti tiphunzile pamene ma company mukugulitsa, ogulawo sangalore kuti ife tikhala pa mipando yabwino, amatipatsa ntchito yomasesa m’macompanymu. Tiphunziliranji pamene kuti tizagwira ntchito zabwino, timangileni sukulu zophunzitsa kuba basi, bola mukagulitsa mukumbuke kugula mankhwala nzipatala komanso mabuku ambiri agulidwe m’masukulu athu koma tisamve kuti mwagulira maunyolo ndi zibonga za apolice.
    Anthu ogwira ntchito ku escom akachotsedwa ntchito azikakhala ku ndata. Bola lathu limazolowera kugulitsa ma company ngati tomato

  2. Telling the Truth says:

    I agree with all those who have criticised Kapito. Why is Kapito attacking IMF and World Bank? Mr Kapito please know that IMF and World Bank do not need Malawi. It is Malawi that needs these two institutions. Mr Kapito you mean you do not know that if these institutions gave Malawi funding without conditionalities these funds would be misused by the DPP govt? Have you already forgotten NACGATE? These parastatals are a drain of taxpayers money and badly abused by the ruling party. Look MBC is now just a mouthpiece of the DPP regime that is failing to transform Malawi. A Kapito you are an empty tin-a spent force.

  3. Gulitsani Escom, Admarc, Water boards, Nyanja mumalizire kugulitsa dziko lonse la Malawi ndi anthu omwe.

  4. Dikisan says:

    Our country has been sold already to the foreigners. What do you expect from people who do not know the vision of the people who founded ESCOM? No wonder tafika pomgulitsa mafupa athu. Chifukwa chosowa zochita. Malawi walero, ndiwa mawa is very painful. Kapito has a point don’t criticize. He has been in the country. He knows our roots. Some of you only know branches where fruits are. Shame on you. Leave Kapito. He has a point. Iwe ukupanga makani ungagule ESCOM? Ndiwe olemera ngati amwenye akudzamaza Blantyre ndi Lilongwe?

  5. Apule says:

    Mr. Kapito needs to understand the words that he is saying. First, it is not in the interest of Government to run businesses. That is why we have a public sector and a private sector. Government’s role is to ensure that rules and regulations are followed that are at the benefit of the major populace. Second, if we Malawians keep on thinking that its donors who want us to change then we will remain poor for the rest of our lives and keep on celebrating independence on July 6 of being poor.

    Let’s face it, for 51 years our public policy has not taken us anywhere. Malawi is one of the countries in the world that has the lowest gross domestic savings averaging about 6.5% per annum. The level of Foreign Direct Investment hovers around 2.5%, again the lowest globally. Where are we going to get the money to transform our economy if this is the current status quo? Mr. Kapito, in addition, you rightly say that for the same company ESCOM that is expected to be of public interest has managed to connect since independence only 9% of our citizens, do you think that is good? The problem with us Malawians is that we fear the future. It is like the person who was given one gold coin in the bible and because he did not know what to do with it he kept it under wraps for fear of the master.

    Malawians, we need to change and if we are to change we have to take up drastic measures that will help is in the future. In Zambia, their reforms started way back in 1991. Yes, their exchange rate depreciated at unimaginable rates of 120% and hyperinflation was at 125% all because they wanted to reform. Now, the Zambian economy is back on track. In 2000 they had privatized most of the public enterprises that the government clinged on to and ever since they did that, their economy has been growing at a rate of more than 7.0% per annum. Inflation is now a single digit and the exchange rate is the strongest compared to Malawi now. Much as we want our government to take hold of everything it cannot find all the money needed to keep our economy; even on life support. There is nothing that is free in this world if you are concerned that our citizens will face high tariffs. In fact, competition will bring in low tariffs as we are currently paying for the inefficiencies that are borne by the current ESCOM at the moment.

    If we are to attract private players in the power sector, we have to understand what they are asking the nation to do. Currently, ESCOM owns three licences in Generation, Transmission and Distribution making it a monopoly in the electricity business. If the financial risk is borne by the private player (where they have to source funds not from Malawi but from international financial institutions), then they need guarantees that the industry would not be predatory. Would a private player come in to do business with Malawi in a sector that is monopolized? No, they will demand a level playing field where not one company has the monopoly of owning three licences as is currently the case. Is this donor driven? No.

    Finally, as leaders that are expected to spearhead development in Malawi, let’s look at the bigger picture. If the current situation of ESCOM only led to connecting 9% of our people, is this satisfactory? Can we then reform and restructure ESCOM and still maintain the status quo where Government still runs the show with inefficient processes? Look at the Water Boards, our Hospitals, etc. Do we still want to continue with getting these services free? You will find that the answers to all these questions is no.

    Mr. Kapito, please do not lead the nation astray claiming that what ever change that we make is from donors. If we have that mentality I can assure you that after another 50 years of independence, Malawi will still be celebrating being a poor nation. If we are to bring autonomy in our institutions, I would recommend commercialization where the public and not Government own share in our public institutions. Having our State-Owned Enterprises owned by Government 100% leads to gross inefficiencies and abuses by only a few individuals. It is up to us as Malawians to choose what is right for the very same poor that we claim to be fighting for their rights.

  6. ndadabwa says:

    usatinyase Kapito. iwe wemwe ukadya ndalama unena kuti yes. nkhope yonyasayo

  7. People, let us be honest. What do we gain from the current status of ESCOM? Blackouts and inefficiencies. I mean ESCOM has been abused by politicians so much that it is almost bankrupt. It is not even answerable or accountable to the customers. Why do you still want this entity to be in Public Hands? By the way, we pay for the loans that ESCOM takes through our taxes yet we do not get much joy in its services. Even the tarriffs are not as low as some people would want us believe. Think of Malawi Telecoms. We have moved on and we get alternatives. We will also get alternatives once ESCOM is put in competition. Once sold, we will no longer have liabilities in ESCOM. Government is not a good business owner.

  8. Mbanangwa says:

    Mr Kapito got it wrong. IMF knows that Malawi government enjoys siphoning out money from Escom, Waterboard etc to finance political meetings instead of benefitting the population. This is an endeavor by IMF to close loose holes that are acting as conduits to siphone out resources from this poor nation.

  9. gaga says:

    its true govt should not give away escom because the benefit to the masses is little as experience has shown on past sale of other entities.

  10. Chimpanzees says:

    Mr Kapito, you told us that ESCOM power all day everyday was a blue lie. ESCOM then danced to your tune with towards power all day everyday.The change In the motto yielded no results in ESCOM s perfomance.
    Sir,Kapito you can’t be good in commenting all issues. Kenya and many African countries unbundled their power utilities and they are successful. Sir it pains us when these companies become milking cows for some political god fathers at the expense of poor Malawians. Are you happy when you see ESCOM trucks ferrying people to political party meetings? Sir Kapito, on this topic you are not an expert and you have been misguided ,better go back to school . Remember to take notes for reference

  11. BYO says:

    I thought ESCOM is a limited company. Hence it operates under the Companies Act.

  12. solomon says:

    the state for the past 20 years has failed to improve and develop escom and water boards its time they leave these to cpmptent private people who can develop them. kapital is a communist liar who advocate to an outdated economic school of thought

  13. Indudah says:

    I see a point in kapito …….nd lemi say dat we shld avoid using principlez of developd countiriez into malawi…..u kno already d weakenss of privatsation on a country like mw…..nd u insist privatisin big bodiez like escom ……remember muluz’s era

  14. Senior Citizen says:

    Peter Muthalika nd chitsiru chosamvera zonena za anthu akufuna akagulitsa ndalama zo zilowe ku accout kwake. Ndalama za bank znapita kut ? Amalawi mwawona munavotera mbava

  15. Bololo says:

    It all comes at a cost. The donors wanted an experimentation ground for these arrangements. If it works or can at least be documented to have worked other developing countries will follow. Quite a good business strategy for the west. Now they have it.

  16. Kapito is big mouthed. Privatizing ESCOM will do good to Malawians. Other developed countries have done it so why are you worried about kapito

  17. nyasapepo says:

    sugacious people will always present constructive ideas, Mr Kapito go on directing gvnt by ur gud ideas

  18. nkasimunguya chinankasanganye says:

    Malawians voted out leaders who could have atleast helped sorting crucial issues affecting lives of majolity malawians. They instead voted a vendor into power.
    I have never seen selfish tribe- like that of….
    We can talk and talk but he is un shaken,shame!!!!!!. Its our fault.

  19. Jang'ala says:

    Sale ESCOM. We faces frequent blackout. Ithink if it can be privatised this can change and start giving us good services.

  20. Mpokosa vin says:

    I think that kapito is talking the truth bcoz privatising state owned organisations has proven to be unsuccessful in recent past.The government is to blame for underperfomance of most parastatals in Malawi chifukwa amalowetsa ndale muzochitika za mabungwewa.The first priority of private companies will be to maximize profits once given chance to run this organisation thereby pushing further the already exorbitant tarrifs which won’t be achieved by an ordinary person.This will then compromise the objective of social corporate resposponsibility.How do you look @ the issue guys?

  21. Kondwani Bowazi says:

    Am tired of this Kapito Dude. The man got a big mouth and no action. He is out there writing checks he can’t cash. Go play somewhere, we are busy!

  22. Our problems are not from these greedy politicians we have BUT the international community as well is the biggest problem.

  23. Clueless leadership says:

    A Kapito musatipusise ngati kuti you are concerned.
    Taonani MSB m’bale wanuyo anagulitsa.
    Escom ndi iyo akugulitsayo.
    Lake Malawi anagulitsa kale kale.
    Nkuthekanso kuti Malawi yomwe anagulitsa.

    By the way, m’bale wanu uja sanatipatse malipiro athu, koma kupangitsa misonkhano yopanda ntchito ku thyolo ndi ndix ndi izo amaziwa.
    Tell him to PAY US NOW OR WE WILL DOWN TOOLS

  24. Federalist says:

    Mr. Kapito , you are unfortunately talking to a people you yourself have helped to divide. You prefer to work on your own for personal publicity and recognition. .Now. listen, what is needed is to mobilize and empower Malawians for them to determine their path to development. This will be possible only if all CSOs stop working in isolation and if they all reject the temporary temptation of scone-stuffing.

    At the moment, I can. assu re you that Malawians in the urban areas who have waited for a year to be connected to magesi are more than happy to have otherr take over part of escom duties. Similarly, our people in villages also want a share of this development service.. To them, whoever brings this chitiukuko is welcome.

  25. Edmund says:

    Any government control in a company is bound to be abused whether you like it or not. Escom must be sold full stop. We should only debate on how best Malawians can benefit in this sale either immediately from proceeds or from future ‘new’ Escom operations. that is what we should be discussing here. My advice: shares must be sold to local Malawians but not the MSB way where government gave one Malawian a lion share advantage which was not good.

  26. Wonder 30 says:

    9% they use electricity in Malawi the rest 91% uses chikoloboyi.Malawi has developed beyond recognition.

  27. Bwampini says:

    More fire APM do not listen to Kapito. Go ahead privatise Escom like you did with MSB by selling it to your Mulhakho brother Mpinganjira.He supported to your stupid idea to offload MSB because Mulli anamugawira Chisikono.He is vomiting stupidity now because Americans will keep watch on this transaction.In short Kapito will not benefit anything.But know that it is just a matter of time your clueless adminstration will fall as a result of these stupid decisions you are making now.
    Akulemmberani hard hitting Pastoral Letter Akatolika. Moti Nawenso Uyithawa ntchito ngati Bingu Posachedwapa.Anyanya mabulanda Mwapiya Mulhupali Kangwazi Peter Mutharika.

  28. Tsoka msinde chimanga chilinda moto says:

    Bwana Kapito you are really right here. Privatization of Mw Government companies has not helped us in anyway yet our donors are having their donations or lending conditions attached to the same.
    Sometimes I wonder whether these loans we get from International banks have anything to take us out of African poverty or they are meant to make us poorer!

  29. mo says:

    Mwaona,yatsala lake Malawi, then m1road ,keneko ujeni

  30. awiky says:

    dats right mr kapito but my quetion iz are u think dat dis greedy politicians are going to change their mind because u have fired ?

  31. Njolinjo says:

    Political appointments is killing our parastatals. Hands off these institutions. There priority is to save their political masters and not the citizenry at large. Shame!!!!!!

  32. Achimidzimidzi says:

    Don’t remind me the MSB scenario.

    The buyer is already here and legally executive has absolute powers to conclude the sale.

  33. KANKHWANI says:

    Mr Kapito if this is idealic then ask those in control to discuss and have a better decision than just making noise like this at the end we gain nothing

  34. ophiri says:

    my malawi

  35. Jones forty says:

    Privatizing Escom is as good as selling the Malawi nation Msb is gone Escom is going what next mdf and mbc will also be going multiparty is war

  36. S. Allie says:

    Kugulitsa Escom zitinthandiza chani umbava ndiye wakula basi at the end Escom gate

  37. INVESTOR says:

    ESCOM NEED TO BE IN PRIVATE HANDS JUST LIKE ADMARC AND WATER BOARDS FOR THE SAKE OF EFFICIENCY.IF THEY HAVE FAILED TO ELECTRIFY 91% OF MALAWIANS IN 51 YEARS IT SHOWS THEY ARE CLUELESS AND RETROGRESSIVE.
    GOVT HAS SHOWN INCOMPETENCE IN RUNNING OF PARASTATALS HENCE WE NEED PRIVATE HANDS.

  38. Kapito Really says:

    Watulukila tsopano. Where have u been. Malawians are really struggling iwe uli duu , am sure Mr Kapito anawafumbatitsa potentha. Tangokhalani chete Mr Kapito.

  39. zibwente says:

    Privatization is not the best solution when the functions of an industry are not making profits. Statutory cooperations have the responsibility to provide resources to the population regardless of profits that they are making. This is trying to conclude that privatizing ESCOM will make the life of Malawians hard as the company will turn into a profit making orgisation. This truly give an impression that electricity will be expensive and it will be a Burden to Malawians

  40. Mwana Mai says:

    Privatisation as such is not a bad idea. What may prove to be sour is the implementation of the whole exercise. If you visit developed countries you will note that services like those provided by Escom are done competitively utilising a number of companies who will compete amongst each other in various ways. If Mr. Kapito feels privatising services is wrong then he might possibly be thinking of privatising wholesale other than letting indigenous businesses acquire shares. What I am saying is that it has already been tried and Malawians on their own cannot run big businesses because of less capital. If that is what it is why not partner with international businesses for the sake of financial support then let Malawians own a big chunk of shares. The problem we have is that we do not possess the entrepreneurship abilities, let alone running mini-buses businesses. For how long are we going to manage our country as if we are still in the 60’s? When are we going to learn to think and do things outside the box, by being speculative? Those organisations bringing up the privatisation mantra should be told that as long as Malawians will hold a bigger shareholding of the industry then that is fine but failing which then it is a no go. But sternly sticking to your guns for no good reasons is counterproductive. Finally, Mr. Kapito is a responsible nan who should know how to go about things when it means advising in his capacity. It won’t benefit anybody if he continues to air his views in the media in order to attract more dissent from the general public because as it is not many Malawians know the pros and cons of this privatisation thing. Zikomo kuti mwanena izi.

  41. zonse ndi nthawi says:

    Mr kapito you are right 100% only that our politicians are too greedy and corrupt. In the past Dr H. Kamuzu Banda was managing these government institutions and were benefiting Malawians .I feel pity with our county Malawi, politicians behaves like mad men that they have no govern in their heads.If everything will be sold long at last they will sold the country.

  42. chefourpence says:

    I like this guy! I like him! And if the experiences of the 90’s are anything to go by, he has a point!

  43. Dedza Guy says:

    Your ideas are good but I feel you need to consult the people as well.

  44. Emmanuel Chimphamba says:

    Yes, he is back. The solo voice… talking to a deaf authority. How many voices were heard talking about the sale of MSB? What came out of that? Search me!

  45. Chozemba chidzakumana ndi chokwawa!!! says:

    Next we’ll hear that “Deal Done”!!! Peter and Goodal in action!!! Koma anthu ena akakalambanso nde sizinthuuuuuuuuuuuuu!! Chikanakhala chimanga chonse kukazinga osasunga mbeu zoona!!

  46. Native says:

    Sell Escom and Water board should be sold too. Government should concentrate on making its people financially independent.

  47. ndugumvwinya says:

    ambwiye che kapito amenewo

  48. Old nyasa says:

    Kapito kapito! where were you when the govt was offloading MSB

  49. Ongeza Kidoko says:

    I fully agree with Mr. Kapito. The Donors must have respect for national policies and development agenda. They tend to dictate too much with the carrot they offer to us in the name of aid. Actually the donor community is into exporting poverty in this global economy, and Malawi seem to be importing too much of this poverty.
    At least for the first time Bwana Kapito has hit the right note! I urge you to pursue this further so that the donors must know that their meddling is unacceptable.

  50. Concerned Malawian says:

    Word Mr Kapito, we surely have blind leadership whose only focus is sourcing loans and grants with no clear vision of the implications of the attached conditions. Their main concern is to have funds in the country’s reserves which they can later devise ways and means of syphoning to support their greedy political agenda. For how long shall this be? The next course of action is to hire Chancellor Angela Merkel to rule our nation as the natives have proven beyond any reasonable doubt that they are failures. I rest my case

  51. Kas says:

    KAPITO Z BACK

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