Malawi development strategies after 50 years: What next?

Malawi Government has already put in a lot of thinking on the objectives and functions of the Malawi Development Bank. Nonetheless, it is my sincere hope that such a Development Bank in Malawi will not be like “traditional development banks” in the developed world. It is also my sincere hope that such a Bank will develop appropriate lending instruments to provide financing to the rural communities, along the lines of the “Grameen Bank in Bangladesh”.

Dr Cornelius Mwalwanda

Dr Cornelius Mwalwanda

The guiding principles of the Grameen Bank, founded by  Muhammad Yunus, is to create economic and social development from below by making finance available to the rural poor. The Bank’s view is that lasting peace cannot be achieved unless large population groups find ways in which to break out of poverty, and micro-credit is one such means. The Bank provides credit to the poorest of the poor in rural Bangladesh without any collateral. At Grameen Bank, credit is a cost effective weapon to fight poverty and it serves as a catalyst in the overall socio-economic development. There are now more than two-dozen organisations within the Grameen family of enterprises. These include the replication and research activities of Grameen Trust, handloom enterprises of Grameen Uddog and fisheries pond management by Grameen Motsho or the Fisheries Foundation.

Malawi will need to venture in this area if we are to make progress. Institutions like the Comsip and Saccu could form important foundations for concerted efforts to address the issue of access to credit by rural areas.

(d)          Role of the private sector in generating growth and employment

The private sector can be an important engine of growth and has provided the much-needed stimulus in developing countries. The World Bank  observes that a number of emerging trends on the African continent could help to transform Africa’s current state of development over the coming years. These include the promise of large revenues from mineral exploitation, rising incomes created by a dramatic expansion of agricultural productivity, the large-scale migration of people from the countryside into Africa’s towns and cities, and a demographic dividend potentially created by Africa’s fast-growing population of young people. The Bank is of the view that:“If properly harnessed to unleash their full potential, these trends hold the promise of more growth, much less poverty, and accelerating shared prosperity for African countries in the foreseeable future.”

Recent discoveries of oil, natural gas, copper, and other strategic minerals, and the expansion of several mines or the building of new ones in Mozambique, Niger, Sierra Leone, and Zambia, together with better political and economic governance, have been sustaining solid economic growth across the continent. Exports are also driving the continent’s growth and the traditional destination of these goods over the last decade is changing as well. Since 2000, the overall growth of Sub-Saharan exports to emerging markets, including those of China, Brazil and India, and to countries in the region has surpassed that to developed markets. Total exports to Brazil, India and China were larger than to the EU market in 2011. Consumer spending, which accounts for more than 60 percent of Africa’s GDP,  has remained strong and contributed to growth of the economies of the continent.

Increased investment flows are also supporting the region’s growth performance. In 2012, for example, net private capital flows to the region increased by 3.3 percent to a record $54.5 billion; and foreign direct investment inflows to the region increased by 5.5 percent in 2012 to $37.7 billion. However, notwithstanding these gains poverty remains pervasive in many parts of Africa , including Malawi. After more than a decade of strong economic growth, Africa has been able to cut poverty on the continent, but not by enough.

Recent major economic trends have changed how developing countries can use trade to facilitate their development. These trends are the economic rise of developing economies, the growing integration of global production through supply chains, the higher prices for agricultural goods and natural resources, and the increasing interdependence of the world economy.

Malawi will need to galvanize the private sector not only to contribute to growth and employment, but also for the country to gain from the world economy and global trade. Efforts will need to be intensified to find innovative ways for supporting the private sector, including programmes to support Micro-Small and Medium Scale Enterprises (MSMEs). The East African Community countries have made much progress in this area, including the Jua Kali Scheme, which supports the development of small enterprises in the East African Community.

In our neighbouring countries, such as Zambia, Mozambique and Tanzania, initiatives to promote entrepreneurial development have dynamited the private sector in those countries. In Zambia, the Bongo hive has proved an important institution for the development new entrepreneurial skills. On the website of Bongo hive, it is stated that the essence of this new lab can be described by three keywords:

Innovation

Innovation generally refers to the creation or improvement of products, technologies, or ideas that signifies a substantial change or difference. The pioneers working in BongoHive want to bring innovation to the world of economics, business, entrepreneurship, health, education etc.

Creativity

Refers to out-of-the box thinkers that know new ideas need nurturing and support. They also know that having an idea is good but acting on it is more important. In their thinking, results are what count.

Sustainability

Refers to the belief that some applications and services can leapfrog development in Zambia. To them applications and services need to have the capacity to endure. With a connected and conducive place for techies to work on technologies that can leapfrog development in Zambia, they hope to produce sustainable outcomes-

These “Entrepreneurial incubators” have proved essential for developing a core group of new successful business people in these countries. Malawi will need to move in a similar direction. There is need for our country to leapfrog technology advances.

Creating an “Enabling Investment Climate” will need to continue to be a key policy focus of the Malawi Government. Efforts will need to continue on improving the country’s ranking on the index of “Doing Business”. The recent establishment of the “One-Stop Investment Window” in the country is a step in the right direction.

(e)          The importance of visionary leadership in development process

The vision and calibre of top leadership is essential to drive the development process of a country. This principle is supported by developments in the “Tiger Countries” and more recently by the rise of countries like China and Brazil. The vision and mission of the top leadership of the country is important not only in setting out the priorities of a country’s development process, but  more important in galvanising all elements of society to “buy-into the process” and thereby become important stakeholders of that process, be it government, private sector or civil society.

Examples of successful developmental oriented leadership can be found in the fourth Prime Minister of Malaysia, Mahathir bin Mohamad, who was the  Prime Minister of Malaysia for 22 years from 1981 to 2003, making him Malaysia’s longest-serving Prime Minister. His political career spanned almost 40 years. During Mahathir’s tenure as Prime Minister, Malaysia experienced a period of rapid modernisation and economic growth, and his government initiated a series of bold infrastructure projects. Mahathir was a dominant political figure, winning five consecutive general elections and fending off a series of rivals for the leadership of UMNO. Rising living standards, together with Dr. Mahathir’s showpiece buildings and outspoken defence of Malaysia’s interests, contributed to a sense of national identity, pride and confidence that had not existed before. He put Malaysia on the map, and most Malaysians were pleased about it. For his efforts to promote the economic development of the country, Mahathir has been granted the Soubriquet (Father of modernisation). Mahathir’s official residence, Sri Perdana, where he resided from August 23 1983 to October 18 1999, was turned into a museum (Galeria Sri Perdana) .

Lee Kuan Yew was the first Prime Minister of Singapore. He is one of the founding fathers of modern Singapore. The youngest to be elected in the office, at the age of 35. He is the longest-serving Prime Minister of Singapore. He presided over the expansion of Singapore’s economy from a third world country into a first world country. He introduced the National Service (NS) scheme, with the help of his Defence Minister Goh Keng Swee. He introduced the ‘Stop-At-Two’ policy in 1960s, for fearing of over expansion of Singapore population. He led the PAP into 8 consecutive election victories.

The second Prime Minister of Singapore was Goh Chok. He introduced several major policies and policy institutions, such as Medisave, non-constituency members of parliament, Government Parliamentary Committees, Group representation constituency, Nominated members of parliament, Vehicle Quota Scheme. He presided over the period when Singapore experienced several crises, such as the 1997 Asian financial crisis, threats of terrorism including the 2011 Singapore embassies attack plot by Jemaah Islamiyah, the 2001–2003 economic recession, and the 2003 SARS outbreak. He also introduced the ‘Baby Bonus’ scheme in a bid to increase birth rates. Prior his appointment as PM, he served as Senior Minister of State for Finance, Minister for Trade and Industry, Minister for Health, Minister for Defence and first Deputy Prime Minister.

These examples of visionary leadership shows the importance of top leadership in driving a country’s development process. In recent years, country’s like China and Brazil have abandoned old ways of doing things and adopted innovative methods of driving the development process, and not withstanding the type of political system that exists in those countries. The leadership of these countries has provided the impetus for economic “take-off” of these countries. Does Malawi have that leadership. That is a “million dollar question”.

Malawi has so far had five Presidents, from Dr. Hastings Kamuzu Banda to our current President Prof. Arthur Peter Mutharika. These Presidents have each had a different opinion on perception of “driving the development process”, as one of the key functions Banda gave considerable attention to was development issues, especially agriculture. Professor Bingu wa Mutharika, was a visionary leader who knew that leadership was important in driving the development process, and indeed a number of important projects were initiated during his tenure. It is difficult to evaluate the Presidency of Dr. Joyce Banda, because of the short period that the Administration was in power. However, the efforts made to stabilise the economy, through the Economic Recovery Plan (ERP), have been appreciated by many. The current leadership of Prof. Arthur Peter Mutharika, being a new Administration has still to demonstrate that it will provide this much-needed leadership our country needs to take-off.

This country also needs institutional changes to support the development process. The most important of this is the “National Economic Council (NEC)”. Most of the Tiger Countries have this key institution, which becomes the “think-tank” on development issues. Countries like Malaysia, Singapore, Thailand, South Korea and Indonesia have National Economic Councils. Furthermore, even developed countries like the United Stets of America have a NEC.

Malawi needs a NEC to coordinate our development policies and serve as a think-tank on these issues and more important serve as a bridge between the public sector and the private sector as well as civil society. This is the institution that could drive “change” in this country.

Recent developments in the Malawi economy, with the country’s ranking on prosperity index in Africa dropping to 12th, and inflation beginning to edge upwards, give rise for concern. Malawians need to put aside their political differences and come together to generate change needed to drive this country towards prosperity. This country is not poor in terms of resources, but poor in terms of human capital needed to drive development.

  •  Cornelius Mwalwanda, PhD, is a former deputy minister of finance and MP for Karonga Central constituency.
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Twebakiki Chichi?
Guest
Malawi needs action oriented people.Barking about these Asian tigers without taking any action is useless.These countries heavily controlled corruption and embraced the spirit of working around the clock.An average Malawian thinks of stealing from the top most bwana to bottom sweeper and you think you can compete with Asian tigers?For the people in power it takes ages to declare their assets.Reasons chachuluka ndi umbava.Dr Mwalwanda twende tulepule waka susa ni ndoki during weekends.You idea of mikwabo is good.There is alot of Usipa and masanga in Lupembe and Mlare.I have two canoes and we should be partners.Hope we can start from… Read more »
mpimpa
Guest

ashiiiii aaaaa its too long my friend aaaa as if ndilemba mayeso by the end of the day? Aaaa

johnM
Guest
Mr. Mwalwanda has done well to respond to his critics. There are many articles written by people who think they know all the solutions and when one criticises them, they do not respond. Mr. Mwalwanda should therefore be commended. In his article, He starts off with the formation of Malawi Development Bank. I don’t know if he believes that it is the panacea of the country’s problems because it is not. Mr. Mwalwanda should know that these methods have already been tried and failed. Government already had INDEBANK which in the old days was Industrial Development Bank and INDEFUND. Government… Read more »
angoni
Guest

You cant handle msb ndiye izi zotheka? Malawi

nganga bulawayo
Guest

The article is too long. Can’t Mwalwanda make it shorter, to the point and focused? And inu a nyasatimes osamalola zimenezi. There is a place for such long and winded essays but not online news.

Mtavuma
Guest

shupiti..za ma essay pano iyi…this idiot was deputy finance misnsiter and could have been implementing these ideas right there..usatikwane wamva?

Geneva
Guest

Frank wantani mwalwanda

chembwiye
Guest

Dazi lometalo nzeru zabwera lero, m’mbuyo muja zinalikuti nzeruzo?

paulos banda
Guest

CEO wake Jumbe aaa kaya

makito
Guest

On the contrary, this guy has just copied things with no analysis. The if Singapore did it Malawi can did it syndrome. Very shallow analysis not befitting such a personality.

wpDiscuz

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