“If there are two or more ways to do something, and one of those ways can result in a catastrophe, then someone will do it” – original Murphy’s Law
“If anything can possibly go wrong, it will go wrong. And usually at the worst time.” – variation of Murphy’s Law
The last breath of hope for Malawi from the IMF has been snuffed out. The Extended Credit Facility (ECF) program is still off-track and might be considered early next year – 2015 – subject to another review and subsequent presentation to the IMF Board.This program, though not worth much in relative terms at a total value of USD150.0 million, is a signal to donors and development partners that a country is “good-to-go” for assistance programs and this can unlock substantial budgetary and development cashflows. But the writing was already on the wall and the IMF stand last week did not come as a surprise to most people who have been following developments closely since the donor freeze in 2013under the Joyce Banda administration.
The IMF fine print indicates that the ECF program has virtually been scrapped and will probably have to be re-negotiatedat some unknown future date. In addition, all major donors have clearly stated that there will be no direct budgetary support to government in the near future. It is, therefore, only proper to call a spade a spade and construe that we could be heading for a Technical Knock-Out (TKO) as ourgovernment may, technically,not survive without financial support. How will it finance its activities and meet its responsibilities and obligations, especially in health, education and sanitation? How about the sensitive, untimely and ill-advised salary increments for civil servants, exorbitant packages for MPs and cabinet ministers?
And what about potential awkward increases of salaries and perks for the judiciary as their junior officers have – given the profile of ongoing CashGate cases – strategically held government to ransom by virtually closing all courts as part of their strike action?Billions in long overdue payments to the private sector? Payments for strategic imports at higher exchange rates, which will exacerbate the initial MK107.0 billion budget deficit? The burden of demands on government are huge visa vis its resource envelope, especially against stagnant or declining tax revenues as business activities slow down due to an unfavourable climate.It might just take a straw to break the camel’s back.
The Peter Mutharika DPP administration is caught between the devil and the deep blue sea. On one hand, its survival is threatened by continued aid withdrawal due to a still porous public financial system that led to the many cases involving over MK20.0 billion 2013 CashGate and related fraud, money laundering and corruption scandals that are yet to be convincingly prosecuted; on the other, it is paralyzed by the fear of the known and unknown skeletons in its closet that could be revealed by the German-sponsored PriceWaterhouse International forensic audit.
Speculation is rife that this investigation could implicate very senior past and present members of the party in alleged scams involving billions of kwachas from 2005 to 2012. This audit has become another pre-condition for resumption of donor support and presents the government with a CATCH-22 situation where the DPP administration now finds itself in that peculiar position where “you are damned if you do, and damned if you don’t.”Sympathetically, one can only imagine the probable immense pressure and torture of sleepless nights that has befallen President Mutharika and his inner circle amidst a deteriorating economic scenario and strident public calls for decisive action.
In the medium to long term, we need to become economically independent by producing more goods and services for both local consumption and for export and reducing our appetite for all things foreign; the ultimate is to become a net exporter with a favourable balance of payments. Until such a time, donors will remain indispensable and illusions of self-dependence are, for now, just that; we still need them to survive.
Given Malawi’s current precarious economic and fiscal position,strong, effective leadership is vital, so here is my short-term survival strategy pro bono advice to President Peter Mutharika: wake up and smell the coffee! And urgently engage a high gear to address donor concerns. Otherwise, you could unwittingly fall prey to a subtle undercurrent that could become an over-powering tidal wave created by the gravity of peoples’ disaffection with the political elites, high-level corruption and worsening economic realities.
Simultaneously, effectively engage the Malawian people, opposition political parties and other stakeholders and bring them on your side to create one united Malawi front. Stir up the fervor of nationalistic pride against some nebulous local and international enemies that do not wish you, your government and Malawians well.
Communicate a shared prosperous vision for Malawi and appeal to the emotions of pride, self-esteem and the virtues of hard work, sacrifice and discipline. Mount an aggressive PR campaign replete with professionally-staged monthly Presidential Press Conferences and regular national press events, debates and interviews to keep the citizenry informed. Keep the connection with the people alive. Cover all the bases. Be more intelligently vocal, visible and accommodating of constructive opposing views. Continue to engage donors as equals and not with a beggar mentality. And please personally ensure that your government seals loopholes in it’s financial systems, like yesterday!
Finally, employ some “moral suasion” and provide resource incentives for the judiciary to hasten prosecution of CashGate cases and any current or emerging trials under all previous administrations without fear or favour. In the quest to reclaim donor confidence and endure, note that beloved sacrificial lambs will have to be offered to appease “the gods.”Time is of the essence.
The ball is in your court, Mr. President.
It’s your call.
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(ChikavuNyirenda is a Senior Lecturer in Banking and Finance at The Catholic University of Malawi and contributes, in his personal capacity, a weekly column, ‘Views from the Sunset,’which is published in ‘The Daily Times’every Monday).Follow and Subscribe Nyasa TV :