The curious curse of donor dependence: Malawi situation

“It’s the economy, Stupid!” – James Carville, Campaign Strategist for Bill Clinton’s successful 1992 presidential bid

One cannot help the nagging feeling of “déjà vu” given our fast deteriorating economic and fiscal scenario following the withdrawal of direct budgetary assistance under Joyce Banda’s PP administration which has spilled over to the new government. There is an eerie sense of history repeating itself, a premonition that we have been down this road before.Fate of the kwacha

Under every regime since independence, we have seen donors withholding their purses, and this has, invariably, led to economic hardship for Malawians and significant changes in the socio-political landscape of Malawi. Reasons for  withdrawal of aid have ranged from human rights abuses and in support of democracy during Dr. H. Kamuzu Banda’s reign, to rampant corruption, lack of respect for the rule of law and accountability under Bakili Muluzi, executive arrogance, intolerance and governance issues with Bingu wa Mutharika and, most recently, unprecedented financial scandals known as CashGate, JetGate and MaizeGate under Joyce Banda.

Smarting from the unexpected loss of power following the sudden death of Bingu wa Mutharika in 2012 and the humiliation of having its leaders arrested and vilified under Joyce Banda’s rule, the DPP faithful regrouped and masterminded a contentious come-back in an elaborate campaign and election strategy that left no stone unturned. Come May, 2014, two years after Bingu wa Mutharika’s death, the DPP was triumphantly back in power under Peter Mutharika!

But the donors have remained adamant on resumption of aid until there is full transparency and accountability with regard to moneys plundered or alleged to have been stolen from government, now from as far back as 2005. President Peter Mutharika and the DPP administration inherited the heavy aftermath of CashGateet al and donors have added another weight by requesting – and providing funding from the Germans – for a forensic audit by PriceWatehouse International to unearth any abuses from 2005 to 2012. This is, coincidentally, the time that the same DPP was last in power.

Can one blame the donors for “abandoning” the Malawian people following the massive looting of government coffers? Perhaps not. In principle, it is purely a question of ensuring adherence to acceptable standards of moral integrity and fiscal prudence. Mind you, donors are also accountable to their taxpayers who are keen to know whether their moneys are benefiting the poor or enriching an elite cabal of selfish and greedy individuals. They, therefore, expect the highest levels of honesty, integrity and conscientiousness from our political leaders and public office bearers. So, ostensibly, the agenda for donor withdrawal is upholding ideals of democratic principles, rule of law, transparency and accountability.

To their credit, and in an act of good faith, our benefactors have not totally ditched us; they are still willing to support social and development programmes directly without channeling resources through the government’s leaking bucket.

Whilst our leaders are most culpable for betraying our trust, we, collectively as Malawians, are equally complicit and have only ourselves to blame for the withdrawal of budgetary support through our actions and inaction. We need to take ownership of our problems and ensure that our leaders address both our concerns and donor disquiet timely to regain lost trust and confidence. As troubled and burdened Malawian taxpayers we must, simultaneously, demand full accountability, punishment, recovery and reparation for and/ or of the unprecedented shameless thievery. And hold our leaders to account.

It’s noteworthy that, all over the world, donors do not usually directly interfere with the local socio-political dynamic. However, they can influence the agenda by withholding aid or imposing sanctions, thereby creating a state of affairs that may result in commotion, coerce compliance to set conditions or lead to significant political transformation. Our own history provides adequate positive correlation between donor withdrawal and seismic changes in the political and socio-economic landscape. It has become a vicious cycle. It is up to us, as Malawians to offer support to, and by our actions, to patriotically compel the government to break the curse and collectively craft a way out of our current dilemma and forge a more inclusive and prosperous future for Malawi.

Economically, the aid withdrawal has started to bite hard and Malawians are, once again, suffering. We are already seeing the signs of an economy that is heading for disaster – a rapidly depreciating currency amidst insufficient foreign exchange reserves, high inflation, already high interest rates expected to go even higher with the recent increase in the central bank policy rate from 22.5% back to 25%,continuous increases in the cost of living, an eminent increase in fuel prices that could further exacerbate the general price increases and spark wide-spread calls for wage and salary increases, increasing unemployment, increasing insecurity and indications of economically unsustainable increased government borrowing to finance recurrent expenditure.

Given the above, and in the spirit of “United, we stand; divided, we fall,” let us, together, urgently and concretely address donor anxieties and solve our looming national crisis. This impinges on Peter Mutharika, as president, to show strong, proactive leadership and to be courageous enough to accommodate “unpalatable” truths and good advice, to be sensitive to the peoples’ concerns and public mood, to be decisive and to take hard decisions that may even be unpopular with some within his own party; to do what is right, and not necessarily what is expedient, as a matter of survival and in the best interests of the nation.

Just like in the touching, highly acclaimed movie, ”The Curious Case of Benjamin Button,”it would appear that the older we grow as a country, the more retrogressive we become  as a nation; it’s a question of two steps forward followed by three steps backward at every turn. It’s time to change and chart a positive way forward.

And right now, we are sitting on an economic and fiscal time-bomb with potentially disruptive political ramifications.

Tick! Tock! Tick Tock!

Please don’t shoot the messenger.

CJN

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(Chikavu Nyirenda 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).

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Fathi Alshab
Guest

these discudsions getting too emotional dometimes..lpointing ti ina fact that some malawians are hurting & our leaders think its normal even ze church clergy guys cinfysed lot too!

Kholowa mkabudula
Guest

Anthu akamatinena kuti a malawi ndife opusa ngati amkanama,we don’t see any problem in that but mimicking. We are a nation l fail to describe!

Cicero
Guest

I want to agree with Mr Chikavu that indeed we Malawians contribute 45& to malaise of our problems. Why can’t we just burn houses of all these thieves called politicians feed them to the crocodiles & start new life with no immunity to the number thief called number citizen. People have done in Burkina Fassou why can’t we did it here(sig-MULUZI)

Medrian Kaunda
Guest

I cannot believe this meek passive replies here. Turning the other cheek, praying that God will one day etc. etc. Totally lame and free and no change and go to church and pray once more. You have to think 20th-21st July, please wake up Someone sacrificed their life for YOU.

Kenkkk
Guest
While I agree with most of the issues you have raised, I just don’t agree with your graph analysis on the four presidents. The Kwacha was strongest under Kamuzu because he ran our economy better than any other leader that followed him. The Kwacha to dollars or pounds was really competitive under Kamuzu. Also you are not comparing like with like, Kamuzu ruled for 30 years but you only chose 10 years. Despite that the Kwacha was still strongest under Kamuzu. Are you just favouring your fellow economists? By the way I am also an economist but I don’t agree… Read more »
Mkandawire
Guest
Bwana “kenkkk” Nyirenda , the writer of this article, has done nothing wrong here. The problem is with us Malawians because we can’t detach ourselves from our perceptions and prejudices. We are strongly brain washed that Kamuzu was better than anybody else to the extent that we can’t accept otherwise even in the face of reliable available evidence. Nyirenda is just showing us what the really data say. In research we don’t force ourselves to accept null hypothesis when the results show that we should reject it. Give us the new data to support what you are claiming, otherwise Nyirenda… Read more »
Kenkkk
Guest

I am afraid you are not convincing me. My only option remaining is to agree to disagree!!!

Namacherenga
Guest

I don’t see anything new in this article. What exactly should the president do? What would Chikavu Nyirenda do if he were president. Otherwise it is a waste of time reading some of these articles.

Mkandawire
Guest
Kamuzu=181% (9yrs); Muluzi=2312.9 (10yrs); Bingu=51.3% (8yrs); Joyce=155% (2yrs). Looking at the statistics about the depreciation of our currency in the graph above in this article, my conclusion is that it is good to be led by an economist than wembawemba people. According to the statistics in the graph, Bingu wa Mutharika is outclassing even Kamuzu. Mmmm Bingu was a true economist. If Nyerenda had factored in devaluation Joyce would have been the worst president ever in terms of currency management (International Economics). Even APM, though we don’t have the figures yet, never match Bingu wa Mutharika. Tribal hatred aside, we… Read more »
Anonymous
Guest

Let we learn to stand alone for how long we will depend of other people to help us, donors there are doing right to teach us lesson to be self dependence

Concerned citizen
Guest
Very good article. I have one problem. What measures have been put in place to take our country out of the donor dependence trap which we have not been able to defeat for 50years? Is it because our leadership is happy with the situation? Or is it that we don’t have a clue as a nation as to what to do? If that is the case, why do all those parliamentarians meet periodically? What do they discuss, and is it of benefit to me as a commoner? Our over dependence on aid is sickening and embarrassing at the same time.… Read more »
CHEWA FEDERAL FRONT
Guest
Yeah, … Tick! Tock! Tick! Malawi will never get out of its poverty trap because it has little to sell to the world. The tobacco produced mainly in the Central Region and Rumphi/Mzimba(North) can not generate enough dollars for 16 million people. Funny thing, some whole villages and districts are dependent on vending. Why should someone travel from Nsanje or Mwanza or Zomba to Kasungu only to be a vendor? They will say “there is more money in the Central Region”. So, why does Kasungu have more money than your district and they will say, “er … Dr Banda…er…” Unless… Read more »
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