A lot of Malawian pundits and commentators have pointed out that cashgate symbolises a larger malaise affecting Malawian society. To these commentators, cashgate happened because we are a “rotten” society ruled by corrupt leaders; because we have lost our moral compass as a nation. If this is true, does it not then follow that many of us, to some extent, have what we can term a “cashgate mindset?” Does it also not follow that this “cashgate mindset” can be evidenced in every sphere of our daily lives?
Despite a few revelations of how much money has been looted thus far and how IFMIS was at the centre of it, forms of plunder at the scale of cashgate have gone on before in the history of the country. Only that past perpetrators managed to get away with it. There is need to continue asking what really caused cashgate, and what needs to be done to ensure it does not happen again. Short of that, we should brace ourselves for more of the same.
In what follows, I discuss the extent to which a “cashgate mindset” has been in the making since we won our independence. I suggest that our failure to tackle inequality and improve the lives of the majority of Malawians lies at the root of the greed that has led to the unprecedented levels of the plunder that we have recently sees. I conclude with a thought for the brave Malawians who have played key roles in bringing out this scandal.
Categories of plunder
The revelations from how cashgate was perpetrated reveal two categories of plunder. The first category was a means for fundraising for political parties. Many pundits have observed that this goes back to 1994, when we adopted a multiparty system of government. I contend that it probably goes back to the one-party era, albeit in a different format.
The other category of the plunder was straightforward thievery; people selfishly enriching themselves at the expense of everyone else. There have been three common denominators in both categories of plunder. First has been the economic inequality that has been the bane of modern Malawi, preceding the independence era. Wealth in Malawi has always been controlled by very few individuals, be it during the colonial era, or the post-independence era, or the multi-party era.
The second denominator has been a shift in the perception and understanding of moral ethics. What in the past would have been seen as taboo, the wanton looting of public funds, came to be seen as normal and acceptable. Even when people knew it was wrong to steal from public funds, many people who should have stopped the theft either simply looked away, or became involved themselves; “tidye nawo.”
The third denominator has been the greed mentioned above; grotesque self-enrichment at the expense of others, through uncouth means, including funding for political campaigns through illegal means. Greed has always been with humankind, and it knows neither geographical boundary nor historical era. But in a society where inequality is blatant and moral ethics are shifting, the desire to curtail malpractices can easily give way to nihilistic irresponsibility.
Cashgate in historical context
A cashgate mindset did not take hold of the Malawian psyche overnight. It has been a gradual process in the making for as long as we have been an independent nation. During the one-party era, the only party in power, the Malawi Congress Party, controlled all the resources and did not have the need to worry about how they would fund election campaigns. Wealth was concentrated at the very top. It was a form of a cashgate mindset, although only those close to the corridors of power had access.
When the multiparty era arrived, ushered in by the coming to power of the United Democratic Front in 1994, a different type of cashgate mindset crept in. Allowed to compete in elections for the first time in decades, parties now had to work hard to look for campaign finances. The depravations of the one-party era meant that those newly in power in the multiparty era had sudden access to what they saw as a ready cash cow that could be milked anyhow. For once, politics became the fastest way to accumulate wealth without having to work hard or be accountable to anyone.
With the economy still undeveloped, there were not many rich individuals who could fund political parties from private wealth. The public purse became an obvious target. With international financial institutions such as the World Bank and the International Monetary Fund insisting on the privatisation of public assets, ruling party politicians found an easy way of transferring wealth from public control into private pockets. Malawi lost national assets such as the Malawi Development Corporation, the Malawi Book Service, the Malawi Railways and numerous other institutions. This was a cashgate mindset at work.
The curse of low salaries
Malawi has always had low salaries in the civil and in the public service. That this was a problem was not obvious during the centralised economy of the one-party era which prohibited individuals from amassing excessive wealth. In the early years of multiparty the UDF government made an attempt at restructuring salary scales in the government. Erstwhile president Dr. Bakili Muluzi commissioned an inquiry, whose findings became commonly known as the Chatsika Report (1995). The report recommended new salary structures, but it also recommended trimming the size of the civil service.
The government warned that it would have to reduce the size of the civil service of almost 120, 000 at the time by half in order to be able to increase salaries. Chairman of the Cabinet Committee on the Economy at the time, Dr. Cassim Chilumpha, was quoted as saying the government would have to raise US$ 660 million (K1 billion at the time) “to fully implement the recommendations of the Chatsika Report” (Malawi News Online, April 1997). Dr Chilumpha, who was also Minister of Justice and Attorney General at the time, argued that pumping such a huge amount of money into the economy would “trigger high inflation” and would render useless the Chatsika recommendations. Most goods, he warned, would be too expensive.
Even worse, warned Dr. Chilumpha, the country would be burdened with borrowed money and accruing interest, discouraging investments and savings. The UDF government’s position was that it was better to “share the little there is and retain most of its work force.” There were obvious merits in the government’s argument at the time, but it is up to economic historians to put into perspective the consequences of that decision.
In a 2005 article titled “Public Finance Management Reform in Malawi” economists Dick Durevall and Mattias Erlandsson from Göteborg University in Sweden argue that numerous efforts to restructure civil service salaries failed over the decades due to entrenched elite interests. Many top civil servants were paid salaries close to those in the private sector, and restructuring the salaries would benefit low and middle level civil servants more than they would benefit top civil servants. Durevall and Erlandsson dispute the recommendation made in the Chatsika Report to cut the civil service by half, arguing that Malawi’s civil service has always been much smaller than that of comparable countries in the region.
In an Economics Association of Malawi (ECAMA) lecture he gave in August 2013, Professor Thandika Mkandawire pointed out that while other countries had ratios of 1:12 for civil servants and the total population, Malawi’s ratio was more than 1:100. Professor Mkandawire’s observation about the small size of Malawi’s civil service supports the argument by Durevall and Erlandsson, raising the question of how the country has been unable to have adequate numbers of civil servants while paying them well.
What has happened instead has been a cashgate mindset at work. Groups of elites have set about changing the salaries and benefits regimen for their own benefit, leaving behind those beneath them. Durevall and Erlandsson point out in their article that in 2003 only 35 percent of the civil service wage bill was made up of salaries, while 66 percent comprised allowances. International travel allowances are particularly generous, by far dwarfing monthly salaries. No wonder international trips are a big motivating factor for top civil servants, and a huge cause of resentment amongst low level civil servants who are effectively barred from such benefits.
The private sector was able to carry out salary restructuring, with the result that profitable corporations now offer salaries and benefits that are much more attractive than civil service salaries. It must be pointed out however that such attractive salaries and benefits are the preserve of elite managers and senior employees. Employees in lower ranks are paid low salaries, with huge gaps between the top and the bottom levels, even when educational qualifications are not significantly wide.
Inequality as a root cause
Such discrepancies in salary structures both in government and in the private sector have led to unprecedented levels of social and economic inequality. The inequality has created enormous amounts of resentment, which find expression in the most unexpected ways. Inequality in remuneration leads employees to engage in money-making ventures, including setting up businesses and travelling to commercial centres in and outside the country when they are supposed to be working for their employer and for the public.
Government employees demand bribes to do routine jobs such as issuing passports, drivers’ licences, or business permits. Lowly paid police officers demand bribes to work on cases, or to issue police reports. The cash system of paying for traffic offences on the spot makes it easy for one to pay a small bribe and get away without having to pay an unreasonably exorbitant penalty.
There was a time in Malawi when strangers would come to one’s rescue; today people demand payment for the simplest help. It is not that people have become heartless for no reason. They have seen others become inexplicably rich while they have continued to wallow in poverty with no hope of ever seeing their economic lives improve. Such inequality breeds a type of insidious anger clueless elites find difficult to understand. As some seem to prosper while others stagnate, there has gradually emerged a culture of “tidye nawo.”
Those elected into public office have been in the forefront of promoting the “tidye nawo” culture. Having no fresh ideas for how to find long lasting solutions that would improve the lot of Malawians, they have found it easier to canvass for their own interests. Hardly a year passes by without the Malawi parliament moving a motion to increase their salaries and perks. Instead of benefitting poor Malawians and graduating the country out of perpetual food crises, the Farm Input Subsidy Programme has become a cashcow for entrenched elite interests.
Ironically, their failure to enact a better remuneration package for government workers and to address problems of poverty in their constituencies comes back to haunt them. Malawian parliamentarians spend a good chunk of their money giving hand-outs to poor people for school fees, medical expenses, funeral expenses, wedding expenses, hunger relief and other forms of charity.
No wonder many parliamentarians choose to live in urban areas away from their constituencies, only coming back during campaign time. Many of those clamouring to run for parliament live in towns and cities but want to represent people living in remote villages.
It is not surprising that the government and the political leadership have sought to cash in on cashgate. While Malawians were perplexed with anger and bewilderment, the government and the leadership were busy claiming that cashgate was a “breakthrough”, a testimony to their efforts to stamp out corruption. But Malawians know better.
Thus far the untold story has been of those who decided enough was enough and it was time to stop looking away. These unsung heroes include ordinary Malawians who tipped off the police and assisted them in investigations. They include police officers who rose to the call of duty and made daring arrests, uncovering some of the stolen money and property. They also include government employees, low level, middle level and top level, who knew it was time to act and put a stop to the runaway train of elite robbery and executive impunity. The media and civil society took a leading role in exposing the travesty for the world to see.
These are Malawians who have not been corrupted by the “cashgate mindset.” They work against the current, taking on high profile individuals who mastermind fraud and deception and hope to get away with it. These are Malawians who prove that it is possible for Malawi to turn around for the better and address the entrenched inequality that is tearing the country asunder. They know that it is possible for the country to exorcise the cashgate ghost that has controlled our minds for decades. They inspire the rest of us in taking our respective roles and doing what is in our capacity to make Malawi a better place for everyone.
- Note: This article appears in the February 2014 issue of The Lamp Magazine.