Uncommon Sense: Looking beyond fresh elections in Malawi

Not long ago, the British High Commissioner to Malawi  Holly Tett pointed out that there is a corruption cartel in Malawi that is at the heart of the country’s economic struggles and failure to develop. She declared that Malawi must diligently and vigilantly deal with this corruption cartel if at all the country is serious about its rhetoric regarding a desire for economic prosperity.

In his article, “A Jaded Decade of State Capture” on LinkedIn,  renowned lawyer and certified fraud examiner Kamudoni Nyasulu points out that the Democratic Progressive Party (DPP) has benefitted from Cashgate in the same way that Joyce Banda and her People’s Party (PP) did.

He states: “After he denied personally benefiting from Zameer Karim’s K145 million donation to DPP; we can reveal that President Peter Mutharika accepted five vehicles from the businessperson roughly a year later. Vehicle registration certificates we have seen and independently verified show that the registration of the vehicles, in Mutharika’s name, occurred just a year after Karim, who runs Pioneer Investment—the firm embroiled in the police food rations controversy—deposited K145 million into the ruling DPP bank account held at Standard Bank, for which Mutharika is the sole signatory.”

The Anti-Corruption Bureau Investigation report into the contract between the Malawi Police Service and Zameer Karim trading as Pioneer Investments was leaked. It showed that Government had paid Zameer Karim K2,793,087,500.00 on the contract but that the contract was tainted by fraud. Zameer Karim deposited the (Government) Reserve Bank of Malawi cheque in his account at National Bank of Malawi on 12 April 2016 and the next day 13 April 2016 he drew his own cheque in the sum of K145 million against the K2,793,087,500.00 in favour of President Mutharika and the DPP.

There was media and civil society uproar about this. The President claimed that he had personally not benefitted from the K145 million, the DPP offered to pay back the money to Zameer Karim. The repayment was made to Zameer Karim through his bank account at First Merchant Bank. Immediately the Financial Intelligence Authority froze the account and Zameer Karim was denied access to the repaid money.

The Financial Intelligence Authority asserted that First Merchant Bank had committed an offence because the K145 million should have raised suspicion and the bank should have filed a suspicious transaction report with the Financial Intelligence Unit. Zameer Karim went to court; first in Blantyre and then in Lilongwe. The Court ordered that the money should be released to Zameer Karim. National Bank of Malawi and Standard Bank had both handled the K145 million but had not been charged with any offence, yet there was no evidence that they had filed suspicious transaction reports.

This led the Court to conclude that there was no breach of the Financial Crimes Act for which First Merchant Bank was charged. The Commercial Court made several observations including that in Malawi the difference between a ruling party and the State has become obscure. In fact, ruling political parties are often referred to as “Boma” literally meaning government. Thus, members of ruling parties as well as their families must, for all intents and purposes be deemed to be politically exposed persons.

I would also add that because of the obscurity even the ruling party itself should be deemed a legally politically exposed entity or person.”

There is a lot of hype over the issue of fresh elections and the hope that this may lead to an improved economic and governance outlook. I am not convinced that such an outcome will flow automatically. There is a need to understand the problems of our country at a deeper level than simply seeing them as a matter of changing individual leaders.

Without sounding too negative, and at the very familiar risk of praise-singers accusing me of speaking and of seeing only the negative, I still feel compelled by what I see as the reality on that ground to remind those in leadership and those aspiring to be leaders that there are important policy areas that need to be addressed and these have nothing to do with the elections.

If it is accepted, for instance, that investment is key to economic development, then there are three important policy areas that need to be addressed before any investor can consider Malawi seriously as a market.

  1. Energy

Unless the government prioritises solving the energy problems, especially the persistent blackouts, no investor worth the name will take Malawi as a serious investment destination. An investor will first consider the energy question and will soon find that Mozambique, Zimbabwe, Tanzania, and other nearby countries present much more attractive options. If we are seriously trying to woo investors, we must do all we can to address our pathetic power supply situation. This must be addressed NOW, as a matter of absolute urgency.

  1. Telecommunications

Malawi is by far one of the most expensive countries in Africa and in the world when it comes to the cost of telephones, internet and other telecommunication services. Mobile phone services are extremely unreliable while at the same time being unjustifiably expensive. Internet services are provided mostly via Wi-Fi internet service providers such as Skyband and Globe, who charge whatever they want for very slow and unreliable services. Proper DSN broadband is almost non-existent, and other telecommunication services are very far behind our neighbours and competitor countries in reliability, efficiency and cost. An investor will consider this item as crucial in making a decision whether to invest in Malawi or to move on to its neighbours.

  1. Malawi as a Market

Because of the economic stagnancy, inflation, and lack of popular spending power, Malawi is not an attractive market for investors. This can be demonstrated by the many companies that have tried to opened their businesses here, and quickly closed their doors and disappeared once their tax break periods were over.

An investor wants to invest in a country where a) the populace has enough spending power that will translate demand into profits, or b), a country that whose foreign trade rules and regulations will allow him to produce a product, export it and make a profit that justifies the investment.

These factors are affected by Malawi’s downward economic spiral, and the tendency to have in government leaders that do not have any idea how to address these matters. As a result, Malawians have no spending power to create an authentic market for most investors, and Malawi’s export rules are forbidding and needing large bribes for an investor to make any sense of his investment.

Now we are obsessed with the court constitutional court case and the hope for fresh elections to depose Peter Mutharika and yet we have not heard any convincing propositions from our leaders as to how they plan to solve these challenges. Could it be that all we are hearing is empty propaganda rhetoric, a matter of form without substance?

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2 years ago

WHAT AN EXCELLENT ARTICLE, ALAN!! Well-researched, clealy presented, and highly significant. Uncommon Sense indeed! The election fraud is nothing compared to the daily frauds which are permitted in Malawi at the top level by banks like FMB,NBM,SB, at the command of goverment-party leaders, and which are keeping Malawi poor. The election process is important and MUST be kept trustworthy or all hope of significant change in Malawi will be abandoned. We need the courts to keep MEC honest. All parts must work. The battle for honesty and integrity in Malawi, whose lines you have described so well, Alan, must be… Read more »

2 years ago

Very, very true!

Zomba Karonga
2 years ago

senseless and rubbish

2 years ago
Reply to  Zomba Karonga

What is rubbish?

2 years ago
Reply to  Tito

The pictures on top

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